By : NCR Retail
October 26, 2017 01:45 PM
Omni-channel has been one of the biggest buzzwords in the retail industry for years now – so much in fact, that it has lost much of its original impact. What most retailers have been working toward is actually ubiquity: simply beingeverywhere consumers are, across digital and physical channels. This alone is no easy feat, given how quickly new commerce avenues and digital innovations have emerged. Because of the rush to keep up with emerging shopping trends, retailers invested in one channel at a time, versus a holistic approach. This resulted in most retailers having an 'omni-channel' environment made up of a collection of loosely-connected systems that can’t deliver the true value of what omni-channel retailing was supposed to create. We refer to this as omni-channel 1.0.
Today, that’s no longer enough. What many retailers regard as an acceptable omni-channel strategy is no longer adequate considering the level of seamless engagement that consumers demand. Being able to deliver a consistent and personalized experience across all channels and touchpoints must be the goal for any retailer wanting to stay relevant in today’s hyper-competitive retail industry. This means current omni-channel strategies must evolve – we are now entering the era of omni-channel 2.0.
Defining omni-channel 2.0
One of the biggest issues retailers have with their current technology environment is that they are complex and inconsistent, having been built up solution-by-solution over a period of many years. Instead of one, singular, adaptable platform, most retailers have legacy systems connected through custom interfaces that aren’t efficient and certainly aren’t easy to integrate with new technologies. This means the goal of delivering a seamless, consistent shopping experience that covers the spectrum of consumer touchpoints is unreachable.
Omni-channel 2.0 is different. Rather than merely being present across channels, retailers must be proficientacross channels. This means engaging customers in new and relevant ways, personalizing the shopping experience, and weaving their brand promise into their consumers’ lives by offering flexibility and convenience. The only way to achieve this is to approach omni-channel differently. Instead of disparate silos built upon the backs of legacy systems, a more open, platform approach is required. Having an omni-channel 2.0 platform allows retailers to break down the barriers between channels, rapidly implement new innovations, delight customers at every turn, and enable future-readiness.
Ken Morris, principal at Boston Retail Partners, explains that using a unified, centralized, real-time platform integrating all customer engagement points is key to supporting true omni-channel. A unified commerce platform, according to Morris, is about getting all pieces of the enterprise working together, rather than enabling support for disparate pieces.
The changing expectations of consumers
Why is now the right time for a platform approach to retail? Consumers have more choices of where and how to shop than ever before, based on the blending of retail segments and the introduction to new competitors winning customers through subscription services, direct-to-customer models, and customization. Consumers want to shop anywhere, fulfill anywhere, and return anywhere - at any time, and to switch between channels during a shopping experience without any disruption. An omni-channel 1.0 approach can hinder this, causing great customer frustration and leading to lost sales and market share to the competition already implementing omni-channel 2.0.
For example, “phantom” inventory is a relatively new problem that retailers are struggling to solve. This occurs when an online shopper sees an item available in-store, even when the item is out of stock, caused by a lag in updating inventory balance between systems. Or if we look at last year’s Black Friday and Cyber Monday, consumers faced with a variety of technical problems, including poorly-performing websites overwhelmed by high traffic volumes, and integration issues with click-and-collect and online shopping carts. As new shopping innovations continue to enter the market, the complexity of keeping up with legacy systems becomes unmanageable.
For retailers that get it right, there's huge potential to profitably grow and win over consumers across all generations. Shoppers will reward those retailers that provide an individualized and seamless experience between digital and physical channels. The vast majority of digitally-enabled sales still occur inside the store, while more than nine out of ten consumers use their smartphones when shopping in store, to compare prices, check product reviews and find more information. Nearly two-thirds of consumers prefer to shop with brands that offer personalized incentives at the right times, for example, a digital coupon sent to their smartphones while inside the store. Retailers that successfully navigate how to engage with consumers both digitally and in-store have a huge opportunity to stay ahead.
Omni-channel 2.0 is a win-win for consumers and retailers
A strong commitment to omni-channel 2.0 proves valuable far beyond meeting evolving consumer demands. Following a platform strategy helps reduce IT maintenance and overhead costs, as companies no longer have to support and invest in multiple, disparate systems.
Retailers can also maintain greater control over key performance indicators (KPI’s) such as order fulfillment accuracy, return on inventory investment, and gross margins. Offering flexible fulfilment options across channels, while maintaining full visibility into the company's entire inventory, helps retailers make more informed choices to better serve consumers. By mitigating issues such as overstocks and out-of-stocks and overstocks, retailers help boost customer satisfaction while optimizing the balance between sales and on-hand inventory.
In the coming years, the speed at which physical and digital retail channels converge will only increase, making it even more important for retailers to adopt a single, omni-channel platform approach. The type of omni-channel 1.0 achieved through a patchwork of IT systems that was sufficient in the past is not sustainable. Retailers that don’t evolve to 2.0 today will continue to struggle and will find themselves more vulnerable to more advanced competitors who have been quicker to embrace omni-channel 2.0.