How can you create a unified commerce experience with omnichannel?
Tom Meehan of CONTROLTEK is here to discuss how retail brands can transition from the old omnichannel mindset and ensure that the customer experience is the same across channels.
Tom is a leading loss prevention expert in cybersecurity and information technology, and he wrote the bestselling book Evolution of Retail Asset Protection: Protecting Your Profit in a Digital Age.
In this episode, Tom will share how you can overcome the most common challenges of omnichannel to create the best possible customer experience.
He’ll also cover:
- The most important part of having a successful omnichannel business
- How risk has changed over the last few years
- The impacts of the pandemic on retail & omnichannel
- And more
Mentioned in this episode:
Transcript
Voiceover: This is Performance Delivered, Insider Secrets for Digital Marketing Success with Steffen Horst and Dave Antil.Steffen Horst: Welcome to the Performance Delivered Insider Secrets for Digital Marketing Success podcast, where we talk with marketing and agency executives and learn how they build successful businesses and their personal brand. I'm your host, Steffen Horst. The topic for today's episode is retail omnichannel and how to transition from the old mindset to the unified commerce. Here to speak with me is Tom Meehan who is the Chief Strategy Officer and Chief Information Security Officer at CONTROLTEK. Tom is the leading loss prevention expert in cybersecurity and information technology. He's the author of the best-selling book, The Evolution of Retail Asset Protection, Protecting Your Profit in the Digital Age, and the co-host of the Crime Science podcast and co-host of the Cash News podcast. Tom, welcome to the show.Tom Meehan: Thank you for having me. Happy to be here.Steffen: Now, Tom, before we before, we start talking about today's topic, tell our listeners a little bit more about yourself. How did you get started? And what led you to CONTROLTEK?Tom: Yeah, so it's probably an interesting journey like everybody else's. I started out my career really in information and technology. I think, in the 90s, if you'd asked me, I would have said that I would have been in a technology role my whole entire life. And I've kind of gotten back to that and worked in two small businesses that I started myself. And by today's standards, they wouldn't even probably qualify doing networking in the in the late 90s. And then started working in retail by accident, and went and spent 22 years in retail and then in various different roles with various different companies. I left retail as the director of technology and investigations for Bloomingdale's and joined CONTROLTEK, as their Chief Strategy Officer and Chief Information Officer, as you mentioned. Just recently took a new role at CONTROLTEK as the president. And, you know, throughout my journey in retail, while I would say I had many different roles, they were heavily based around technology and risk. And, you know, I really got to grow up in retail. And it's interesting to say I don't think I'm that old. But when I started my first retail job, there was no email or no cell phones. It was it, we had inter-store communications only. I had a pager to get when to get in contact with me when I was a management role. And I went through the progression of really the birth of .com. And at a very large, iconic brand was there when they really started e-commerce. So we've got to experience that firsthand. And had inventory control positions, asset protection positions, finance positions, technology positions, so got to see the good, the bad, the ugly. So I feel really fortunate that I got to experience that journey.Steffen: What made retail so interesting, so exciting for you that you stayed in that area for so long?Tom: So I think for first starters for me is that it was very dynamic. Over the years, I experienced a lot of different challenges, got to work with a lot of different people. And I really am a firm believer of the people make it great. And I spent the bulk of my career at Bloomingdale's and really worked with phenomenal people. Was challenged every day with different things, but also was allowed to be creative and create programs. So it was a it was an always learning experience and I think transitioning to CONTROLTEK and being you know, a professional services solution provider and helping you know banks and retailers and industry folks protect goods and really track where they go was what probably sounds like an unnatural progression, but it was a perfect progression is taking all that experience and actually applying in applied and then being able to help folks, you know, arguably not have to revisit all the things I did.Steffen: Now from time to time people say the term unified commerce. How does this differ from the omnichannel mindset?Tom: So it's interesting because unified commerce and omnichannel have saw a lot of similarities. And I think omni channel became a buzzword right. And I remember, I really do remember living a single channel, retail environment and then having an off price brand or another brand under the umbrella and then a .com and then you had all of these different brands which in some cases maybe cater to a different customer but in a lot of time In the same customer shop. And in omnichannel, a lot of times, and this isn't right or wrong, this is just the way it is, you treat each channel separately. So you may market differently on each channel, you may have different pricing, different approaches, and at face value that makes sense for someone in marketing and brand building. But when you think about it from a customer