Omnichannel – Delivering An Enhanced Shopper Experience

The Real Miracle on 34^th Street: Omnichannel

In the holiday classic, Miracle on 34^th Street, Ed Gwynn as Santa Claus sends Macy’s shoppers to other stores to fulfill children’s holiday dreams. Instead of condemning this heresy, Macy’s embraces it as the greatest sales gimmick ever: “We’ll be known as ‘The Helpful Store.’ ‘The Friendly Store.’ ‘The Store with a Heart.’ The store that places public service ahead of profits. And consequently, we’ll make more profits than ever before.” And of course, it didn’t take long before arch-rival Gimbel’s was doing the same thing.

It made for a great movie, but could it happen?

As more and more retailers embrace omnichannel technology, it could be just around the corner.

Omnichannel is – roughly – combining bricks and clicks to deliver an enhanced shopper experience, increasing sales and building loyalty. In essence, omnichannel combines the capabilities of both in-store and online purchasing. Order online and pick-up in the store. Buy in the store and have it shipped to your home. Can’t find it in your store? No worries – the salesperson checks inventory, finds it at another store and has it shipped to you at any store or to your home. And then do everything in reverse if there is a return.

So why not help the consumer by finding what they want at a competitor? They are checking on their phones, anyway. If you can’t beat them, join them!

While omnichannel sounds like a shopper’s dream, it is currently a huge challenge for retailers. Many brick-and-mortar retailers start their e-commerce or online shopping efforts as a completely separate division. There was no need for integration between traditional merchandising and “those internet people.” But now, to create the seamless shopper experience enabled by technology (and delivered by pure e-commerce players like Amazon and Zappos), traditional retailers are struggling to catch up.

Here are five key challenges for retailers seeking to win at omnichannel:

That said, the following are 5 of the top Omnichannel logistics challenges retail business face today:

1. Lack of real-time, cross-channel inventory visibility. In omnichannel retailing, it is crucial that everyone know to the second where each piece of inventory is located and its status. Is someone trying on that shirt in San Francisco while some other customer is looking at it online? Many traditional retailers have legacy inventory systems that make omnichannel retailing difficult to impossible.
2. Segmented Supply Chain Processes. Large, traditional retailers have many distribution centers, managed by different in-house and outsourced operators, running on different systems – and therefore, they employ different tactics to ensure their supply chain runs smoothly. Consolidating supply chain processes is key to omnichannel capabilities.
3. Sustainability of a Speedy Delivery. Consumers’ expectations of “speedy delivery” – and how much they should pay for it, if at all – are being influenced by competing online retailers. Bricks-and-mortar retailers may have a challenge to meet those delivery requirements because of their physical and technology infrastructure.
4. Transportation Innovation. Traditional retailers did not worry about getting the product from the store to the consumers’ house. The consumer took care of that for them. So, to deliver products in a way that meets consumer expectations, retailers must develop a new competence in innovating transportation to keep costs low and service high. (Can you say, “drone?!”)
5. Ease of Return. As important as delivery is in the omnichannel world, taking an unwanted product away (returns) are just as important in the shopper experience. Making returning a product as easy as buying it is key.

Progressive Insurance has built their offering around presenting you with three quotes – even if they are not the lowest. So will there be a day when your Macy’s salesperson sends you down the mall or to another website so you can purchase what you want from a different retailer at a better price? Not in the near term. But an improved cross-channel shopper experience is an imperative for retailer success: IDC estimates that cross-channel shoppers have a 30% higher lifetime value than shoppers who only use one channel. What retailer can afford to risk that?

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