Findings from the EHI Omnichannel Days 2019

How can brick and mortar and digital business be harmoniously combined so that, ideally, the perfect “omnichannel sound” is created? This question was raised last week during the EHI Omnichannel Days. Also this year numerous interesting speakers gave their individual answers. For all those who stayed at home I would like to summarize my notes on selected lectures in this article.

Interconnected Retail in DIY Logistics (Ingo Leiner, Chief Logistics Officer, Hornbach)

  • The DIY market has grown by 12.3 percent since 2013
    • Classic DIY stores, however, lost 3 percent, Hornbach increased its market share moderately against this trend
    • Especially competitors from outside the industry are entering the market and growing
  • Times change and retailers react with different solutions, e.g. expanding the cross-channel approach.
  • Hornbach focuses less on individual channels and more on customer needs in order to derive services from these wishes, e.g. self-scan in order to reduce queues at checkouts.
  • For many services – especially when it comes to e-commerce – logistics is needed
  • Hornbach, for example, has 562 shipping points in nine countries
  • This network is extremely complex, but it also opens up options to both provide the customer with a good shopping experience and ensure their own efficiency in delivery.
  • Tactical goals of Hornbach logistics are therefore:
  1. Expansion of the product range
  2. Increase of article availability
  3. Reduction of delivery distances
  4. Reduction of partial deliveries
  • Hornbach has developed its own order management system in order to efficiently pursue these goals
  • The role of the logistician will change in the future – he will become an integrated service partner.

The customer as an empress – How bonprix changes the brick and mortar shopping experience with its “fashion connected” approach (Daniel Füchtenschnieder, Managing Director, bonprix Retail)

  • Assumption: Humans are “social animals”. Therefore, the city will continue to exist – at least in 1a locations.
  • The PoS will change. However, the digital is not in the foreground, but assists meaningfully (Age of Assistance).
  • bonprix has set up a pilot store in Hamburg in which new concepts developed in dialogue with customers can be tested.
  • Tried and tested concepts:
    • Retargeting: The customer can identify herself in the shop via an app if she wishes.
    • One-Item-Presentation: Only one item is shown per article in the shop. This improves the overview. The customers scan interesting products.
    • Fitting Room Experience: The selected items are brought into the customer’s cabin in the appropriate size before she enters it. The cabin offers enough space and the light can be changed individually.
    • Fast Check Out: There is no classic checkout. Customers can check out themselves, e.g. via PayPal.
    • In addition, attention was paid to a pleasant store experience.
  • Learnings:
    • Dialogue with customers is essential.
    • The store will never be finished. This realization requires a rethink.

How Adler Modemärkte uses AI to manage its inventory across channels (Marcel Turhan, Head of PME / PMO, Adler Modemärkte)

  • Challenges from the market
    • Increasing dominance of online pure players
    • Online growth at the expense of the brick-and-mortar business
    • Disruptive business models
  • Challenges from customer side
    • Increasing customer expectations, Amazon as benchmark
    • New values change purchasing behaviour
    • Brand loyalty erodes, experience gains importance
  • In the past, Adler also caused problems in the goods management process. A tender for a solution was therefore published in 2018. aifora won the tender.
  • The new system has three central modules:
  1. Replenishment: Control of all inventory processes of NOS articles via artificial intelligence.
  2. Allocation of seasonal goods: Control of the initial order quantity determination, the initial and subsequent allocation and the last push.
  3. Transfers/redistribution of goods: Control of internal inventory optimization and balancing of distribution channels.
  • Benefits
    • Within a few months the first results could already be seen.
    • Monetary advantages are also expected (+ 3-6 percent sales, – 15-25 percent total inventories).

EHI Research: The Top Omnichannel Retailers (Lars Hofacker, Head of E-Commerce Research & Christoph Langenberg, Data Analyst & Project Manager E-Commerce Research, EHI Retail Institute)

  • 312 of the 1,000 top-selling online shops in Germany offer Omnichannel services.
  • The number of single-channel and cross/omnichannel retailers has increased. The number of multichannel merchants has decreased.

=> All or nothing!

  • Only Click & Collect is really established among providers. The majority of merchants offer two to three services (mostly Click & Collect + x).
  • The number of services increases with the number of stores. The added value of an omnichannel integration thus seems to be greater with a higher number of stores.
  • Omnichannel is a topic above all in the fashion industry: 32.4 percent of Omnichannel suppliers are fashion retailers.
  • Omnichannel dealers usually have a brick and mortar tradition: only 10 percent of the providers have started online.

