Want to become an omnichannel retailer? Here’s how
I get asked a lot about omnichannel retail. A few years ago, it was just a buzzword but now it’s at the forefront of boardroom thinking. So, what is omnichannel? Why does it matter? and how do you get there?
First let’s get our terms sorted. You’ve probably heard a lot about multichannel and omnichannel and its fair to say many use the terms interchangeably.
Multichannel vs. Omnichannel
Multichannel describes a retail environment where customers have a choice of channels to interact and engage with your brand based on their preferences. Whether it’s researching online or buying instore, the customer may transition between various channels as they complete their tasks.
e.g. A customer notices a Facebook ad, visits a web shop, selects an item, buys and has delivered to their door.
But there are limitations to multichannel
Multichannel retailers often design customer experiences with an ‘inside out’* mentality. They often organise themselves into channel silos where performance and focus is channel singular. In some instances, channels are incorrectly seen as competing against one another or cannibalising sales. This is often the case when a traditional bricks and mortar retailer launches an online store.
Multichannel experiences can often be frustrating for the customer. With the rise in the number of channels, comes the growth in potential headaches for retailers. A multichannel brand that has a separate team running an online store vs. a network of physical stores might find itself offering inconsistent prices or product ranges. Customers are often frustrated when it becomes clear that channels are not integrated with data shared between them.
e.g. a customer places an online order only to find no-one can help when asked questions about it instore or over the phone.
Okay. So what’s omnichannel?
Omnichannel is a development of multichannel. It too recognises that customers can transition and transact across multiple channels. It merges together the offline and online world.
The core difference is in how seamless the experience is for the customer. In an omnichannel world a customer will find shopping effortless as each channel is integrated and works together. Channels complement one another with data and technology helping customers to complete their tasks faster and more effectively. Omnichannel retailers tend to adopt an ‘outside in’** approach to customer experience design. They design experiences based on customer need rather than on business capability. Omnichannel retailers are adapt at exploiting trends in channel and customer behaviour. A customer showrooming*** in a multichannel store is perceived as a risk and shown the door. In the omnichannel store they’re provided with free Wi-Fi so they can engage with the brand and product catalogue online.
There’s opportunity in Omnichannel
For retailers pushing towards omnichannel, the case for change is obvious and the rewards worthwhile. Omnichannel will allow retailers to build deeper and more engaging relationships with customers. The speed and efficiency of shopping will encourage loyalty and repeat purchases. Increasing competition means retailers are striving to maintain loyal customers by providing the most seamless cross channel experiences. Retailers that fail to meet this growing demand from customers will ultimately fail.
You only need to look at the numbers. A recent survey by Nielsen found that 60% of consumers researched online before making a purchase instore. Another statistic from Deloitte showed that 22% of consumers spend more instore when they have looked online first. Retailers who fail to offer a multichannel and omnichannel experience will simply see customers go elsewhere.
Moving towards omnichannel status requires significant change across data, technology, culture, organisational design, processes and people.
Becoming an omnichannel retailer isn’t without it’s barriers. So what could hold you back?
1. Antiquated IT systems — technology that was built for a previous age will need to be replaced. A new connected warehouse that speaks to stores and a website will need new fulfilment technology. An experience whereby a customer orders online but picks up instore will require tracking and notification technology. In some instances, technology will need to be enhanced, replaced or built from scratch.
2. Out dated processes — omnichannel will require new processes to be built. Returns handling alone is a significant amount of process re-design.
3. Poor quality data — without real-time, high quality, accurate data omnichannel retailing is impossible. Customer data will need to be cleansed and validated to ensure personalised experiences. Defining data requirements for both the customer and business will take considerable effort and time. It is likely that an entirely new data framework and architecture will be required.
4. Lack of unified information — In an omnichannel world inconsistent pricing and product range information isn’t acceptable. A lot of work will be required to unify pricing and product information to ensure consistency and standardisation across channels.
5. Fear of change — stakeholders across the business may be unsure what a move to omnichannel means to them. Some will fear the impact online might have on more traditional channels. Channel ‘owners’ might be wary of collaborating for fear of seeing their status downgraded.
So how do you build an omnichannel retail business?
- Pull together a team of A-Star players.