perspective, it's challenging. So the unified commerce model isn't different in the fundamentals of omnichannel. The biggest fundamental difference is you're treating the company as a one and you're bringing all of those channels together. So if you are in a retailer that has an off price, a full line store, if we're using a department store analogy, and a .com, you're taking that and you're saying how do I make sure that my messaging, my platform has a consolidated umbrella, if you will, and the customer experience is the same throughout those channels. A lot of times, it goes back to marketing. But that's in simplest form isn't always the way it works. So yeah, where you can repurpose images, to make it seamless for a customer. But this is more about if I want to shop that I have the same experience. And my favorite example that I think happens to probably everybody that listens is you see something online from a major retailer that's priced at their website, and you go to their store, and it's a different price. And well, in some cases, you'll hear well, that's an online only special, but we're happy to price match it in the store. And think of the shopping experience that you have a customer that went to your website and saw this, and then they went to your store to buy, that is the perfect unified commerce example. In an omnichannel mindset, it's I want to drive each channel differently. In a unified commerce mindset is the customer that looks at the website and shops in my store has the exact same experience from a pricing, from a description, or from an availability standpoint. Now, oversimplifying that example isn't always that easy, depending on where it started. But that's probably the easiest example to use of the difference between omnichannel and unified commerce.Steffen: Now, to me that makes total sense. You know, why would you treat these channels differently? Because at the end of the day, you want to satisfy your customer, whether a customer walks into your store, shops on Amazon, or on your website, you name it. It should be the same experience everywhere. Where do companies have problems with that? Or switching their mindset?Tom: Yeah, I think it's, it's probably because while it's very simplistic for you and I to say it out loud, there's a lot of logistics that go involved in it. So one of the examples I'd give is that, generally a traditional brick-and-mortar retailer that's been around for more than 20 years, has built an infrastructure around brick and mortar, right. They've built their distribution supply chain, they've built their buildings. Everything was built around that systemically, resource wide, process wise. And for some retailers, the while it sounds crazy the .com boom, or the e-commerce boom, retail happened very fast. So the challenge of switching how do I now create a supply chain network that's designed to ship to customers? How do I manage the risk when I ship to customers? How do I actually physically handle the goods? And when we talk about it on this podcast, it's like, logically, it would sound pretty easy. But if you have a distribution center that was built to receive a truck, empty that and then split up merchandise to send back to stores, it's very different than a distribution center that was built to distribute packages to 10s of 1000s of and potentially hundreds of 1000s of individual addresses. So that's, that kind of systemic process isn't as easy as as it sounds. The other thing is an assortment of merchandise when you're buying for, doesn't matter how many stores you have. A 50 store chain, and you're distributing that merchandise, there is a planning that goes into that distribution. Not always, right. But I think retailers have really kind of figured out how to plan where to send what. Well, when you add the .com channel to that, you might find that the online shopper buys differently than the in-store shopper. So some of those systemic create your processes, create it to how you replenish change very differently. Also, today, about 60% of items that you buy online from a retailer are still shipped from an individual store location. Again, sounds really easy, right? Sounds logical. But think about it. If you went into a store today, and you're shopping, think about the fact that that store was built to shop in and now you have a mini distribution center. How do you ship packages out of it? How do you even get the supplies? And if you are not prepared correctly, you may not even have this physical space. All of those things make unified commerce challenging. The other thing is traditional brick-and-mortar retailers base a lot on conversion, right. I have a customer that walks in the door, and they buy something. I have 10 customers in the store, 50, 5 of them buy something five don't. 50% of my customers convert. When you add omnichannel to that, a lot of those numbers are hard to equate. When you think of unified commerce, you're not you're looking at the customer as a whole and the wallet share. And probably the other thing that makes it really challenging and why this is quasi difficult. And sometimes you have retailers that conceptually are doing this, but can almost never pull the whole switch is that customers shop differently. Generations drive how people shop. You may have a customer that loves Target. But the parents, or the folks over 45 in the house shop in the store. And their children may love Target, too and their 20s but they are shopping online. So this goes back to why omnichannel at face value sometimes does make sense. How do you advertise and entice those folks? So while unified commerce makes complete total sense for the future, it isn't just a simple