Digital Mall – The Shopping Center as an Omnichannel Hub (Sebastian Baumann, Digital Innovation & Analytics / Executive Unit to CEO, ECE Projektmanagement)

  • About a year ago, ECE created a data platform – Digital Mall – into which the product data of interested retailers flow.
  • Customers can use the platform to
    • Check availability
    • Reserve articles
    • Arrange pick-up-in-store
  • Currently, 100 stores are connected in five centers. By the end of the year there are supposed to be 1,000 stores in 35 malls.
  • So far, the Digital Mall has mainly been a digital storefront. Targets:
    • Further expansion (transaction, logistics etc.)
    • An internal mall logistics system could collect the goods from the retailers and send them to the customers.
    • The density of centers in the Republic could be a good starting point for same-day delivery.

“Online purchase with happy end” – Customer-centric solutions at City-Center Bergedorf (Lutz Müller, Center Manager City-Center Bergedorf, DI Group)

  • The City-Center Bergedorf would like to bring e-commerce into the centre. A parcel shop has therefore been set up where customers can pick up parcels from several parcel services.
  • Challenges
    • Acquiring parcel delivery partners is anything but easy because they are not used to joining forces.
    • Quantity forecast
    • Ensuring sustainability through success
  • Status quo
    • Initially started with two parcel services. Meanwhile there are four (dpd, Hermes, GLS, UPS).
    • About 3,000 customers per month.
    • Synergy effects noticeable: Over 50 percent of parcel customers intend to shop at the center.
  • Outlook
    • Set up in-house logistics
    • Last mile to the customer

Customer centricity – From Omnichannel to AI (Helmar Hipp, Managing Director, Cyberport)

  • Distribution of sales at Cyberport: 50 % online, 20 % bricks and mortar, 30 % by telephone
  • Omnichannel is part of the DNA (Click & Collect, for example, was introduced in 2005). The backend systems have been on the hump for many years.
  • SAP was customized almost beyond recognition, making it difficult to replace software. Cyberport must almost inevitably develop into a technology company.
  • Success factors in e-commerce are
    • Availability
    • Service & Consulting
    • Usability
    • Delivery time
    • Price & Conditions
    • Product marketing
  • Choosing the right software is becoming increasingly difficult as the number of vendors continues to grow.
  • Central question in the selection process: Is this solution an engineer-driven innovation or does it meet a customer requirement?
  • Artificial intelligence, on the other hand, is still in its infancy. There are still comparably few suppliers on the market.
  • Aims of Artificial Intelligence
    • Relief from monotonous processes
    • Time saving through automation
    • Reducing error rates
    • Efficiency
    • Increasing customer orientation
  • Cyberport implements AI solutions (e.g. demand forecasting, natural language generation, pricing).
  • However, training algorithms is very time-consuming. In addition, employees are still required to extract a business impact from the data.

Omnichannel-as-a-Service: Why running your Stores on Smartphones (Rudolf Geiger, Director Sales Europe, NewStore)

  • Brick and mortar retail is not dead: 90 percent of retail continues to take place in shops.
  • But a new approach is needed: You have to run your shop like a website.
  • Beliefs behind Newstore:
    • Retail will in future be controlled via smartphones connected to the cloud.
    • One must know who is in his business.
    • One must know where the goods are.
    • Data integrity must be ensured. Therefore, one should use the shop employees to improve the data quality.
    • The productivity of employees can be improved. You have to put them in a position to do a better job.
    • The customer wants convenience.
    • Use of the smartphone.

internetstores GmbH / goes offline: Motivation, Business Model and Possible Limits of Multichannel Integration (Kai Ehlers, Director Multichannel, internetstores /

  • Specialist retail continues to be strong in the bicycle business. The online segment is growing primarily at the expense of hypermarkets and DIY stores.
  • builds its multichannel trade on three pillars:
  • Stand-alone stores:
    • Customer comes into the store with a started Customer Journey. Customer should be able to test.
    • Fast logistics from the warehouse to the store is important.
    • In-store orders are possible via terminals.
  • Service partner:
    • Cooperation with smaller dealers.
    • This way, covers smaller cities and rural areas.
    • The partners participate in the traffic and receive a commission.
    • They also have the option of additional sales (e.g. helmet, bicycle lock, etc.).
  • Shop-in-Shop
  • Do multichannel business models make sense?
  • One should analyze the characteristics of the industry and the competencies of one’s own company before making a decision.
  • Market view:
    • Long customer journeys with research and inspiration phases vs. ad hoc purchases
    • Need for (After Sales) Services
    • Need for explanation, desire for prior testing
    • Possibility to create a shopping experience
    • Market position and competition
  • Company view:
    • Range depth and exclusivity (e.g. via own brands)
    • Logistics setup and supply chain
    • Marketing approach: individualized vs. spray and pray
    • Data-driven Work & Play
    • Affinity for tools and system-driven work

