Caught in the Net

Nov 01, 2006 10:30 PM  By

A year after launching a Website selling its outdoor sporting gear and clothing in 1996, Recreational Equipment Inc. (REI) installed Internet kiosks in all of its stores. Retailer customers — and store employees — were underwhelmed, to say the least. “Performance was miserable, as planning was poor and infrastructure inadequate,” admits Brad Brown, vice president of e-commerce and Web strategy at Sumner, WA-based REI. What’s more, store clerks viewed the kiosks as a competing channel and wanted nothing to do with them.

But during a store visit a few years later, Joan Broughton, who was at the time REI’s vice president of multichannel programs, noticed that employees had printed detailed product descriptions from the Website and attached them to the zipper pulls of a tent display in the middle of the showroom floor. “It triggered some sense in my head that the stores were seeing the value of extended product descriptions on the Web, and I thought, How can we use that more readily?” says Broughton, now the vice president of content and education at Shop.org, the online division of the Washington-based National Retail Federation.

Getting your store managers and staff to accept the Internet — especially when you install kiosks or Web terminals to facilitate in-store, online shopping — can be a tough sell.

You have to make sure they see the benefit and how it will help the store — and the company. “As time went by, more employees were realizing [that the kiosks were] good for them because they sell a wide range of product, and customers were expecting that when they come in [associates] will be an expert in when to use the product and in what weather,” says Broughton.

Today, Brown says, “everyone at REI sees the Internet as a critical component of how we go to market and understands — or is certainly made aware of — how Internet sales contribute to in-store sales.”

Customers are buying into it as well: “We’ve invested time, effort, and dollars to improve [the kiosks], and today about $200,000 of business per day is done via input on store kiosks,” says Brown.

Persuading retail employees to befriend your Website as a separate sales channel and information source and getting them on board when you integrate Internet kiosks into your store isn’t easy, says Rob Schmults, vice president, sporting goods at King of Prussia, PA-based e-commerce solutions provider GSI Commerce. “Very often, the other channels are less than thrilled with the newcomer,” he says.

Retail staff may think their customers are turning their back on the brick-and-mortarchannel and going online instead, leading them to wonder if that is hurting their comparable store sales. But most data, Schmults says, indicate that the Internet supplements rather than cannibalizes store sales. Richmond, VA-based consumer electronics retailer Circuit City, for one, reports that half of its store customers start their shopping experience online.

Not to mention that there is an appreciable uptick in order sizes among those who buy online and pick up their order in the store — according to Shop.org, 20% of such customers will buy additional items.

And online features that help consumers shop, such as product comparison tools and store locators, also contribute to increased store traffic and sales, says Maris Daugherty, senior consultant in the Toronto-based multichannel retailing consultancy J.C. Williams Group.

Gain without pain

Merchants face a number of burdens when trying to incorporate retail-specific Internet functions such as in-store pickup or returns for products ordered online. Challenges include syncing online inventory information into their point-of-sale (POS) equipment, creating a physical place for kiosks and in-store pickups, and fostering employee dedication to their role in facilitating these new services.

Schmults says retailers can start integrating retail-specific Internet functions into stores by determining how to leverage existing systems and capabilities. “That’s not only ideal from a cost perspective, but it also limits the change in management issues you will have with the sales associates,” he says.

Most POS systems introduced in the past few years have multichannel capabilities such as Web connections designed into them, technically enabling them to handle in-store online orders. But Schmults cautions that processing orders on the POS system may become a burden during the checkout process and that you may need to augment these systems with additional technology. As another example, the POS system might be able to notify employees that an in-store pickup order needs to be picked, but it may not be a sufficient mechanism by itself because of the passive manner in which it notifies associates. In this case, some retailers enhanced the capability so that the information is pushed out to the appropriate employees’ pagers.

Technological issues pale in comparison to the challenge of convincing retail employees to support the integration of the new channel into their stores. Without that support, however, any cross-channel in-store initiative is destined to fail.

Schmults says the first step is making the new channel easy for employees to use on a day-to-day basis: “Don’t make it painful for the people who work in the store.” The technology and the process should be seamless and relatively intuitive for employees; otherwise you’re introducing a barrier that keeps employees from embracing the Internet.

Footwear, apparel, and accessories manufacturer/marketer Timberland introduced kiosks into its U.S. stores a few years ago. “These kiosks have been a great source of support for situations where the customer wants a product that is no longer in stock in the store but can be purchased at that moment, in-store, via the kiosk. Thus we are preventing lost sales,” says Troy Brown, senior director of e-commerce. “We also have seen the kiosk evolve to become the primary in-store fulfillment mechanism for our customized boots. We’ve seen significant consumer interest in customized products, and the kiosk lets us deliver that experience to the stores as well as via the Internet.” Using the kiosks, Timberland can merchandise “virtual SKUs” that don’t physically exist because they haven’t been made but can be ordered and made on demand, he says.

Timberland’s success hasn’t come without challenges, however. The Stratham, NH-based company is already upgrading its kiosk infrastructure to make it easier for employees and consumers alike. “Making sure the technology platform has the capacity, speed, and durability to match your requirements is important,” Brown says.

Show and sell

The simplest technological interface in the world can still be puzzling for someone who hasn’t been trained how to use it. Likewise, employees can’t follow procedures if no one has bothered to instruct them on what the procedures are.

But beyond instructing staff on the hows of any in-store cross-channel functions, you need to show them the whys — and make embracing the changes worth their while.

Schmults recalls that several years ago, Tower Records realized that its store employees were directing customers to competitors’ Websites when they couldn’t find a product within the store. Management created a contest with a cash incentive for associates to submit ideas of how to improve the Tower Records Website. Schmults says the real intent was to encourage employees to get online, look at the company’s Website, and become familiar with it. “It was a cheap way to get them to educate themselves,” he says.

Another key component of a successful integration is determining which channel — online or retail — will get credit for in-store kiosk purchases or online purchases that are picked up in the store. “Generally it’s a two-prong thing with multichannel projects,” Broughton says. “You can’t work in a vacuum and say it works well for the Internet but not [reward] the store employees who will do the final execution.”

Schmults advises working with the existing incentive structure to find a way to give store associates and managers an incentive to use the kiosks and compensation for those sales, such as a credit toward their monthly commission or quota. This will make employees a willing and enthusiastic participant in the technology.

REI’s in-store pickup program rewards both channels by directing revenue from kiosk sales into the direct sales pipeline but giving stores credit for the sales. After all, Broughton says, “stores were really required for sales execution.”

Timberland also credits stores with sales completed at in-store kiosks. “The kiosk therefore does not cannibalize anyone’s compensation program but enhances it,” says Troy Brown.

It works the same way at Circuit City, says spokesperson Jim Babb. “We make sure Web-ordered merchandise that’s picked up in stores does not hurt the stores’ bottom lines. If I buy a product on our Website and pick it up in a store, the store gets credit for the purchase.”

Show stores the Web’s power

To demonstrate how effective the Internet is in sending traffic and sales to stores — and to show employees that the Internet shouldn’t be looked at as a threat — J.C. Williams’s Daugherty recommends running an online promotion such as coupons that are redeemable only at in stores “to show the store what kind of a power the Web can be.”

Schmults suggests pushing out related metrics, such as what percent of sales were completed through the in-store pickup and return program or which stores have the highest kiosk-related sales, to retail associates so that they feel compelled to work harder. Says Schmults, “Nothing breeds endorsement among retailers like success.”