Bring together a cross functional team that will collaborate to build your retail future. Make sure you have a single responsible owner and representation from all the required business areas. Include people from product development, brand, marketing, store estate, digital and supply chain. Never leave out IT or HR — you’ll only regret it later. Make sure you have strong project management skills in place and defined ways of working to ensure success. Foster an environment where debate is okay, failure acceptable, learning a must and alignment overrides agreement.
2. Start with your customers.
Explore existing segmentation work you might have commissioned in the past. You can use segmentation data to help build personas. Personas are sometimes criticised for lacking data, but they’re essential if you are to design future retail experiences to meet customer expectations.
3. Define your omnichannel vision and proposition.
Bring your A-team together to define and align on an omnichannel vision. Spell out what your ambition is and what success will look like for both the customer and the business. Consider defining some targets and KPIs to give the business focus.
Outline what the proposition will be for customers. Articulate how omnichannel will benefit them and how the business will meet their needs and wants. Once you execute in the real world it’s the proposition that will help you judge whether you’ve been successful or not.
4. Build some typical omnichannel scenarios.
Develop a small number of futuristic end-to-end scenarios that align with your overall strategic omnichannel ambition and goals. A typical scenario might be a customer that browses instore, orders online, tracks using their mobile and picks up instore. These scenarios can be documented in written form or visualised as journey maps. Remember to look at what other innovative businesses are doing in this space. Use that insight together with trend insight to ensure you’re designing for the future and not the here and now. How you proceed is up to you, but try and avoid creating beautiful PDF journey maps that stay stuck in the cloud. We’ve all been there!
5. Catalogue your capabilities…and don’t worry there will be loads of them.
Each customer scenario will contain a multitude of capabilities. An example capability might be ‘click and collect’. Here the business needs to be able to process an online order and have it ready for the customer to pick up when required. In a typical scenario you could have dozens of capabilities if not more.
6. Define your requirements (from a customer and business perspective).
When writing customer requirements always write it from their point of view using and starting with ‘I’. An example could be: ‘I can review shipment options and select a method of delivery and time window for delivery’.
When writing business requirements you need to think of the process, people, technology, data and systems impact each customer requirement will have on your business. The click and collect example means you will need rigorous processes to handle stock movements while correct customer data is critical if you want the package delivered to the right person at the right time.
So now you have your vision and proposition defined. You have a set of scenarios that show what the future will look like. You have documented and catalogued your capabilities, customer and business requirements.
But how do you actually build that future?
By adopting agile development.
This is where your project or programme team will probably need to change. Some of the same people will be involved but others may drop out with new additions joining the group.
The job of this team is now to build, build and build. But before they do they need to prioritise scenarios and capabilities so that they know where to start with building your omnichannel future. Prioritisation can be done a number of ways but it’s often a case of looking at customer and business impact and benefits. You’ll also need to consider a mix of quick wins and longer term activities. This is essential if you’re to avoid spending all your time on small things while ignoring the big return on investment items. You’ll also want to avoid putting all your energies into big ticket items which don’t materialise quickly. This is often how big programmes stall when those outside the group see little change on the ground.
Once you have your prioritisation in place it’s time to build. Like any agile programme your team will be delivering capabilities incrementally. These might be as proof of concepts, pilots or experiments. Over time the capabilities will become more sophisticated.
By now you’ll have a road-map of capabilities that will be delivered across the year or however long your programme lasts. In time as capabilities are launched the scenarios you designed at the beginning will come to fruition. Once your scenarios are live experiences it then comes down to measuring the customer experience to see how well you’ve delivered against your vision, proposition, business case and KPIs. Like any business improvement programme there is no real end. The team will need to focus on continual improvement before the next round of transformation begins.
If you’re a retailer looking to jump to multichannel or leap frog to omnichannel then check out our website to see how we can help. At Strategy Activist we work with businesses to help design their future and ensure they survive and thrive. www.strategyactivist.com
- *inside out — the culture in a company where the business thinks about itself before considering the customer.
- **outside in — the culture in a company where the business thinks about the customer before itself.
- ***showrooming — the act of checking out a price instore and then sneakily checking Amazon. Yep I’ve done it too.