Day 3 marks the end of another NRF Retail Big Show, but we walk away armed with insights, data, and ideas that will help Kibo and our clients thrive in 2023 and beyond. On the last day, we heard from retail experts from Charles Schwab, Neiman Marcus, Bealls, Mondelez, and Poolwerx, covering economy trends, headless commerce, supply chain strategies, and distributed order management.
Keynote: Charles Schwab Shares Economic Trends and Neiman Marcus Discusses Customer Loyalty
Liz Ann Sonders, Managing Director, Chief Investment Strategist at Charles Schwab, kicked off Day 3 of NRF with economic trends and predictions. Similar to what we heard during Days 1 and 2 of NRF, supply chain and inventory management are top priorities for retailers right now.
According to Liz, retailers are evaluating their supply chains and diversifying where they’re getting their products from, how they’re storing inventory, and how it’s getting distributed to shoppers. “A smarter way to think about diversification of supply chains, so you’re not putting all of your eggs in one basket,” said Liz. Overall, Charles Schwab predicts we’ll see a shift in investment-driven companies as retailers focus on improving their supply chain and inventory management.
Following Liz, Geoffroy van Raemdonck, CEO of Neiman Marcus, joined the stage to discuss how the company has turned around over the last few years by focusing on the few rather than the masses. “We’re truly a relationship business,” saidGeoffroy.
Many of Neiman Marcus’ shoppers, which also includes Bergdorf Goodman, have personal associates that help them find items and make them aware of new products that come in. “We know that customers who are in those relationships spend 12 times more than customers who do not have that relationship with an associate.”
While this level of customer service isn’t doable at every retailer, it emphasizes the importance of customer service in retention rates and average spending. 2% of Neiman Marcus’ customers spend on average $27,000 a year with the retailer. The luxury retailer is aiming to improve that percentage to ensure they’re not relying on too few shoppers to make an impact on growth.
5 Critical Values From Distributed Order Management in an Omnichannel World
As retailers struggle with inventory visibility and fulfillment efficiency, OMS has quickly become the core system needed to successfully run a commerce business. IHL predicts that the order management systems market will grow from $1.64 billion in 2022 to $3.16 billion in 2027. IHL also found that 52% of retailers say inventory visibility is a top tech priority in 2023.
As retailers evaluate distributed order management (DOM) solutions to deliver seamless omnichannel experiences, there are five things to consider:
1. Where inventory comes from and is stored is changing.
Overall, consumers do not trust retailers to keep products in stock — around a third of consumers across industries are decreasing their trust in retailers. To combat this loss of trust, retailers are re-examining where their inventory comes from, where they store it, and how they distribute it to the end consumer.
In addition to implementing automation into their order management workflows and processes, retailers will be choosing more domestic suppliers and near-shoring for their most critical product categories.
2. Stores are more relevant now and will put greater pressure on inventory visibility.
COVID accelerated the adoption of fulfillment strategies like BOPIS, ship from store, and local store delivery — and they’re here to stay. The growth in reliance on stores to be part of the eCommerce fulfillment process puts greater pressure on retailers to have real-time inventory visibility. Without real-time inventory visibility, you risk underselling or overselling products. The total cost of out-of-stocks and overstocks for retailers in 2022 was nearly $2 trillion — a 12.7% increase from 2020.
3. Advanced analytics will help unlock value.
Automation, AI, and machine learning are finding more applications in order management. Retailers will be looking for order and inventory data to not only know what happened and why, but what should be done based on the information given. “The next battleground in retail will be fixing inventory issues and store operations with AI and ML,” said Jerry Sheldon, Senior Analyst at IHL.
4. Fulfillment optimization in modern OMS solutions.
“The biggest differentiator is fulfillment optimization,” said Jerry. Many retailers have adopted BOPIS, ship from store, local delivery, and curbside, but very few have optimized these customer experiences for profitability. The average margin point loss from a traditional store visit when not optimized is 8.1 for BOPIS and 3.6 for curbside.
