JEM Retail Consultants providing services in buying and merchandising, Programme Management, IT services and Logistics & Warehousing.

Tuesday, 22 October 2013

What Does Omni-Channel Mean and Can Every Retailer Deliver It?

Firstly what is omni-channel? The Webcredible report in 2012 defined it as "Doing multi-channel properly". It is delivering a seamless experience to your customers and "ability to choose any technology or communications channel they wish, at any time, anywhere."


Omni-channel is an open platform approach that enables the customer to see the retailer as a brand rather than a channel within a brand. From the customer's perspective they are able to make a purchase online, in store, on a mobile app, on the phone etc and have access to the same full product offering and stock availability.

Once purchased the customer then has the ability to decide time and place of delivery e.g. home, office, store. Perhaps the trickiest technical piece of the jigsaw is for the (returning) customer to be recognised immediately they start the transaction and have any previous delivery information, payment and credit information presented to them thus reducing the transaction time and continual re-entry of information.

Within the retailer's technical infrastructure all channels must work from a single database of products, prices and promotions and the all important customer history and information must be readily available to any device / point of sale. The bricks-and-mortar stores must become an extension of the Supply Chain.

The Webcredible report acknowledges that "Generally omni-channel is not being done well at the moment" and "Fully developed omni-channel experiences (such as Burberry's) are only currently feasible thanks to innovation and budget that can be justified in flagship stores for exclusive brands".

So is "omni-channel" just the latest buzzword or is it an essential development that retailers can't afford not to invest in? Consider the following scenario:

It is a Thursday afternoon. Your customer, a regular though infrequent shopper, calls into your flagship city centre store on her way home and sees a dress that she likes in your sale. In a hurry she doesn't try it on and leaves your store.

30 minutes later she is relaxing in her train seat and decides to take advantage of your mobile app. She saves the dress along with 2 matching items to view them later. Once home she accesses your website through a tablet, retrieves the saved items and asks for them to be sent to her nearest store, which happens to be a concession, with the intention of trying them on before deciding to purchase.

As it is the end of the season the concession only has stock of one of the items. Your DC has one of the others, but only your flagship store has the third. No one place has all 3 items in the sizes required. All the items were available to the customer as omni-channel displays 100% of the stock irrespective of physical location. To add to the challenges the Department Store where the concession is based will not take deliveries on a Saturday.

The first issue is that the software has to take the customer's order and use it to generate instructions to 3 different places: 1) the concession that the customer will visit 2) one other store to tell them to move an item to the concession and 3) the DC to move the item that will complete the order.

Secondly there is a big issue here with timing. The order was placed on a Thursday evening and the customer, may arrive as early as 09:00 on Saturday. While this may (I repeat "may") be possible from the DC, how many retailers would be able to complete the inter-branch transfer within the required timescale?

Next is cost. This order will generate 2 exceptional item movements and will inevitably generate additional cost. As the customer's perception is that they are buying from a store they don't expect any of this to be passed on to them and it will therefore come out of an already diminished margin.

Finally there is service. The customer has high expectations of the way she will be treated at the store, which given that it is a concession may not even be by your employees. It should also be noted that she doesn't perceive herself to have actually bought the items yet. If she doesn't turn up on the Saturday, or decides not to purchase one or more of the items then it won't be a return, it will never have been a sale.

Under these circumstances isn't it more realistic for most retailers to restrict the customer to a home delivery option at the point of ordering? After that everything becomes logistically much more straightforward and the costs easier to control. Surely it is better to do this well than attempt something more complex and fail?

Whilst the desire is to be omni-channel, the execution may not be if you want to a) make money from the sale and b) satisfy customer expectations, which has got to be what it is all about. As a customer I don't mind being restricted to home delivery, or receiving multiple parcels, all I want is what I ordered. As long as the interaction with the website lets me know what to expect, why would I really care?

Surely the key thing has got to be: don't promise what you can't, profitably and reliably, deliver.

Written by Mike Gamble: Director JEM Retail Consultants.

No comments:

Post a Comment