Galeries Lafayette, the Paris-based department store chain, has had a large and loyal following for most of its 120 years. Its displays of goods including the famous weekly fashion show have become almost like theatre, and customers from all over the world have long flocked into its 64 outlets to be entertained as well as to buy.
But around 2008, the custodians of this legendary brand could foresee that beautiful locations just weren’t enough in the digital era. The company could do much better by virtualising the in-store experience through multiple channels that brought its goods within reach of a vastly wider audience. The company’s shareholders were putting pressure on it to do so.
After a disappointing first attempt that didn’t embrace the full potential of digital transformation, in 2011 Galeries Lafayette engaged SAP to build a so-called ‘omnichannel experience’ by connecting isolated avenues of sales in a more cohesive whole. The glue for creating a more unified customer experience was mountains of data that had been lying dormant. By sharing that data across channels, Galeries Lafayette could offer a much richer retail proposition. The platform employed for the transformation was known as ‘hybris Commerce Accelerator’.
In adopting hybris, the chain was following in the footsteps of over 500 firms, many multinationals, that had chosen the platform, including Bridgestone, Levi’s, Nikon and Nespresso.
The result? Within two years the chain has nearly quadrupled traffic to its site. But the word “traffic” doesn’t come anywhere near conveying what the omnichannel strategy did – and is doing – for Galeries Lafayette. By embracing omnichannel, the chain has exported those eye-catching displays to a vast new viewership. Omnichannel enables the chain to leverage its rich data into online sales, in-store pickups, exclusive promotions and other consumer-enticing experiences.
In the process a strange thing has happened. Customers who once never bought anything without visiting a store have learned the attractions of online buying, while the reverse has also occurred: regular online shoppers are now dropping into brick and mortar stores. Even better, all customers are buying more on a regular basis with highly gratifying bottom-line results. In 2012, just as its omnichannel strategy was bedding in, Galeries Lafayette earned just three percent of its €2.8bn in revenues from online sales. That percentage is growing rapidly.
Creating a successful omnichannel experience comes down to one word: consistency. Customers expect the company to speak with the same voice across all interactions. “They aren’t concerned about which channel they use”, SAP explained in an article in October. “They want fast, simple, convenient and pleasurable experiences, delivered consistently.”
However, delivering consistency across channels means nothing if those channels don’t integrate seamlessly with each other. There can be no dead ends in the omnichannel customer experience. As SAP added: “disjointed experiences can create frustration and anger that can lead customers to cut off the relationship.”
Reduced to its essentials, the same shopping experience enjoyed by people in retail outlets must be extended to people online and on mobile devices. That’s in terms of displays, goods available, pricing, special offers, returns and everything else.
Retailers that resist moving down this path risk losing revenue to competitors and becoming irrelevant to customers. Earlier this year, SAP’s Dr Ingo Woesner, product manager for Retail Omnichannel Commerce, put it neatly: “Omnichannel commerce is going beyond the hype phase to becoming mandatory for every retailer across all retail segments. It promises to address the customer in a personalised way with an offering [that is] harmonised across all channels. This will boost revenues for omnichannel-driven retailers compared with channel-specific businesses that operate in silos.”
Simultaneously, the most forward-looking retailers have adopted digital to turn the in-store experience almost into an interactive movie. When shoppers walk into the flagship store of luxury retailer Burberry in London, they are confronted with full-length screens along the walls that alternate between audio-visual content and live streaming of models on the catwalk. Entranced, customers like to use their mobile devices to interact with what they see on the screens.
And that’s before they get to the fitting rooms. Attached to the clothing are radio-frequency identification tags that trigger a display on the mirror showing how the item was crafted. And to help cement the sale, iPad-armed salespeople are standing by to help customers view online content and answer questions. Thus, the virtual and physical experiences are mutually enhanced. As Burberry’s Chief Creative Officer and CEO Christopher Bailey explained: “Digital must accompany customers on every step of the journey, whether online or off.”
However, it isn’t easy to achieve this transformational conversion, as Dr Woesner acknowledged. This is particularly true of companies with dated IT systems. “The switch from a grown-up ‘zoo’ of channel solutions and sales heritage to a unified omnichannel strategy ….can take years or even a decade to transform the company”, he warned.
The perfect retail world becomes more and more achievable by the day
Ticking off some of the challenges, he cited the disparate sales channels from bricks-and-mortar stores to ecommerce platforms that retailers typically employ. Others run franchise chains that are difficult to unify. While customers can usually register on any one of a retailer’s channels, not all the channels will run customer loyalty programmes. Irritatingly for customers, promotions or discounts may be available on one channel but not another. And, damagingly for the integrity of the brand, marketing campaigns “are rarely synchronised across channels such as television, print, The perfect retail world becomes more and more achievable by the day web, mobile, social media and the store”, according to Dr Woesner.
The good news is that this perfect retail world becomes more and more achievable by the day, as Galeries Lafayette, Burberry and other digital pioneers have proved. “Many issues can be [already be] addressed by SAP’s capabilities”, Dr Woeser explained.
Does the era of multi-channel retail mean that old-fashioned, face-to-face retailing is dead in the age of digital selling? Quite the opposite, Galeries Lafayette’s stores welcome more than 20 million visitors a year, equivalent to 55,000 a day. And, as Burberry has shown, the one enhances the other.
Part of the series: Our Digital Planet: Data-Driven Business Frameworks Are the Future. In a Hyperconnected World, the Collaborator Is King
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