switch. How do I advertise, how do I manage? How do I do all of those things and keep my consumer engaged, while making it seamless for them?Steffen: So what do you think is the most important part of having a successful omnichannel business?Tom: I think, you know, this is where unified commerce and omni channel are exactly the same. It has to be a easy experience for your customer. So in an omnichannel environment, we use the pricing one because that's one of my ones that I think everybody at some point can equate to. The other big one is refunds like what happens when I buy something online and I want to return it in the store or vice versa. I buy something in a store and I want to return it online. And someone might say, well, why would you want to do that? But again, when you are, you want it to be easy for the customer. And you really have to look at the customer experience, and say in an omnichannel environment, how do I manage all of these different channels? And you know, basically, it makes the customer feel like the same. But look at the numbers differently. In a unified commerce environment, you are literally saying this customer is this brand's customer. And I think today, the success criteria for all of, whether it's unified commerce, or omnichannel is how do you enhance that customer experience? How do you eliminate the gaps in the process? How do you make it seamless for them, regardless of what channel they want to buy in. And that's the real unified commerce piece of it. And I'll use a real example of myself. Recently I travel a lot. And I recently bought some suit jackets because I lost some weight, some sport coats really. And I bought them online, and they weren't the right size. So I went into the store. And they were very, very helpful, very friendly. And I said, oh, I bought these online and want to return them. No problem, sir. And then they went in the back and they printed a UPS label and they boxed them up and they put it on and I said oh well do I get a receipt now. They said what we're gonna do is we're gonna ship this back to our .com division, we don't actually do anything in the store. When you return it in the store, we just ship it back. So I left that store with no, nothing. Didn't have anything that I left with. And then they said, oh, probably about two weeks before you get your credit. Now being a retail guy, I know that person that that that store has no control over that. But it's a very, very poor customer experience. And what it led me to is I went to the store really for no reason. I didn't get any, I didn't get that instant return. And I still bought other suit and sport coats. I bought the right size because they had them. But there are some folks that might not be able to if you tied up their funds. And by the way, they couldn't do an exchange. It couldn't give me credit for it, they had to send it back this way. It's a fairly large organization. And I understand why because I worked in retail, but what it really is, is they treat, in that environment, they're a true omnichannel retailer. Their divisions are financially completely separated. So they're actually transferring that merchandise back. They don't have the capacity today to do it. That's a really good example of a customer experience where next time I'll still buy from them, but I probably will not buy online from them because the convenience factor of online went away. Also, from the retail side, it's actually a lot more expensive for them to box that up and send it back. so there is a sustainability portion of extra cardboard being used. There's the fuel to get it, there's the cost associated with it. Were in the in the omnichannel world, they'd have a benefit if they could consume that in store. Again, easy to say, but a lot there. So long-winded answer, but it really comes back to customer experiencing it. Making it easier for your customer. Customers have a lot of options these days. And you if you want your customers to shop with you, you have to make it easy for them.Steffen: Now, you've already just talked about how to make it easy for customers, when you talked about, you know, why is the online division different to the in store division, for example. You know, if this would be seamless, then you would get your credit in store, or as you were buying something else, then it would just, you know, use the money that you already paid for the purchase that you did in-store. What other examples can you give, or ideas can you give for companies that are looking to become more seamless between all of their channels in order to be successful?Tom: Yeah, I think this is the hard part, because I'm talking about from the lens of the customer. And I think from the retail lens, this all has to do with the way you have your inventory set up. And, you know, it's very easy, even as a past retailer to talk about all the things the customer sees. However, I can understand the challenges. So the first thing anytime, and today in my current role, I actually engage with some retailers as our customers and it is about what is the problem that you're trying to solve. So understanding why omnichannel can be challenging for you. And then sometimes there's some financial burdens of you have a company that, you know, is really three companies in one. Your .com division is a separate company, by design. Built that way. So then you have to create, you know, an inner store, type transfer environment or store, you know, company to company. And fundamentally, that does create risk and extra work. But again, if you're going back to the customer satisfaction piece, the journey for the customer really needs to be about I'm shopping at a brand. So