5. Cloud-based software that’s flexible and customizable.
While cloud-based software brought uniformity to the tech stack, retailers now want to be able to “customize the cloud.” One of the top priorities for cloud-based software among retail leaders will be inventory visibility, according to IHL.
A DOM system strengthens the supply chain by providing real-time visibility of all available inventory and streamlining complex order fulfillment models in the most efficient way possible to reduce distribution costs while meeting customer experience goals across all channels. “If you don’t have an up-to-date, modern OMS, you’re behind,” said Jerry.
Learn more about the benefits of DOM systems here.
Winning Strategies for Supply Chain Performance with Bealls, Inc. and Mondelēz
Bealls, Inc. and Mondelēz International have dealt with their fair share of challenges over the last few years, including supply chain issues and inflation rates. By using real-time automation and data, they’ve been able to transform their operations to navigate future disruptions and quickly shift strategies.
“The ability to change and react quickly enough has been at the forefront of our initiatives,” said Jacqueline Long, Director of Merchandise Process at Bealls. Before COVID, Bealls implemented automation around the allocation of product, allowing them to increase their product sell-through rate.
Mondelez has also prioritized automation with their focus being on the pack process. As they felt the ramifications of the supply chain disruptions, the company leveraged technology to identify problems in the pack process, quickly address those problems, and effectively communicate those issues with their suppliers and partners.
Poolwerx Reimagines Their Digital Commerce Future with Headless Commerce
Poolwerx, a franchise pool business with 165 retail stores and a B2B commerce component, faced numerous challenges that drove them to prioritize its digital transformation and move to a headless commerce solution:
Business adaptations: Poolwerx started as a home service company to clean pools and maintain pool equipment. But to smooth out seasonal revenue, they targeted commercial clients, such as hotels, and launched retail stores.
Franchise model: As a franchise business model, Poolwerx needs technology to provide business performance visibility at two different levels, one for franchisors and one for franchisees.
Geographic expansion: Poolwerx started in Australia and has since expanded into North America – the cultural difference, supply chain challenges, and tax codes add a layer of complexity to the business.
Pools are a living beast: Pool equipment is getting smarter, allowing Poolwerx to use data to better serve their clients. But they need to be able to aggregate the data and leverage it across all aspects of the business.
3 Ways Poolwerx Benefits from Headless Commerce
There are three ways Poolwerx has benefitted from moving to a headless commerce solution:
- The API-first approach allows Poolwerx to integrate various solutions and have data seamlessly flow across systems. As a result, all sales channels have access to real-time accurate data to better serve their customers.
- Poolwerx has been able to implement complex logic without the high cost of building and maintaining those workflows and integrations.
- The headless architecture allows Poolwerx to easily update the frontend experience without disrupting backend systems. “Making sure we can create rich digital experiences all comes from this headless architecture,” said Shannon O’Brien, Chief Innovation & Technology Officer at Poolwerx.
Headless Commerce Use Cases
There are many use cases for headless commerce, but Shannon from Poolwerx outlined their top three. First, it’s allowed them to open up their partnership opportunities with software vendors to deliver rich customer experiences. Poolwerx serves B2C customers, B2B clients, technicians, and franchises. With headless commerce, they can manage experiences in a single platform, including customer appointments, warranties, and quote information.
Second, Poolwerx can support complex order management workflow. For example, if an eCommerce shopper buys an order online, Poolwerx can route the order based on local store and distribution center availability to ensure the order gets to the shopper quickly and efficiently.
Until next time, NRF
The world has thrown a lot our way, but it’s exciting to see how retailers and retail experts are innovating and collaborating to overcome recent challenges. Today, companies are smarter and faster thanks to solutions like composable commerce, distributed order management, and inventory visibility. We’re excited to continue working with leading retailers like Ace Hardware, Athletic Greens, and Coastal Construction to accelerate their growth and deliver exceptional customer experiences.
If you’re inspired to evaluate eCommerce, order management, or subscription solutions, register for a 15-min. demo of Kibo eCommerce and Subscription Commerce, or for a 15-min. demo of Kibo Order Management.