Your Place or Mine?

You want customers to be able to buy online and pick up at your store. But figuring out how to do that is a major IT challenge. Here's how two retailers pulled it off and why one is balking.

MY FATHER LOVES Lands' End. His entire XL wardrobe consists almost entirely of jackets, sweaters, button-downs, khakis, jeans, polo shirts, shorts and shoes from the venerable Dodgeville, Wis.-based cataloger. He loves Lands' End's traditional fashions, customer service and unconditional guarantee—which he tests every few seasons when he returns his loafers, claiming the soles have worn thin.

My father hates Sears, the ancient giant of Hoffman Estates, Ill. He says its snowblowers, washing machines, dryers and dishwashers all break down. And its repairmen never show up on time.

When he learned last May that Sears was buying Lands' End, my father was not happy. In fact, I haven't seen him so crestfallen since the New England Patriots lost to the Chicago Bears in Super Bowl XX. He thinks his least favorite mass merchant is going to ruin his favorite apparel retailer. "Sears will milk them and milk them dry," he says.

Whether Dad is right or wrong, whether the acquisition ruins Lands' End or opens up a new market for it, one thing is clear: Bricks need clicks, clicks need bricks, and Sears has hugely strengthened its Internet presence with its purchase of Lands' End, both in terms of its highly regarded line of clothing and its equally highly regarded Web technology.

"In today's retail market, you cannot be a credible national retailer without having a robust website," says Dennis Bowman, senior vice president and CIO of Circuit City based in Richmond, Va., adding that seamless multichannel retailing has become as much of a customer expectation as stores that are clean and well-stocked.

To that end, multichannel retailers will be working furiously during the next five years to integrate their e-commerce sites with their inventory and point-of-sale (POS) systems so that they can accept in-store returns of merchandise bought online and allow customers to buy on the Web and pick up in the store.

Some companies, such as Best Buy, Circuit City, Office Depot and Sears, already do so. Their bricks and clicks are completely integrated. These companies have been the fast movers because they already had an area in their stores for merchandise pickup (usually for big, bulky items like TVs and appliances), and because long before the Web they had systems and processes in place that facilitated the transfer of a sale from one store to another.

Other retailers are partially integrated. Ann Taylor, Bed Bath & Beyond, Eddie Bauer, Linens 'n Things, Macy's, REI, Target, The Gap and others let customers return but not pick up online-ordered merchandise in stores. But there's still a host of big-name retailers including J.Crew and Victoria's Secret that can't do even that.

"It's not something we offer at the moment, and it's not something we're planning to offer any time soon," says Karina Sokolovskaya, spokeswoman for New York City-based J.Crew. IT and e-commerce executives at Victoria's Secret had no comment.

Other retailers and analysts say that companies such as J.Crew and Victoria's Secret are taking longer to integrate their channels because they're starting from scratch. They don't have the infrastructure in place that lets them transfer sales from one store to another, nor do they have an area in their stores where they can set aside items that customers have reserved online.

"If they set up their websites separately, it may be hard for them to make it work from a back-end, accounting point of view," says Sally McKenzie, Eddie Bauer's vice president of e-commerce.

Ultimately, the explanation for why so few retailers offer the full "buy online, pick up in store" capability is because the level of integration required to make that work is awfully hard to achieve. The few pioneering companies that have succeeded have done so by patching their information systems together, leveraging robust POS systems, implementing a real-time inventory system, and building on existing processes and in-store infrastructure. Giving consumers the flexibility to shop online and return or pick up items in stores is helping beleaguered Sears struggle out of its financial tailspin. It's helping Circuit City keep the cash rolling in at a time when the company's profits are threatened by sharp decreases in the price of consumer electronics. And while Eddie Bauer does not offer in-store pickup, simply letting customers return Web orders to stores is helping the company increase customer loyalty in the apparel market where competition is as stiff as starched denim.

While my father may be pessimistic about the fate of Lands' End, he might come to appreciate the convenience of being able to return his worn loafers to the Sears near him, rather than having to pack them up and ship them off to Wisconsin.

Circuit City
Where the Web Is Just Another Store
The seamless integration of Web and store operations hinges on having the right technology, the right infrastructure, the right processes and, above all, the right mind-set.

In 1998, Circuit City, the $12.8 billion consumer electronics retailer, put Web-enabled kiosks in its stores to allow customers to build customized PCs. Surprisingly, 50 percent of the people who purchased PCs through these kiosks wanted to pick them up in the store rather than have them delivered to their home.

A year later, while the company was codifying its e-commerce strategy, it struggled with how to fund its
Circuit City CIO Dennis Bowman had a process for allowing one store to sell another's inventory. He leveraged that to include the Web. Simple, right? Not exactly.
vision of multichannel retailing. Venture capitalists were not throwing millions Circuit City's way. Though hype about the Web was brewing hotter and faster than lattes at Starbucks, shareholders still viewed the new medium as a risky investment. If Circuit City wanted to do something about the Web, it was going to have to do it on a budget.

Circuit City's penny-wise attitude led it to use its own assets to set up its e-commerce infrastructure. Had the company spun off its site as a separate entity (as so many other enterprises did in order to fund their Web initiatives), Circuit City (like others) would have wound up with a website that was not integrated with its other systems.

"We thought of the Web as just another store. We basically set it up as a virtual location," says E-Commerce Director Steve Duchelle.

That notion that the Web store was no different from any other store led Circuit City to adapt its proprietary POS technology—which already let stores sell from one to another—to sell across channels and offer pickup services...

Article continued at: http://www.cio.com/archive/080102/mime.html