it's how do you plan from the beginning? How do you when you're making investments into infrastructure and resources, look at the customer side of it. One of the things that I preach a lot and talk a lot about and I learned this in retail is you're taking a different approach to problem-solving. Using something like a design thinking methodology where you are, you're encouraging everybody on that team in the IT department to put themselves in the shoes of the consumer. And for a second step out of the business realm and say, what does this feel like for my customer? And what can I do differently? It's actually an exercise I do with a lot of folks, today I do workshops, I do a lot of that. And it really, really is helpful to go and put yourself in the customer's shoes. And it's more than just you and I talking about it saying, what does it like to a customer? Maybe you have a customer that you know, bought suit sport coats like I did, and tied up their complete balance on their credit card to do it. What does that mean for them? Does that mean they might not be able to buy milk? Does that mean they might not be able to food because of your system? Does it mean that they had to drive further because of it? Does it mean that there are other circumstances that occur for that customer. And it's very hard when you are in a retail environment. And you're posed with solving all of these things in real time. So that to me is always, again, fundamentally easy to say. But really step back and say what does it feel like to be a customer in my environment, and then build around that. Easy to talk about on the podcast, really hard to do when you have sometimes billions of dollars of transactions going on. And again, you are built, you are built, your brand, your story, everything was built around, I'm selling to a customer who comes into a store and very rapidly in some cases, I now have a customer that will go on this website, buy something and pick it up at a store. I might have a customer that buys something on the website shipped to us and return it in a store. I might have a customer that has a hybrid where one of the items in the order they pick up from the store, the other one is shipped from a DC. All of these from, all of these pieces from a systemic standpoint, create challenges. So you have to be able to solve those stay profitable, while still keeping that customer journey sound. And then from a marketing standpoint, I know you know a lot about this. How do you build up a compelling story to your customer because we know that the journey is different and we know that some of the things that people buy online are different than what they buy in-store. Steffen: Yeah, I mean, it definitely sounds much more complex than you think about it. But as a customer is like well why is this not possible? You know. Why can I not get A, B, C? But all of these systems, all of these departments obviously need to work together. There needs to be workstreams. There need to be software that enables all that. What you want to achieve. And lining all of that up can be a challenge too. Now, Tom, you have a strong background in risk. How has the risk landscape changed over the last few years?Tom: Yeah, I mean, that's what I spent most of my career in. And I think there's a couple of things. One, the risk is today has changed even in the last two years, if you really think about it with COVID is. So if you're a retailer, there is a cost of doing business online, that isn't the same in the stores. Whether it be credit card fraud, friendly fraud, you have internal theft, damaged, you know, last mile, you know losses, damages. All of those things have been around, but they've been exasperated by some of the things that are occurring today. When you think about unified commerce or omnichannel, and it's hard to plan for everything.It's really, really challenging. If you think about, you know, what you deal with as a retailer, how do I plan for all of these things? That's one. The other piece is, this is kind of quasi why you might want to look at a more unified commerce platform for a marketing perspective. We're in this hyper connected environment where if I have a bad experience, or you have a bad experience, in a retailer, you have access to hundreds of millions of people in real time. You can do a TikTok video, you can do a Twitter post, you can put on Facebook, you can get on a podcast and talk about it. So when we think about risk, there's a huge risk and when you upset the customer, what that means for them, and how do you manage that. And then the fundamental cyber risk of that is often very challenging for retailers is today, you have a lot more risk than you had before your digital landscape or your digital risk footprint is so much larger. So today, I might have hundreds of 1000s of customers going to a website, putting personal information in that I'm now responsible to safeguard. So when you are looking at this, all of those things come into play. And I think retailers and there are studies to support this actually, there was one at the beginning of the year, really do a really good job. In some cases, they do a better job than any other industry, even banking and Department of Defense, because they have so much customer information. And they understand the brand side of it. But when you're doing anything in an omni channel or unified commerce, you have all of these risk factors. And they're just expanding. They're just getting more and more. Now you have buy online, pick up in-store. You have buy online, pick up in-store with proxy pickup. So I can buy, you know, a $10,000 item and have you pick it up for me? What does that mean? What does