Office Depot SVP Says “Start Your Engines”

“You can’t win today’s race with yesterday’s car.” Formula One racing great Emerson Fittapaldi said it, and Monica Luechtefeld, executive vice president for strategy and development at Office Depot, repeated it in her keynote speech at the Chicago Association of Direct Marketing’s DM Days & Expo 2005.

The sentiment is appropriate for any Internet retailer, Luechtefeld said, but it’s particularly good advice for a multi-channel merchant like Office Depot, with 1,200 retail stores in 24 countries, 1,100 catalog mailings with a circulation of 296 million, nine e-commerce Web sites in the U.S. and another 33 globally, and a corporate account sales force of more than 2,500 in North America and Europe. Merchants that large and diverse need to coordinate their various channels to present an integrated brand and message to their customers.

That means they can’t afford to be satisfied with the sales approach or the corporate organization that worked well yesterday—not with customers constantly raising their expectations about how they will be marketed to online. “What you did that was breakthough and leading edge eight months ago is old news now,” she said. “It’s been replicated, and now it’s expected by the customers.”

Internet merchants make the mistake of benchmarking their services against the companies they see as their peers in their segment. “But your customers come to you online with memories of the best sited they’ve searched, the best images they’ve seen, the best experience they’ve had,” Luechtefeld told her audience. “They’re coming to you with expectations set by the best-in-breed, not the people you compete against in your niche.”

Like many large, diverse retailers, Office Depot today carries on its relationships with customers in a wide variety of ways, from direct mail to catalogs and newspaper inserts, to account manager calls and e-mail. They can access the company’s several Web sites or visit its retail stores. Luechtefeld said those rising expectations have led customers to move from merely consuming in multiple channels to demanding that retailers recognize them, no matter how they choose to buy. Customers are driving for a seamless shopping experience that spans all the channels. They want loyalty programs and discount pricing that follows them on- or offline, and may in the future even expect rewards or incentives for their multi-channel behavior.

That’s forcing multi-channel retailers to take a new, holistic view of the customer, and that in turn is having a major impact on the retail organization, Luechtefeld noted. “It’s an enormous shift inside the corporation if you think about having to coordinate an offer to a customer across any way they choose to interact with you,” she said.

In-store pickup is another cross-channel behavior that is enormously popular with shoppers but which is forcing big merchandisers to re-examine their processes. If a customer searches for a product online and reserves it online, but drive to an actual store and pays for it at the point of sale, who gets “credit” for the sale, the Internet division or the store? (At Office Depot it goes to the in-store retailer, says Luechtefeld, although the Web team gets credit for an assist.)

The same thing operates in reverse. Customers can now go online to access the sales and coupons in Office Depot’s Sunday newspaper inserts; they can make and save online shopping lists, print them out, and even sign up to get advance copies of those inserts—complete with “in-store only” coupons and incentives.

The next channel challenge will be to market to shoppers more efficiently using wireless technology in a convergence of mobile technology and the physical retail space, Luechtefeld said. “Customers walk into the store wired today, and they’re going to expect marketing content to reach them on their devices,” she pointed out.

“We need to take wireless technology in-store to the point where we can recognize a customer as they walk in, and present them with the right offer, the right content, the right price and product comparisons on the right mobile device—while they’re shopping in the store.