Omni-channel retailing is the latest buzzword flying across the boardrooms of retailers across the UK. Put simply, it means the seamless integration of digital and physical shopping channels, including mobile commerce and social media, to achieve a consistent approach to marketing and selling goods to consumers.
If done well it will enhance customer profitability by driving loyalty and offering a high quality shopping experience with the same levels of service, range of products and flexibility available to customers regardless of the channel they chose to use.
However, in reality this is not easy to achieve. Omni-channel retailing requires a radical rethink of a retailer’s traditional marketing, merchandising, fulfilment and supply chain strategies. Tinkering at the edges of the business will not suffice.
In fact, if done poorly, a misjudged approach can rapidly erode profitability and mean that key business objectives are not met.
We have already seen a number of retailers struggle to maintain profitability while striving to satisfy the high expectations customers have in a multi-channel shopping environment. Retailers often rush to meet these expectations, before accurately calculating the true cost of their actions. This can result in the following pitfalls:
- Setting pricing and promotion strategies that drive volumes through channels which do not maximise overall profitability;
- Establishing service levels without a true understanding of the underlying costs;
- Replicating processes across channels that fail to leverage company scale;
- Offering different product ranges across channels, driving complexity and cost.
It’s often a lack of understanding of the true implications and interdependency of the decisions that are made within each channel, combined with limited clarity of the underlying profitability at a channel and product level that causes sub-optimal performance. It is critical that a holistic approach across channels is applied.
Businesses that are successful pursuing an omni-channel retailing strategy clearly understand why they are doing it and what they want to achieve. They aim to achieve business-wide standardisation in their processes, data and tools. This can really drive positive return on investment by reducing duplication and unnecessary storage of excess stock.
Striving to provide a consistent and high quality experience for customers is to be encouraged. However, it cannot be achieved at the cost of profitability.