Posts Tagged ‘Omni-Channel’
Omnichannel Differences in the US & Europe
15 years ago, we embarked on the first “multichannel” retailing study for the National Retail Federation, during the midst of the Dotcom Bubble era. Little did we know how long it would take before retailers truly committed to the long journey we now call omnichannel or cross channel retail strategies. Today the ubiquity of “omnichannel” is enough that the mere mention draws a grimace or a roll of the eyes from industry insiders, similar to other industry buzzwords like “big data” and “customer centricity”.
Despite this growing cynicism, the retail industry marches forward at a steady pace of omnichannel development with each passing season. We’re still excited to see new developments emerge that will change how retailers win the hearts and wallets of shoppers. Macy’s announcement of their latest wave of omnichannel capabilities sets the bar higher: ApplePay in-store, same day delivery in select markets, national rollout of in-store pick up, enhanced mobile apps and pilot tests of digital tools in-store (associate and consumer-facing). In the same week, Staples similarly announced a range of new cross channel capabilities to position themselves as innovative leaders, and Whole Foods launched their own version of in-store pick up.
But how does all of this US omnichannel development stack up against European retailers’ drive towards omnichannel innovation?
In recent years, among our Ebeltoft Group of retail consultancies, we have benchmarked global cross channel capabilities and a vast wave of retail innovation driven by digitally-infused retail concepts. The global trend is clear, but some findings such as the more advanced omnichannel among UK specialty apparel retailers (vs. US retailers) were a tad surprising. Some of the most innovative new concepts, born of the digital world and transforming into physical store retailers (Emmas Enkel or My Meusli) are award-winning German retailers. And while many leading European retailers started later than their US counterparts, their commitment to omnichannel has been impressive.
This week, I will speak at an Amsterdam retail event on omnichannel strategies and will have the opportunity interact first hand with the retailers who are “raising the omnichannel bar” in their markets. The competitive intensity within mature, slow growth retail markets of Western Europe are macro drivers pushing retailers to find new sources of advantage, and we’re quickly seeing many retailers embrace integrated digital strategies (aka omnichannel) as their strategic priority. In many ways, we draw analogies to our work in international ecommerce, where European retailers more naturally plan for growth outside of their domestic market, and therefore have different attitudes among senior decision makers to take these risks.
We will report back from Europe, and the upcoming Shop.org conference in Seattle where we expect to hear even more of the latest and greatest omnichannel innovation, to share our impressions of these attitudes to embrace digital retail in our next post.
Omnichannel Challenges – Keeping Score In A Connected Environment
Multichannel retailers are responding to the connected consumer at break neck speed. The shift in their business model demands that they work horizontally across the organization, breaking down silo’s, and developing new collaborative processes. Yet in many cases the organization of human capital, budgeting and planning, and key metrics have not aligned with their new Omnichannel strategy.
We ask our clients to answer “Big Questions” to help illustrate the challenges that they will face in their shift to an omnichannel future.
Is it the expectation that the Ecommerce team will support “all things digital” within the business?
In some cases we see brand marketing taking on the role of social marketing and digital display for awareness building. But in most cases the Ecommerce team is still responsible to develop content, support brand campaigns on the site, develop the mobile strategy, and to help educate the Senior Team on how to leverage the digital infrastructure critical to the omnichannel future. In many cases, they are asked to manage vendor selection, the digital roadmap and more – in addition to driving ecommerce revenue growth. Yet, when it is time to resource the “all things digital” team, the resources are based on Ecommerce revenues. We encourage our clients to measure the influence of digital efforts on the broader business to properly resource for the Omnichannel customer experience.
In response to our suggestion to measure online influence we often hear “ We can’t always see what happens at the store and we need to understand how much of the business is incremental ”. Our overwhelming recommendation will save you time and effort. Don’t chase the incremental statistic – it’s difficult to prove and may only give your detractors the opportunity to poke holes in your analysis. Instead, determine your key metrics (e.g. customers who buy in multiple channels, cross channel customer satisfaction ratings, number of hits on the store locator or who redeem coupon codes at the store, incremental sales from “pick up in store” orders). Track what you can to develop a benchmark and look for growth. Report progress to the broad management team and reward positive influencers. This will help you align disparate teams to work together better.
When the time comes to add resources pay close attention to the skillsets that are needed to drive those customers across channels. Sometimes it is as simple as adding more copy and creative talent. Sometimes it means reducing the administrative workload of Senior resources by bringing in support personnel. Other times it is developing a core competency in an area you have been outsourcing and the new positions will require acquiring high level specialized skill sets. With the changing role of the digital team, make sure to support growth by getting the necessary resources to deliver the customer experience you envision.
Are you willing to track and reward store associates for online revenue increases in their store’s trading area?
We are asking store associates to become digital evangelists but in many cases we don’t reward them for contributing to the increase in online sales in their store’s trading areas. Or on adding incremental sales for in store pick up orders. In many cases we ask them to learn more about an extended online offering but don’t give them incentive or “time on the clock” to do so. The Container Store is an omnichannel best practice leader that allows store staff to train and learn about digital advancements “on the clock”, and this shows in their excellent store execution. Our research has confirmed that tracking and sharing online revenue within the store’s trading areas has been a game changer for most retailers.
Incentivize the behaviors you want to build upon.
Until retailers are at a point where we can look at sales in a holistic manner and reward people across channels for behaviors we want to reinforce, we will struggle with the omnichannel customer experience. Understanding that organizations will evolve, measurement tools will improve and new processes will replace old ones suggests our success metrics need to evolve too. Develop a plan to measure, report, and reward your team to support a digitally connected environment and you will lessen the friction that comes with change management.
Cross Channel and Omnichannel Definitions
First a few words about the definition and usage of the term Omnichannel. We have been working with retailers for almost two decades on integrated channel strategies. Our belief has always been that the brick and mortar stores would become the integrated point of difference for most retailers. We helped retailers develop their multichannel strategies when Ecommerce was new. We promoted Cross Channel retailing strategies as customer behavior changed and they began to demand an integrated and easy way to cross between selling channels. Then, Harvard Business Review wrote a game changing white paper titled “The Future of Shopping”, that coined the phrase Omnichannel.
There is no retail dictionary to validate the definition of Cross Channel and Omnichannel. In most cases, we see them used interchangeably. Our definitions are:
- Cross Channel Retailing is the operational interaction to drive sales, communications and supply across channels (e.g. store, website, catalog, mobile, social). We envision these integrated operations, (including human capital, content and data) to enhance the customer experience by giving her the freedom to experience the brand on her terms.
- Omnichannel Retailing is the underlying infrastructure and processes necessary to operate and execute on Cross Channel capabilities.
To say that the future of retail will look different because of the changes Cross Channel / Omnichannel retailing will deliver is a good bet. How each retailer gets to their future will be as different as the definition of the term within the industry.