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The adoption and economics of 'omnichannel' retailing

Thursday July 12 2012

Multichannel retail expert Andy Tudor comments on the move in retail from ‘multichannel’ to ‘omnichannel’. He examines what this might mean for the industry and what kind of take-up the industry can expect for this new distribution model

Multichannel retail expert Andy Tudor comments on the move in retail from ‘multichannel’ to ‘omnichannel’. He examines what this might mean for the industry and what kind of take-up the industry can expect for this new distribution model


Over the coming year, retailers who are already looking at the different ways in which their customers transact with them will start to introduce new IT initiatives to turn their plans into reality, predicts Andy Tudor, head of multichannel solutions at Retail Assist. He said that many are starting to espouse omnichannel and see it as “an all-encompassing ‘win-win’ interface that enhances customer convenience and satisfaction while increasing the retailer’s ability to secure sales”.


Maximising technology opportunities


Based upon the work being currently undertaken by, what Tudor referred to as, "the most forward-thinking of our clients," he forecast the following developments:


Mobile payments – expect to see significant trials of mobile payments, marking a move beyond today’s mobile-optimised websites and mobile apps to focus on linking different channels. The goal here is a scenario whereby customers start to research purchases on their mobile, then go into a store to confirm their choice, possibly completing the purchase on their mobile device as well.


"With the adoption of NFC payment technology we will see organisations such as the London Underground use this payment technology to replace their Oyster cards" he predicted. "Once mobile payment technology is implemented widely within the public sector, we believe any resistance to using it within retail will lessen."


Reduced fixed-till usage – Tudor anticipates a move away from fixed tills. "We’ve already come across several tablet trials and, as platforms such as Windows 8 start to come out, we may see a real challenge to Apple’s monopoly. Tablets offer an added level of instore customer interaction, which is particularly important for retailers whose product price-points or overall basket values are higher," he explained.


Social networking – The multichannel expert contended that social networking has already proved its worth by enabling retailers to better understand their customers. "We’ve seen executive board members respond to Twitter feeds and Facebook comments," he said. "At an operational level, we also see retailers studying live Twitter streams to gauge consumer reaction to new product launches. We predict that social networking practices will be widely introduced into the workplace and become an integral part of a retail organisation’s communications culture."


International websites – here Tudor highlights considerable expansion. “We will continue to see dedicated websites, which will break down the barriers to international trade and permit customers to shop in their native language and currency.”


Assuring investment returns


But what about the economics of these new omnichannel initiatives? In simple terms, can the retail industry afford them?


“While few deny the importance of omnichannel, we see differing levels of investment in this area, not surprisingly,” Tudor responded. “Some retailers are making good progress and are integrating their channels seamlessly. Others are simply making sure that financial pressures are well managed and are not investing in omnichannel this year.”


Those retailers that have decided to embark upon omnichannel developments are at different stages of the journey. “At one extreme, we see some who have yet to embark on a mobile strategy, still trading via ‘bricks and mortar’ stores or on the web,” added Tudor. “At the other, we are working with businesses at the forefront of omnichannel, which have already merged their channels and have achieved the goal of enabling customers to start product research using one channel, and make their purchase using another.”


Behind the scenes, he observed that those clients leading the omnichannel charge are joining up their fulfilment processes and making their stock and inventory work very hard. “In cases where a web purchase cannot be fulfilled from the distribution centre (DC) because it is not holding product in stock, we see product coming from store to complete the process; a great example of omnichannel in practice,” he added.


“Today, the buzz is omnichannel, and is all about the customer shopping the brand as opposed to shopping the channel. A consistent brand and shopping experience can be provided regardless of the channel chosen. That’s real progress,” Tudor stated.


He concluded: “If a retailer gets omnichannel right, there are clear financial benefits to be gained. A client of ours who has enabled fulfilment from stores as well as via the DC for web purchases attributes a 20% sales uplift on a like-for-like basis in the eight weeks before Christmas 2011 to this new approach. This is a very significant return on investment, and one that clearly justifies the initial capital outlay.”


Retail Assist is a retail only IT services and solutions provider. Andy Tudor would welcome reader comments at