The company says the key is using vast amount of data and being fast on its feet
By guest author Angus Loten, who writes about enterprise information technology for The Wall Street Journal’s New York bureau.
“Keeping up with customer-service expectations in the digital age takes more than tech know-how. Especially when the customers are young, tech-savvy “sneakerheads” who want tomorrow’s shoes today—or even yesterday.
To meet that challenge, Foot Locker Inc. is focused on analysing huge amounts of data, innovative digital marketing—and speed.Across the entire company—some 3,270 locations and websites spread across 27 countries—the corporate culture has had to change, says Pawan Verma, chief information and customer connectivity officer at the New York-based sports footwear retailer.
Mr. Verma, a former Target Corp. vice president, is driving these changes in a role that has expanded since he joined the company as CIO four years ago. Now, in addition to overseeing global technology systems, he is in charge of digital marketing, supply chain and customer-loyalty efforts world-wide, from Foot Locker stores in the U.S. to Eastbay, Lady Foot Locker, Kids Foot Locker and Champs Sports, among other retail outlets.
Spurred by growing market pressure to offer a higher degree of personalization and on-demand services, Mr. Verma’s goal is to integrate and gather data from across the store’s operations—everything from website clicks to delivery preferences. Algorithms are then applied to the data to quickly and accurately glean market intelligence, often in real time.
To do all of this, Mr. Verma has boosted Foot Locker’s tech staff roughly 30% over the past three years, while creating separate teams that work on data, apps, interfaces between apps and operating systems, artificial intelligence, augmented reality and machine learning.
But, these and other strategy shifts would be worthless without the entire company “rowing as one,” Mr. Verma says. He wants a greater mix of workers from across all operations working together to create and launch projects, such as new user apps or virtual pop-up stores.
Mr. Verma spoke with The Wall Street Journal about the challenges of turning a 45-year-old shoe retailer into an agile, tech-driven venture for Gen Z “sneaker freaks.” Edited excerpts follow:
WSJ: Why has your role expanded so much?
MR. VERMA: I have all the traditional CIO responsibilities, but I also have supply chain, call centre, digital marketing and store connectivity.
Our consumer does not differentiate if specific transactions or engagement happens in a store or online. They start searching online and they move to mobile phones, or they move to stores, or sometimes they are having conversations about our products and services on social media. Our core customers, 12- to 25-year-olds, are very highly connected.
That is why we have combined all these key functions—from our product collections to how we provide content, how we connect with them in their individual communities, and how we make sure that it’s on their terms, anywhere and anytime.
WSJ: What kind of data do you need to do that?
MR. VERMA: Internally we get traditional data, such as sentiment data and click-through data [which shows when a customer clicks on a promotion]. Our external sources of data can include social media, or a given sales or sports event, or working with marketing agencies. We have multiple brands, and there are brands that we connect with externally, such as Nike and Adidas, and we can get the pulse of how our customers react to those brands.
In the past 2½ years, we have created a data-science team focused on the different patterns of particular cohorts of customers. Are they really buying customers, or are they prospects? Or are they just coming to the website? Do we need to do something there?
We are focusing on creating stronger relationships and engagements with our customers through experiences such as a product-launch app. We are also inviting our customers to provide us post-purchase feedback along with pictures and videos. The feedback has allowed us to improve our fulfilment and shipping, as well as provide an overall better experience for customers.
WSJ: How quickly are you able to convert these digital efforts into real-world products and services?
MR. VERMA: The cycle time, from inception to activation, has drastically reduced. The old mind-set was to start a project by gathering all the requirements for the first three months, then create the conceptual design for the next three months, the app design for the next three months, the coding for the next three months. By that point the customer has often moved on. That mind-set has completely changed.
We have launched new search or checkout tools where the idea came Monday morning, and within two or three weeks we were running tests. Almost every week we are trying out a new algorithm on 5 % of the traffic to see if they will react. If we see a favourable result, we will go to 10 %. When we see an even more positive result, we might go to 50 %.
We used to do four or five technology releases a year, like new mobile apps and customer-facing dot-coms, and now we might be doing four or five every week. There are times we do four or five a day. Some work and some do not work, but you can learn very quickly, rather than wait a year to see if it works or not. You can now see it in three weeks. That culture change is huge.
WSJ: Do you have an example of all of these efforts coming together?
MR. VERMA: We surprised sneakerheads with an augmented-reality scavenger hunt in October, timed with the drop of LeBron 16 King Court Purple sneakers in Los Angeles. Sneakerheads could unlock geo-targeted AR clues throughout the city, eventually leading them to where they could find and purchase the limited-edition sneakers. The shoe sold out in less than two hours.
This was delivered in collaboration with various teams across the company, from product, user experience, design and engineering.
WSJ: What are your biggest challenges working with data, AI and emerging digital capabilities?
MR. VERMA: There are several areas, but a key one is around security. We are collecting billions of events and using machine-learning software to find a signal from noise. For example, when we have a product launch, such as Nike Air Force or Jordan Retro, billions of bots mimicking customers will try to render our websites and mobile apps useless by staging distributed-denial-of-service attacks on our internal and cloud infrastructure. This can drive customers away from the products they want and impact the social currency of our brand. We created tools, with some vendor partnerships, that deflect bot traffic and protect the site.
Another challenge is just making sure that we are transparent with our customers when we are creating profiles or collecting data. We need to make sure that we are providing them opt-in or opt-out preferences, especially with regulations like GDPR [the European Union’s General Data Protection Regulation] and other data-privacy laws.
We need to make sure we are always there and always on top of it.”