Inside Foot Locker’s Shift To Experience-Driven Commerce
For sportswear and footwear retailer Foot Locker, digital transformation has meant shifting the focus away from customer transaction value toward customer lifetime value, with the goal of engaging, inspiring, and providing a more connected journey to customers across all touch points.
by Giselle Abramovich
Posted on 01-12-2019
While digital transformation is top-of-mind for all businesses today, the journey is very different for every company that embarks on it. For sportswear and footwear retailer Foot Locker, digital transformation has meant shifting its focus away from customer transaction value and toward customer lifetime value, with the goal of engaging, inspiring, and providing a more connected journey for customers across all touch points.
“Digital transformation is all about creating connected journeys and experiences, which are much more emotional and engaging,” said Pawan Verma, EVP and chief information and customer connectivity officer at Foot Locker, in an exclusive interview with CMO.com. “And that goes way beyond providing functional and transactional capabilities to customers. It’s much deeper than that.”
According to Verma, when the company set out on its digital transformation journey almost three years ago, the aim from the start was to use different technologies to create connected journeys for customers, beginning with the consumer’s discovery phase and moving to the point of inspiration, then the purchase, and even the post-fulfillment period.
“Our digital transformation efforts were triggered once we realized that our customers were at a level of digital maturity where they stopped differentiating in-store experiences from dot-com, and vice versa,” he said. “Overall, our work has been centered on people, process, technology, and culture, and reshaping all of these things in service of our customers.”
Data Connectivity And New Thinking
The first item on Foot Locker’s transformation agenda was to connect the various data flowing through the organization. This was no easy feat, as Foot Locker owns and operates not only its Foot Locker retail stores, but also Kids Foot Locker, Lady Foot Locker, Champs Sports, Footaction, Runners Point, Sidestep, and SIX:02 retail stores, as well as its direct-to-customer channels, including Eastbay.com.
Add to that the fact that no two customer journeys are the same—and the challenge in connecting all this data becomes even more evident. For the core Foot Locker customer, mobile penetration is quite high, Verma said. These individuals demand a frictionless journey that allows them to purchase a product easily. Verma knew that choosing the right technology platform would play a big role.
“We had disparate technology, with each of the different [brands] on a disconnected technology platform” he said. “Today we are at the point where the front-end experience and front-end personas are different across our different branches and brands. But, behind the scenes, you have a common ecosystem, which is really helping in connecting data and experiences.”
Beyond technology and building the single view of the customer, the organization also needed to shift its mentality to more customer-centric business processes. This meant breaking silos throughout the organization so that departments such as merchandising, IT, and customer experience were on the same page and working toward one common goal.
“Believe it or not, changing a technology, or changing the paradigm around marketing or different ways of delivering the customer experience, is a much easier part of digital transformation than the internal organizational readiness and shifting enterprise thinking,” Verma said. “Culture change is much harder, and that’s the strongest muscle that we had to build.”
That muscle starts with employees. According to Verma, finding the right people for the job was a big part of the company’s transformation. He estimated that about 50% of the Foot Locker digital technology team has been hired in the past two-and-a-half years. “Our data science team didn’t even exist back then,” he said.
According to Verma, Foot Locker is looking for individuals with a deep understanding beyond retail. “We are looking for somebody who has majored in technology, majored in data, and maybe has a minor in retail,” he said. “We aren’t looking for a major in retail or in inventory. The characteristic that I always look for, personally, is somebody who is utterly curious, somebody who is always looking to make things better, and somebody who thinks outside the box.”
A team player, Verma added, is also important. “And you do want to find someone who can fit in the culture but equally doesn’t become complacent about the culture—someone who can continue to challenge the status quo and help shape the new culture,” he said.
Keeping Up With Ever-Changing Consumer Demands
To keep pace with evolving consumer expectations, Foot Locker has moved to an agile business process, with about 55% to 60% of its development done using agile methodologies, compared with about 10% prior to digital transformation. “We are doing a lot of iterative product management-based development wherein we are making releases every two weeks rather than once a quarter or, in some cases, even longer,” he explained.
Agile methodologies, he added, are also being used outside of development, in marketing and other more consumer-facing functions, as well as with decision-making throughout the enterprise.
“An agile approach is not only a culture change within the technology team, it is equally a culture change on the business team where they are in the mindset of iterating collectively,” he explained.
Fueling this new agile business mentality is data, which is now readily available and at the disposal of various departments and functions. In turn, that has made intelligent decision-making a faster process than it has been in the past. The change in mentality is about not being so high-strung on perfection and instead focusing on progress. Testing, failing, and learning is acceptable, he said.
“If you have an hypothesis that you’re working on, you need to have about 70% confidence that the hypothesis will work, and then it’s time to test it,” he said. “If it doesn’t work, fine. Then you try a different hypothesis.” It is in this phase of innovation and experimentation that data helps most because it can predict what it will take to get an audience engaged.
Case in point: Foot Locker made a data-backed decision when it partnered with Nike for an augmented reality-based scavenger hunt last year called “The Hunt.” To kick off the NBA 2018 season, sneaker-obsessed consumers in Los Angeles were given the chance to be one of the first to buy a pair of the new Nike LeBron 16 King “Court Purple” sneaker, which LeBron James wore on court during his first game of the season. Access to the product was unlocked for customers who successfully completed the AR scavenger hunt, which used geotargeted AR clues throughout the city that led fans to pop-up locations displaying limited-edition kicks and other gear.
The hunt started with about 20,000 users, but the 500 or so people who actually went through the entire game gave Foot Locker a plethora of insights. “We’re making business decisions based on data and test runs [like these],” Verma said.
The Next Phase Of Digital Transformation
Now that Foot Locker has an extensive data leg, which is bringing all the data together from all different places, then cleansing and enriching it to make it readily available in a very high computational velocity, the next phase of digital transformation is improving customer experiences through personalization, he said. AI will play a big role in fulfilling this goal.
“AI, to me, is going to change the way we think and make decisions about the right experience,” Verma told CMO.com. Coupled with AI, AR is also important; he believes that AI-fueled AR will “create experiences that people haven’t even dreamed of yet.”
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