that, what fraud implications are there if I'm a bad guy, or I'm a red shopper instead of a good guy. Refunds, you know, how do you manage the risk of returns. Like what's too much? You may have a customer that, or a subset of customers that everything they buy, they return. Wardrobing, all of these things in some fashion existed before, but they never really truly existed together. And I think just this week, you heard Walmart and Target talk about their shrink, you know, talking about Target said $400 million in gross margin loss to in-store organized retail theft and shoplifting. You know, you know, that's very tangible. Well, how much fraud happens in their online channel? You know, and, you know, how do you how do you manage all of those things? That's traditional kind of risk. I really, really talk a lot about those are the things that you know, we are constantly working on. When you think of the full list risk landscape, it's it's much, much larger, and then there are things that we didn't even touch on like product liability and losing control of product, drop shipping. So this is not an easy equation to solve. And that's why I keep saying over and over again. I don't I don't think you will see a lot of people that don't believe that the customer satisfaction is the first piece to focus on. It's just they may not be built for it. The other thing is and this is kind of quasi interesting is a good online customer, if you're using like a risk model, looks very different than a good in store customer. So you know a lot of you know your online return percentages are a lot higher than your in-store. Impulsive, quick buys. There are a whole bunch of behaviors online that don't exhibit the same way in store. So you have different groups working on risk models, and all of these things are occurring when the risk is not really the focal point. The focal point is how do I get the transaction done as quickly as possible for the customer? If you're in a traditional retailer, that's the key, right. Like how do I get that retailer what they need. And even in a full-service environment where you want the person to spend a lot of time with your folks in a store, the key still is I want this to be seamless. I want this to be easy. I want my customer to know that this is the place to shop. Because of what the value we add is. And this is not an upscale or an off-brand or designer challenge. This is everybody's challenge. This is Walmart. If you're a low cost provider, you still want that wallet share, you still want that customer to come to you. And I think I'll use this as an example. Because all these unified commerce things that we talked about, you still have some challenges where unified commerce doesn't necessarily work. And it's not even omnichannel, when you have someone like a Walmart who has a Sam's Club brand. That is not the same customer. Or you have a very upscale retailer who has an off-brand and off-price more, they're not looking at the same customer. So sometimes they're quasi unified, or quasi omnichannel. But interestingly enough, if you're a customer and you shop at Saks Fifth Avenue in-store, and you shop on their website, and you shop at Off Fifth, you could be a customer that shops all three, but generally the demographic is different. So all of those things, create risk and challenges that at surface, everything we said probably anybody who's listening goes, yeah, it makes sense. But to actually apply this is means a very, very strong roadmap with a lot of process behind it.Steffen: Now we're, we're coming out of COVID. Not too much talk about it anymore. But how has COVID impacted retail related to omnichannel?Tom: So I think that at first and you know, on my other podcast, we talked a lot about this, and we try not to use the C word because for 18 months, every week, twice a week, it's all we talked about on a podcast. But the reality is COVID-19 really did change retail. And I don't know if it was for the good or the bad. But there was this thought and wasn't certainly my thought that because people were shopping online, that they would change their behaviors. And you know, all the data supported, what I thought it would is 100 years of behavior doesn't change in 18 months. So we've seen that, although there was a huge influx during COVID of online shopping, that customers have basically started to go back in stores. You know, the Black Friday numbers show that there were more people on stores and online. The numbers on Amazon show you that more people are shopping brick and mortar, that's human behavior, right. That's also very generationally driven. But what COVID really did, is it forced innovation in some cases. And what I think it showed retailers is that sometimes, you know, these innovative things really have negative consequences to their profit margin. And I think if you ask people after they see it, they know. So one of my most favorites, COVID examples, everybody talked about all of the online grocery shopping and the volume that was driven by grocers online. Well, this is interesting, because if you're from Europe, it's very different than the US. So in the United States pre, you know, pre COVID during COVID, people shop a lot of name brands and retailers that are grocers really don't have high margin. There's a misconception grocers or Walmart, I think Walmart is two cents on the dollar is what they make. They have 100 over 100 billion, you know, hundreds of billions of dollars. So it's different, but they're really based on volume. Grocers, if you're not selling private label merchandise, generally are very low margin. One to 3%. But what do you think happens when we go into COVID? And I think