April 28, 2016

Omnichannel retailing is not only picking up speed, it is practically exploding

Erik Nyré

Head of CEM Consulting, Tieto

Driving customers to the store is a good opportunity for retailers to create add-on sales as well as engage with the customer on a deeper level than what online currently offers, and thereby create increased loyalty.

The retail transformation from multichannel to omnichannel

According e.g. to research by HUI and PostNord (1), by 2017 60% of all retail sales will involve internet somewhere along the shopping journey. Also, in Sweden, mCommerce has doubled 2014 to 2015 from 11 to 20%. Some of the fastest growing categories of online sales were Toys and childrens ware at 49%, Groceries at 43% and Building products at 41%, showing that ecommerce today is popular across the board of completely different product areas.

Current customers are also more and more expecting pick-up in-store after ordering on-line. Reasons for the increased adoption of click-and-collect and ship-to-store come both from a wish to avoid shipping costs, as well as the possibility of faster access to the purchased product, rather than waiting several days for a home delivery. Lastly, in a survey by LoyaltyOne (2), 68% of respondents said they would visit the store to pick up their online purchase for discounts as small as 1% and 15%.

Driving customers to the store is a good opportunity for retailers to create add-on sales as well as engage with the customer on a deeper level than what online currently offers, and thereby create increased loyalty.

Composition, continuity and consistency

So, what are customers expecting from their omnichannel shopping experience today?

Composition means that the functionalities offered in each channel is in line with what the customer is expecting in that part of the customer journey. This could e.g. mean the possibility to place an order when browsing on your mobile or the access to a customer service rep when visiting a store.

Continuity means that the transition from one channel to the next is completely seamless and synchronized. Initiating a purchase on my mobile by placing a product in the shopping basket should enable me to continue the purchase of that same product on my laptop later the same day.

Consistency is very much about the customer getting the same overall experience irrespective of channel. This could be both in the form of coherent visual designs but also as the perceived quality and scope of customer service, whether be it online or in a store.

So, where do you start?

  1. Understand the why – When starting any major business transformation, the objectives should always be clear. It is easy to feel stressed because every competitor is investing large amounts in their omnichannel capabilities, but then it is still important to stay calm and assess the concrete and relevant needs of your particular business. In one recent project, we found the client was ready to invest in full omnichannel capabilities at once, but if this is not anchored in a strategic direction and connected to key business KPIs, the challenge will always be to align with the management team to support the initiative. Just ”doing everything” is not the solution, as it will dilute your resources and in the worst case lead to disillusionment from employees as promises cannot be delivered. Also, technologies are changing so fast today, that an agile approach; to test and to learn, is usually recommendable. 
  2. Understand performance of current channels – channels today do not operate in solitude. Even though no structured omnichannel strategy is in place, channels still influence one another in different ways. Important is to understand how. For example, is the online webpage a good place just for content browsing or actually driving traffic to the stores? How many customers who visit the store has found the brand online first? And how many customers who have visited a store actually would prefer to purchase a product via web or possibly even mobile? Understanding these usage patterns and customer needs helps position the use of channels also in the future omnichannel setting.
  3. Prepare to manage channel conflicts – a classic example of channel conflict in omnichannel retail occurs as revenue starts to move from the historically strong brick-and- mortar stores to online. Setting a clear revenue sharing model in place, based on e.g. proximity to store of online customer, is one way of starting to overcome that conflict.

These are some of the first key steps retailers should consider when starting to strengthen their omnichannel capabilites. For most, this will be a trial and error approach, but doing the strategic homework before starting may well prove to be a good investment.

Want to know more? Visit www.tieto.com/cem or contact me directly erik.nyre@tieto.com

Sources:
1. Postnord/ Svensk Digital Handel/ HUI Research, eBarometern Q2 2015
2. http://www.emarketer.com/Article/Retailers-Must- Make-Buy-Online-Pick- Up-In-Store- Worth/1011831

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