Bed, Bath & Beyond - understanding omni-channel retail, it's complicated
- Summary:
- Bed, Bath & Beyond is a big investor in omni-channel retail, but also an example of how complicated understanding the customer journey is in today's market.
I mean, all retailers have to have an omni-channel strategy, right? That’s a given. So they have to spend money on cloud and mobile and apps and all that cool digital stuff because, well, they just do. So, let’s just get on with it and work out the practical implications later once we can see things more clearly.
Except that in a lot of cases, things don’t that much clearer. And while retailers remain convinced that the omni-channel spend is essential and will defend it to shareholders to their last breath, it’s best not to ask too many difficult questions.
Take this from Susan Lattmann, CFO at Bed, Bath & Beyond. This is a company that has set out a very clear digital direction for itself and seen some enthusiasm for its efforts from its customer base. So it knows something is working here, just not quite what it is perhaps. It is, as Lattmann puts it, not that simple to talk in terms of online and offline as the boundaries become increasingly blurred:
As we often say, we believe in an integrated and seamless customer experience, and although we cannot tell you through which channel a sale was initiated, we can provide information based on where the sale was consummated. Sales consummated on a mobile device while the customer is physically in store location are referred to as customer facing digital channel sale. Customer orders taken in store by an associate through the Beyond Store our proprietary web based platform are referred to as in-store sales. Customer orders reserved online and picked up in a store are also referred to as in-store sales, while purchases made online that are subsequently returned to a store are referred to as a reduction in-store sales.
It is, as the saying goes, complicated. So it is that CEO Steven Tamares talks in terms of “the challenges presented by declining foot traffic in stores and the opportunities presented by omni-channel retailing”, but admits:
It's hard to explain the dynamic. As we get better, we are losing foot traffic and that's the lion share of our business. So even though we've been able to sustain very healthy growth in the digital world, when the big base [of foot traffic] deteriorates, that's a big hit for us.
But there’s no easy way to force customers back into the stores, he concedes:
We don't want to take them to a place they don't want to be. We are not going to win at that…the reality is that we are historically a brick-and-mortar operation that is seeing less foot traffic and that's a hard thing to make up. I can't say that we can do short term things to try buy the customer to come into the store, but we are just fooling ourselves, that's not way they wanted to be over time.
Balance
The immediate challenge then is to get the appropriate omni-channel environment in place that provides the new digital platforms and openings, but also exploits the existing offline infrastructure of the stores, including services for reserving an item online and picking it up in store, returning an online purchase to store or scheduling an appointment online to meet with one of the registry consultants in store. The stores are also use to ship online orders to customers, with an increasing number of branches providing same day delivery.
So there is a function for the stores. That said, Tamares acknowledges that opening new outlets isn’t something that you should expect to see more of in the near future:
The pace of our store opening has slowed and we've increased the number of store closing over the past several years. As leases come up renewal, if we cannot reach acceptable terms with our landlord, we would expect the pace of store closings to increase as a result of our assumptions regarding brick-and-mortar store traffic in future years, as well as the continuation of our market optimization strategy. At the same time, we are making investment to evolve and improve existing store formats, enhance omni-channel services, integrate technology tools and create a more experiential shopping environment in our stores.
As for the digital channels, that’s where investment will be seen, he adds:
Our digital channels, both web and mobile, they continue to grow at a very healthy pace, driven in part by a customer experience that keeps getting better. Some of the improvements that we've made include adding to an online product assortment and service offering; improving our content to be more inspirational; making enhancements to search-and-navigation; and creating a more frictionless checkout experience. Specific examples include the piloting of enhanced type-ahead search capabilities which improve the overall online experience by making a much easier and faster through use of images to find items on the Bed Bath & Beyond website.
In search, we continue to implement machine learning capability to further improve the relevancy of results. We've simplified the navigation of our site, now introducing a new mover tab to make it easier for these customers to find relevant content and products. In addition, we've also launched a simple coupon code in checkout to allow customers to apply their favorite big blue coupon to their online order.
In our mobile channel, we've improved the speed of our Bed Bath & Beyond and buybuy BABY mobile app by optimizing some of the experiences for Apple and Android operating systems. In the past few months we've transitioned to our My Offers which is our coupon wallet and our registry led new pages on our app to native experiences which have greatly upgraded the speed and overall experience on the app. While these improvements are generating great feedback and reviews from our customers, we continue to monitor the ongoing changes in technology to further our customer experiences.
My take
It’s a timely reminder that there’s a long way to go in the field of omni-channel analytics to understand fully what is going on in the customer journey among retailers with both online and offline assets.