Sell safes personally online – how a family business reinvents itself (Dirk Ewers, Head of eCommerce, TRESORE)

  • Hartmann Tresore still has a website for lead generation today
    • Look & feel of a shop, but no prices. Instead a button “Request now” is available.
    • The conversation rate is ok, but the button is still a hurdle that not every customer takes.
  • Therefore a test was initiated first: For a (monthly changing) safe the price was displayed and a direct order possibility was set up. This is sold approx. 40 times per month.
  • Based on this experience, the question arose: Do we have to change – even though we are the market leader?
  • Project: Online in 100 days
    • No brand (since the Hartmann brand should not be used)
    • No product portfolio
    • No knowledge of e-commerce
  • Solution: Integration of service providers and creation of new teams
  • Selling through the good feeling (security instead of fear). Examples:
    • Wording of the description texts
    • Product names (first names instead of article numbers)
    • Product photos (also emotionally important things besides money and folders)
  • In addition, great importance was attached to building trust:
    • Photos of real employees instead of stock photos
    • Local sports sponsoring
    • Cooperation with e.g. hunting clubs
    • Certificates (Trusted Shops etc.)
    • Many payment options
    • Click & Collect option
    • Social media channels
  • Learnings:
    • Convince employees (e.g. through events, goodies)
    • Go new ways (e.g. organization via internal chat programs)
    • Location Paderborn instead of Berlin (maintain regionality, send employees to events and further training instead)

You have to have ideas – Omnichannel in a brick and mortar core market (Jan Buse, Head of eCommerce, Hellweg)

  • What is special about DIY?
    • Very high SKU number per store (over 60,000)
    • Very large showrooms in peripheral locations
    • Low staffing levels
    • Target group is more hybrid and is to be captured by different clusters
    • Supposedly low product involvement / few emotional products
    • Very heterogeneous assortment
    • Heterogeneous supplier structure
  • At first glance, online disruption is slower in the DIY than in other segments. But online market is growing very dynamically (on average 17 percent per year).
  • Competition at DIY
    • Increasing price transparency
    • Successful online niche players
    • Unbeatable assortment depth at Amazon
  • But customers are also changing:
    • More and more “Do it for me” instead of “Do it yourself”
    • More and more informed
  • The role of the online shop is changing: no longer just a digital storefront, but an independent sales channel and endless shelf. This has consequences:
    • Branch and head office processes and systems must be more closely coordinated.
    • Complex logistics requirements, therefore a large network of e-commerce warehouses, drop ship partners and hub markets.

Analogue to digital – from catalogue mail order company to technology company (Knut Talman, Head of IT and Head of Tech Strategy, OTTO Group)

  • OTTO is actually doing well with constant linear growth. But platform operators have exponential growth. OTTO is therefore in the process of making the biggest change in the company’s history: the conversion to a platform.
  • To this end, OTTO intends to modernize all its systems over the next four years and develop numerous new features (e.g. aggregated reviews, image recognition, networked household appliances).
  • This is another reason why OTTO employs 1,400 IT staff in Hamburg alone.
  • The new business strategy has also led to a change in culture. The employees are familiar with each other and a casual clothing style has established itself right up to the executive floors. In addition, great importance is attached to the further training of colleagues.
  • Furthermore, it has been recognised that transformation is not a project that can be completed in the foreseeable future. Instead, it is a matter of constant change.

From customer to fan: QVC makes the difference (Mathias Bork, CEO, QVC Germany)

  • QVC’s goal is to turn customers into fans. This has several advantages: Fans are not only more loyal, but also give more feedback. This presupposes that you know your customers well and that you are willing to exchange ideas with them. In this way the personal contact is to be emphasized.
  • In addition, QVC relies on consulting expertise and a curated offer. Customers are supposed to be inspired. QVC therefore does not see itself in the field of demand-oriented purchasing.
  • So far, the strategy seems to be successful: QVC has a repurchase rate of 96 percent. Regular customers buy an average of 26 products per year and rate them frequently. In addition, 70 percent of customers in a survey stated that they would miss QVC if the company no longer existed.

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