The current retail environment is undeniably hypercompetitive, characterised by relentless change and staggering technological transformation in the last decade. The rise of eCommerce, mobile phones and increased importance being placed on the customer experience has completely altered the retail industry, with companies all clamouring to stay ahead of the trends.
The changes and opportunities that have arisen from this drastic transformation has left merchants questioning how their business can best serve the increasingly demanding customer, provide an enhanced, barrier free shopping experience and achieve brand differentiation while remaining financially afloat.
These are difficult questions to answer, but solutions are starting to slowly emerge.
A recent study of 350 leading global retailers by Brightpearl seems to show sweeping consensus from retailers on the solution to their conundrum – implementation of an omnichannel strategy. Over 90 per cent of retailers and brands have an omnichannel plan in place or are looking to invest in one soon, with 87 per cent regarding omnichannel as important, if not critical to their business.
So, what is omnichannel?
Omnichannel retailing is an approach that seeks to provide the customer with a seamless and consistent shopping experience. Merchants strive to provide unity whichever channel the customer is using to purchase products, be that a desktop or mobile device, by telephone or in a bricks and mortar shop.
To ensure that omnichannel strategies are implemented successfully, merchants must use software to centrally manage their back office processes, such as order fulfillment, accounting and inventory management. This will guarantee that the different sales channels work cohesively and avoid any problems with stock shortages and the suchlike.
As seen in the recent survey, retailers overwhelmingly agree that omnichannel technology is integral to their success and that they should execute these strategies as a main business priority.
However, the reality for these companies paints a much different picture.
Even as merchants consider omnichannel vital to their business, only 12 per cent believe they currently have the right technology in place, with a meagre 8 per cent claiming they have actually mastered their omnichannel approach.
Clearly, while interest in omnichannel is high among retailers of all sizes, they need to significantly improve their strategy execution.
It is no longer enough for companies to pay lip service to omnichannel without doing it well. Customers now demand a rapid, convenient and seamless experience, be that online, via mobile or in-store. They expect the retailer to know them, and provide a positive and personalised cross-platform customer experience.
Businesses cannot expect to implement omnichannel strategies as a quick fix without taking full responsibility for the technological commitment necessary to fully benefit from their investment.
So, the question remains: why is the omnichannel gap so large?
1) Cost of technology
Integrating various sales channels into one single, consolidated platform has obvious advantages for retailers; the ability to capture and analyse data, learn deep insights about customers, and support rapid, and informed business decisions.
However, costs associated with adopting omnichannel technologies can often prove a barrier to merchants looking for software to aid implementation of their strategy. This is short sighted as siloed data, disparate, expensive legacy systems, and an over-reliance on time consuming processes will prove costlier in the long-term.
The cost barrier could explain the gap between retailers who have simply constructed an omnichannel plan and those who believe they are executing one successfully, with the most effective technology platform in place.
2) Proof of value
Legacy retailers can be slow to embrace new technologies as a crucial part of building a future for their company. After achieving success in a time before omnichannel, it is easy to disregard as a non-essential addition to the business. However, to dismiss omnichannel is to misunderstand the benefits retailers can reap from adopting the technology.
There seems to be a lack of real consensus on the advantages of an omnichannel strategy. This, coupled with confusion at the top management tier of businesses around the technology’s capabilities is holding retailers back from executing their omnichannel plans to the highest standard.
The gap needs to be fused between visionaries who see how ideal things could be if strategies were carried out to the best of their ability, and pragmatists who just want to make it work.
Visionaries understand that today’s customer expects both instant gratification and higher levels of personalisation - they expect retailers to know him or her. This is made difficult when merchants spend considerable time on cost-consuming backend processes while using multiple avenues to engage customers. Instead, technology that automates back office processes like order fulfillment, carrier integrations, and integrated purchase ordering, can drive back office efficiencies -- freeing retailers to focus more time on creating positive, personalised and consistent customer experiences across platforms.
The industry is moving at such a rapid pace and retailers looking to keep up should be looking at what a true omnichannel business with proper innovations could look like.
3) Need for speed
In the current period of swift and thorough transformation across the entire retail industry, companies no longer have the luxury of time to come to terms with new technologies.
Businesses like HMV, for example, failed to anticipate the relocation online of their industries and went into administration as a result. Had they been more invested in new technologies and had applied them to their business models, they could still have been trading today.
Retail technology will continue to evolve and the face of the sector will shift with each new development. Merchants need to anticipate and understand the value of the opportunities in front of them and respond to rapidly accelerated change or face being left behind.
Trust is always a tricky subject when it comes to technology but merchants cannot waste time trying to reconcile their former practises with the new way of operating within retail.
The difference between retailers executing highly effective omnichannel strategies and those who are simply implementing them is that the former has accepted that technology is now an integral part of their business.
Those businesses are now using technology to form the bedrock of their omnichannel strategy, and as a result are much better placed to deliver an authentic omnichannel experience for customers and achieve retail success.
5) Lack of real commitment
Merchants looking to bridge the gap between simple implementation and successful execution of an omnichannel strategy need to dedicate significant time and resources to their plan.
It is not enough to just adopt the technology. Developing the ability to deliver the rapid choice, convenience and seamless experience, be that online, via mobile or in-store, that customers now demand, requires merchants to allocate adequate resources to their omnichannel strategies from the outset.
It is clear that merchants do understand the benefits of an effective omnichannel strategy. More than 90 per cent of said that they either have such a plan in place or intend to invest in one soon, with 60 per cent believing the key payoff from implementing omnichannel successfully is providing better customer service.
Bridging the chasm between omnichannel adoption and execution requires an agile technology solution that unifies the multiple cross-channel sales systems and provides a single, consolidated platform, that frees merchants to better serve customers and provide a barrier-free shopping experience
The power of omnichannel is undeniable. The companies that use the right technology to form the foundation of their omnichannel strategies will be those who reap the full benefit of the innovation, setting themselves apart in the process.
The time will be upon us soon when authentic omnichannel experiences will be expected as standard within retail. Businesses need to ensure they have the right systems and technology in place for when that day comes or risk becoming extinct.
Derek O’Carroll, Chief Executive Officer, Brightpearl
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