everybody said all these grocers are doing amazing. They have all these online orders. Well, when you add the fees associated with, you know, Instacart and some of these other online delivery services or deliver yourself, your margin disappears. You're almost in some in some cases, can become unprofitable. And some of the largest grocery retailers that are publicly held, talk about the huge influx in volume, yet they didn't actually have any increase. And in some cases had significant decreases in profit. So when we talk about COVID, some of the euphoric things that we think are great, really don't actually yield profit. Online businesses for instance, if you have an omnichannel or unified commerce footprint, you know, that an online sale is only really good when you don't have to touch it multiple times. When you have a system that makes sure it ships from the right place at the right time, the second you have to refund it, the second that comes back into your, your environment, there's a high likelihood that you have depleted all of your profit, and even maybe losing money. COVID really flushed a lot of that out. The other thing COVID flushed out is the supply chain challenges infrastructure. So when I, and in my current role we manufacture all over the world. And it for the last six years, you know, I've spent a lot of time traveling the world. And I'm fortunate that I had the opportunity to learn this. But when COVID happened, it really wasn't COVID. It was just the weaknesses in the supply chain. We went from years ago, to having inventory in stores to just on time inventory to a true global economy. WellCOVID identified the risks of that. And you know, regardless of where you live today in the world, we have a change, circulation challenge or shortage challenge in most major countries that still take cash that was driven by COVID. You have, we had shortages of just about everything. Like when you really looked at it, and that was all supply chain driven. So I think COVID has really changed the omnichannel piece of how we bring inventory in. How we ring sales. The importance of not touching things twice. The importance of onhand accuracy. So inventory availability and accuracy. Before, everybody knew that retail inventory accuracy was important. When COVID happened, and you had to ship more things than you ever did before and you couldn't find them. It really surfaced how much of a challenge it was. And these are, there are some numbers from a lot of different studies out there. But, you know, there was, you know, a lot of studies that said, you know, typical retailers had an inventory accuracy in the 60th percentile. And imagine during COVID tying to find things when four to 10 times you couldn't. All of those things were things that I think if you asked retailers around the table, they would create a list, but they didn't actually have anything to show that it happened. The other thing I think COVID did, and this is a good, this is a good and a bad is a lot of the things that retailers were going to try, buy online pick up in store, curbside pickup, they identified because they had to do it, what it really meant for their business. From a profitability standpoint, what customer would use it, all of those things. So if you could look at COVID as a bright side, it really did help in the digital transformation journey that retailers are on identify would work and didn't work. So you had some historical data that would have taken maybe 20 or 30 years to get that overnight, you had retailers that had no choice but to do. I think the other thing COVID helped change. Not help, but change this, you know, the way some of the which I would say is probably not a great omni channel example, but c stores. Like how convenience stores operated, you know, drive throughs all of those things. So while COVID I think was horrific for the economy, and, you know, the unfortunate deaths of people that got ill, it really flushed out a lot of the things in retail associated with omnichannel that I think we all in the retail space probably knew anecdotally, but didn't really have a testbed to see.Steffen: Well, Tom, unfortunately, we've come to the end of today's podcast episode. Thank you so much for joining me on the Performance Delivered podcast in sharing your thoughts on omnichannel and unified commerce. Now, if people want to find out more about you, about CONTROLTEK, how can they get in touch?Tom: Yeah, I think for me, I'm not hard to find. If you're a LinkedIn person, you can just look me up, Tom Meehan. I'm on every social media network under Tom Meehan and usually I put CFI for certified forensic interviewer after my name because my name is common. I'm on Twitter at Tom's IT Logic. T O M S I T L O G I C and then Controltekusa.com And it's control and t e k usa.com But lots of podcasts. I really appreciate you mentioned that. The Cash News podcast and the Crime Science podcast are both, one is weekly one is bi-weekly and I really am super excited and happy to be here. I really appreciate you having me on as a guest.Steffen: Thank you so much, Tom. Now, thanks, everyone for listening. If you'd like the Performance Delivered podcast, please subscribe to us and leave us a review on iTunes or your favorite podcast application. If you want to find out more about Symphonic Digital, you can visit us at symphonicdigital.com or follow us on Twitter at Symphonic HQ. Thanks again and see you next time.Voiceover: Performance Delivered is sponsored by Symphonic Digital. Discover audience focused and data driven digital marketing solutions for small and medium businesses at symphonicdigital.com
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