In our continuing series on the state of global cross-channel capabilities, we asked Jim Okamura, Managing Partner at Okamura Consulting, for his thoughts on the emerging “research online, purchase offline” (or “ROPO”) service offered by some retailers. Judging from the results of the “Global Cross-Channel Retailing Report: The (Un)Connected Store” study conducted by Okamura Consulting and Ebeltoft Group earlier this year, some retailers and some categories are making strides, while others clearly have a fair bit of work ahead.
We’ve heard for years that you can’t measure an e-commerce site strictly in terms of the direct sales it generates. Since many consumers now start their shopping research online, a retailer’s website is likely to have a huge impact on in-store sales as well, even many times the size of direct web revenues. What’s your take on the global situation vis-à-vis “ROPO” – that is, “research online, purchase offline”? Any markets where this has become standard?
In our study, “ROPO” looked at the customer-facing tools and policies the retailers have, and not at “who is getting credit for sales” or “how the retailers are justifying the business case for investment.” We didn’t judge market standards for measuring the total impact on the business. However, you can tell by some of the country and category findings how this common shopping behavior has been given more attention by some retailers. Consistent with the overall study findings, the gap between leaders and laggards is quite wide, showing how far we have to go with ROPO cross-channel capabilities.
Let’s start with the basics – finding a store. Are multichannel retailers still overlooking this basic but high customer demand function? What constitutes a “best in class” store locator offering at this point?
Store locator should be easy and convenient on the retailer’s website, yet globally we found that 38% of retailers made it difficult to find, and for another 5% we could not find a store locator on the site! And that’s just basic store information. We are generally looking for retailers who are going the extra mile by providing some added value content or functionality, such as a map, directions, GPS coordinates, send to mobile, store events, store associate names and contacts. The good news is that 69% of our global sample met this requirement, with a high of 83% among D-I-Y retailers while specialty fashion retailers came in lowest at 54%. This says something to us in terms of the priorities these retailers have to drive traffic to store. The D-I-Y category was strong across most ROPO measures, which makes sense given their products’ e-commerce potential, the complexity of purchase decisions for home renovation projects and the reliance on store associate expertise – all of which suggests strong cross-channel strategies.
Consumers also often want to complement the store locator information with information about whether a specific product is in stock at that store. This isn’t necessarily an easy thing to develop – who’s leading the charge in offering this kind of information?
In-stock visibility at the store level is one of the core cross-channel capabilities we are very bullish on. Providing shoppers with the confidence that the product will be available in the store of their choice is only part of the benefit to retailers. The inventory visibility across stores and the direct distribution channel is fundamental to distributed inventory management that is becoming popular. We notice SKU-intensive businesses like shoe retailers as some of the early adopters to ship online orders from stores, or store-to-store transfers to capture demand if one store is out of stock in a size or color. And we’re seeing this develop across all types of retailers now, albeit in early stages in most cases. Yet you’re right that this is not easy to develop. Readiness includes the technology to confidently know where any product is in stock, but equally important it needs prioritization, cooperation, and smooth processes within store operations.
One of the surprises in our study was how often we found store-level inventory visibility. 44% of the retailers audited across all categories offer this service to customers, with electronics (68%) and D-I-Y (56%) retailers clearly in the lead. In the U.S. we expect the largest retailers in those categories would have this capability, but globally I didn’t expect that many retailers to give this functionality priority. All of this said, however, merely offering this capability in our study does not mean that the retailer has perfected it. We suspect many of the retailers are still in early stages, although that only enhances our interest in who is doing inventory visibility well, as we would anticipate more cross-channel operating capabilities to follow.
How well are retailers leveraging their websites to promote in-store events and/or specials to their customers – that is, driving traffic to stores?
If you ask many e-commerce senior executives about their goals, I’m sure most would say driving traffic to stores is one of their mandates. It’s the trendy thing to say, but it is another matter to actually give priority and devote resources to this functionality. Globally, only 35% of our leading retailers promote store events, led by 50% of D-I-Y retailers and 39% of general retailers we surveyed. We believe the success metrics for the digital team are not aligned with the goal to drive store traffic, so we cannot blame any team that is focused on driving online revenue instead of broader cross-channel priorities. These are some of the barriers that will change slowly as e-commerce growth decelerates and cross-channel programs develop more momentum.
In general, is there a category or two that stands out in delivering on ROPO? Any retailer “shining examples” that come to mind?
The D-I-Y retailers over-delivered against my expectations. I expected Home Depot, Lowe’s and B&Q to have more experience with cross-channel capabilities, but was pleasantly surprised to see some nascent activity among retailers in other countries as well. Consistent with the overall findings of the study, however, the full potential of “ROPO” is barely being tapped, so we’ll need to keep an eye on retailers as they get further out of the gate with ROPO offerings. It stands to reason that this most common of cross-channel shopper behaviors will eventually be matched with equally strong retailer capabilities, but we’re really not that much farther ahead from five years ago. And perhaps that’s where mobile push-to-store programs will have greater impact than the web over the long run.