PVH finds perfect fit in hybrid IT operating model amid pandemic

As COVID-19 shuttered stores worldwide in 2020, apparel retailer PVH knew it had to act quickly to stem lost sales. The company tackled the challenge by bolstering its digital presence, using software to move inventory idling in North American retail stores and warehouses, en route to boosting holiday ecommerce sales.

While many retailers curbed spending, PVH increased investment in technology to grow its digital channels and prioritized essential projects, including enabling consumers to buy merchandise online and have it shipped to them from stores and making its website more friendly for mobile shopping, according to Bob Bolger, general vice president of PVH’s Americas technology and process group (TPG).

“COVID showed everybody how quickly you can get things done when you don’t focus on boiling the ocean,” says Bolger, who compared the impact of the outbreak on the retail sector “to waking up in the fourth quarter of an American football game behind by three scores.” To wit, PVH zeroed in on anything to do with ecommerce to satisfy the consumer. 

It’s a familiar theme playing out across several sectors, with 305 CEOs surveyed for Gartner’s 2021 CEO Survey citing digitalization (18%) and ecommerce (16%) as their top business priorities for the year. For its part, PVH doubled down on ensuring that consumers could purchase its goods online from any connected device and receive them quickly, an initiative which garnered PVH a US CIO 100 award.

Betting on a new order and delivery paradigm

The COVID-19 closings posed two problems for PVH: Inventory at its third-party logistics provider was insufficient to fulfill spiraling demand, while inventory turnover stalled at stores across the country. To mitigate the effects, PVH elected to fulfill demand for its products directly from its retail stores, ostensibly turning them into micro-fulfillment centers, says Brian McGrath, vice president of unified commerce for PVH’s TPG Americas.

Within three weeks, software engineers wrote and launched a service to fulfill orders from megastores, starting first with Calvin Klein underwear products and Van Heusen women’s apparel. While micro-fulfillment was on PVH’s strategic roadmap, the pandemic “forced us to do that fulfillment in micro-location immediately,” McGrath tells CIO.com.

Throughout the summer PVH expanded its capabilities and assortment to increase the throughput of store fulfillment, including simplifying the picking process in stores, reducing the amount of paper printed and integrating to FedEx for automated fulfillment. By September, the tech team had built enough capabilities to fulfill product orders from its internal distribution center in Jonesville, N.C.

Like most retailers, more than 70% of PVH’s consumers transact from mobile phones, with the percentage exceeding 90% during Black Friday. Consequently, PVH knew it had to augment the ecommerce experience for mobile users. In parallel with its buy-online, ship-from-store efforts, PVH trimmed a full second off its mobile website experience while creating a “mobile-first” checkout experience by reducing the clicks to purchase by consolidating steps and reducing customer errors.

The engineering team also deployed a website chatbot to resolve the most common reasons for contact, such as queries about order arrival times and return processes, without the assistance of a customer service agent. Offloading such transactional outreaches helped reduce wait times for customers, notching a 40% success rate in solving consumers’ questions while enabling service teams to focus on more high-value contact. PVH also introduced post-purchase email outreach, providing consumers updates about their order status, as well as potential delays, which helped reduce customer calls.

Tackling time-to-market with a hybrid delivery model

To achieve this during the pressures of the pandemic, PVH had to work quickly, opting to instantiate a hybrid operating model for software delivery, McGrath says. This hybrid approach included the project-based model in which it delivered software in the traditional waterfall model, along with the emerging product operating model prizing agile delivery cycles.

For instance, the ship-from-store initiative was delivered as a minimum viable product (MVP), with new features introduced in two-week sprints, eventually building up to its full-fledged form leading up to Memorial Day, McGrath says. Meanwhile, PVH handled the website conversion in monthly (and sometimes longer) sprints, with each sprint targeting a specific page in the redesigned checkout flow, starting with the payment process before perfecting the shopping cart experience.

Getting buy-in for the hybrid delivery model required smooth change management, powered by communication. Once executive leadership communicated the go-forward plan, leaders ensured the new approach cascaded down through the organization, Bolger says. “We first had to get the associates to think the same way and align on that thought process,” Bolger says. Already operating in agile fashion, PVH’s customer service crew continued to serve shoppers, albeit via their laptops from their homes.

Sifting through data for ecommerce gold

A data-driven approach helped supercharge the ecommerce efforts, boosting conversion rates and reducing errors while growing customer satisfaction.

For its mobile site conversion, PVH measured the impact of its upgrades to bounce rate, average order value, and cart abandonment rates. It evaluated error messages, looking closely at gaffes that yielded high impact. For instance, it detected 12 different errors in checkout that crimped the user experience. After fixing these issues, PVH tracked near 100% conversion rates on future customers who would have seen these errors.

The efforts paid off, as the company netted a 70% boost in ecommerce, according to PVH’s third-quarter 2020 earnings report. The ship-from-store channel delivered over 120,000 orders to consumers. Shipping from its Jonesville warehouse fueled 30,000 units daily incremental shipping capacity during the holiday peak.

Of course, optimizing site conversion is an evolving process. To that end, PVH is also exploring how to personalize product recommendations to each shopper, a Holy Grail achieved by Amazon.com and select others using data analytics to improve the customer experience.

“Our senior leaders want to be fact-based and the way to do that is to have the right analytics systems in place and have our associates take advantage of that information and use it,” Bolger says.