Toys"R"Us Chief Shows Gap Between CEOs, E-Commerce

A large chasm still exists between the thinking of retail CEOs and E-Commerce execs. Case in point: Toys"R"Us CEO Jerry Storch, who gave a tradeshow keynote on Tuesday (Sept. 11) defending brick-and-mortar chains and promoting merged-channel, not just online, retail. That defense of bricks isn't an issue. What's worrisome is that Storch's view of merged channel (a.k.a. omnichannel) is far behind what customers already expect—namely, that it's all the same retailer, and online-versus-stores better not get in the way.

When it comes to merged-channel thinking, customers are already there. E-Commerce execs are getting there. But chain CEOs don't get it yet.

Part of what Storch was trumpeting was a new Toys"R"Us service called "Ship To Store," in which customers can order items online and have them shipped free to a store for pickup seven to 14 days later. OK, that's great—but it's not to be confused with a different Toys"R"Us program called "Buy Online, Pick Up In Store," which lets customers shop online and then pick up the items in a store three hours later from the inventory that's already in the store.

Yet a different soon-to-arrive (in October) Toys"R"Us feature is called "My Store" and lets customers browse the inventory in a particular store. And still another, non-customer-facing capability is called "Ship From Store," which enables E-Commerce orders to be filled and shipped from a store's inventory instead of from a distribution center.

Those are all useful functions (and they're certainly not unique to Toys"R"Us). But the fact they all have their own names—sometimes confusingly similar names—that are being rattled off by a retail CEO demonstrates something is wrong.

Customers won't remember the names of all those services, which won't be the same at Toys"R"Us and other chains anyway. (Try this: Without looking back, try to remember what the difference was between "Ship To Store," "Buy Online, Pick Up In Store" and "Ship From Store." And good luck with that.)

For customers, the chain is the chain, online or in-store. They want to buy the product and either pick it up or have it delivered. That's all. They don't know or care where the product comes from—their local store, a DC, some other store—just how long it will take to arrive either at a store or a delivery address. Customers especially don't care what the name is for some element of that process—any more than they care what SKU or DC or POS mean.

And that's true whatever online/in-store lines they cross.And that's true whether they shop on a chain's E-Commerce Web site, check a local store's inventory online, call the store, ask an associate in person or walk down a store's aisles. Remember, some of these customers want to save time by shopping in-store, buying on their mobile phone and having the product delivered at home. Others want to shop online from home and pick up the item in-store. Still others would really like to call ahead to have an associate pull the item, then pay online and get in and out of the store in 90 seconds.

That's the merged-channel ideal—shop anywhere, pay anywhere, receive the merchandise anywhere. Anything less than that is a hole in the process. And, increasingly, customers have already figured it out.

Meanwhile, big chain E-Commerce execs are frantically working out what will be required for the necessary single view of inventory for stores, logistics for inventory balancing, compensation strategies for sales that cross the in-store/online boundary—and, ultimately, how to get rid of that boundary, because with a chain that's doing merged channel, there's no such thing. There are lots of technical and organizational legacy to plow up, in addition to new technical and organizational systems to develop, but at least E-Commerce execs have the picture.

But no one seems to have explained the picture to some retail CEOs. Yes, the CEO signed off on a lot of merged-channel initiatives. And every one of them provides a useful feature for customers (and, hopefully, more sales to more customers).

But as soon as each of those initiatives is done, it should become invisible. It's easy to understand why a CEO wants to call out particular initiatives—it looks good for PR, and CEOs want initiatives to show a return on investment. But that won't work with omnichannel, where—if it's done right—every new project sends customers where they want to go, but not in ways that make it easy to calculate ROI. In reality, there's no way to think about the ROI of an individual project when things are that intertwined. And the people who should be thinking through that under-the-covers stuff are the software developers—not CEOs.

Which means that if a CEO is proudly announcing the names of a batch of newly launched merged-channel services, either something is seriously wrong with how well integrated the chain's operations really are, or the CEO needs a much better understanding of what merged channel actually means within the chain.

Either way—whether the chasm to cross is explaining to the CEO or integrating the merged-channel process—E-Commerce execs have their work cut out for them.