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Omnichannel Isn’t Dead – It’s Just Difficult

Not even five years ago, I was startled to hear giggling and verbal backtracking anytime someone mentioned the word “omnichannel” at the annual NRF conference. Every speaker, at the time, had to had to caveat their statement with how they hated the word or acknowledge how big of a buzzword it had become. You could even search “omnichannel is dead” online and see thousands of hits.

So why were folks still talking about omnichannel if it was going to be spoken about in hushed terms? Well for one, “unified commerce” didn’t really roll off the tongue as well, and ‘unicommerce’ just sounds weird. More importantly though, regardless of what it’s called, there are still plenty of retailers who have yet to move away from siloed channels toward an ‘omnichannel’ or ‘unified commerce’ approach. We keep talking about it because it isn’t easy, making the first step daunting for those yet to take what will most certainly become a mandatory journey for survival in today’s retail marketplace.

Technology Challenges

For retailers who are behind the omnichannel curve, there are likely technical challenges to achieving what the ultimate goal is – opening up inventory across the network to customers, regardless of where or how they are shopping. Real-time inventory is not widely accessible throughout these organizations and legacy systems are not equipped to handle the sophisticated routing necessary to make “ship from anywhere” an executable, cost-effective concept. This forces a key decision – to implement modern systems capable of handling the decision making while maintaining the in-house control of the process, or to partner with a third-party who can handle it for you. Either strategy can work for an organization, but both are significant investments with pros and cons that need to be measured appropriately.

Inventory Challenges

Opening up stores to operate as fulfillment centers is not simply a retail technology challenge. It can fundamentally challenge the way brands approach inventory management. If the ultimate goal is to have product available when, where, and how the customer wants it, then inventory needs to be staged in the network to make this a feasible goal. For brands that operate with lower inventory on the shelves and little back-room space, there won’t necessarily be the volume available to ship or for in-store pick up. The product mix at stores, along with the inventory levels available, could either drive the omnichannel strategy for a retailer or need to be adjusted to allow for new functionality such as buy online, pick up in store. Simply plugging in the technology won’t boost the top line if the product isn’t there to be purchased to begin with.

Store Operations Challenges

Often times when thinking about a change such as this, the focus is put on technology or the supply chain, and one key aspect is left behind: the store associate. The associate plays a vital role in the store, serving as the driver of positive customer experiences. Brands that don’t pay proper attention to the impact of the in-store aspects of omnichannel are risking their overall experience for the benefit of potential incremental orders. Ensuring that associates are both properly trained and incentivized to participate in cross-channel commerce is essential to the overall success of the initiative. If an associate doesn’t get commission on an order that they place for a customer in-store simply because it’s fulfilled elsewhere, what is the likelihood that they will consistently offer it up as a service? If there is not sufficient space in the store for staging, packing, and shipping orders – how does that impact behavior? The technical investment will be a waste if associates aren’t on-time with picking orders in store. These are all aspects that go into deploying an omnichannel strategy and can’t be left as an afterthought. Without a doubt, both the customer and store associate experience have to be a central tenant of any omnichannel strategy.

Regardless of the term you call it, omnichannel remains a must for retailers but a challenge, nonetheless. Having a holistic strategy that encompasses people, processes, and technology is mandatory for success. The rollout of functionality will likely be driven by what is cost-effective and will gain the biggest bang for the buck, but no matter what the strategy, retailers must be prepared for a massive change to their operations.

For guidance on navigating the evolving retail landscape, connect with one of our retail experts today.

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Tags: Retail Planning and Execution, Specialty Retail, Supply Chain Technology