How Omni are you?
A retail New Year's resolution
This week saw a January sale saga that got me thinking about that much-derided retail phrase ‘omni-channel’.
‘Omni-channel’ is a phrase widely used in retailers when discussing their digital strategies but it comes in for a lot of grief, particularly from analysts and writers about the sector, for the perfectly good reason that it isn’t always clear what people actually mean by it. Just like politicians might pick, say, 5 targets to achieve and then keep shifting the definitions until they’ve met them, many retail businesses have spiced up their results presentations with liberal use of the phrases like ‘Continued investment in our omni-channel capability’ when what they really mean is that they’ve spent some money on their website.
So what does it mean? This week a little black dress provided a great illustration. The dress, for sale in a fairly up-market womenswear retailer, attracted the attention of Mrs S. She tried it on, liked it but decided not to buy it on the spot. A day or 2 later, however, the decision was made - we wanted the dress.
Step 1 - have a look at it on the brand’s website. Tragedy strikes, the size we need is out of stock. But look - there on the page it says ‘check stock in store’ so let’s do that. Good news - a store near us says ‘last few left’. As luck would have it, we only need 1, so that’s the job done.
Isn’t it?
Except it turns out that you can’t actually buy one of those last few in the store from the website. There is no button to click. Even when, after some heroic detective work, we found the phone number and rang the store there was no way to make the purchase - they can’t take money over the phone and don’t post product out from store anyway.
In the end, an emergency dash in the car saw the whole thing have a happy outcome, but chatting to the team in the store about the whole issue reminded me of a topic I’ve written about before - the ‘spectrum’ of omni-channel solutions.
Consider 4 levels of sophistication that you might have in connecting your digital and store worlds together:
Your website is really an entirely distinct operation from your stores. You think of it, and probably report on it, as if it was another store on top of your physical ones. It has its own stock, and can therefore be out of stock on a product which is in plentiful supply in your stores (and vice versa). (I’ve even been in one retail warehouse where the empty pick location which generated that ‘out of stock’ message was right next to the full one which was dedicated to supplying stores with the same product!).
Up one level of sophistication and your website can ‘see’ stock in store but only via an overnight batch run of data - meaning that it has a fairly good idea that a product is in a store but can’t be certain that it wasn’t sold half an hour ago. As a result, you can’t sell store stock from the website with confidence. Conversely, your stores can probably sell a customer something from your website but only by effectively logging on the way a customer would, and if a customer tries to ‘click and collect’ something by buying online and collecting in store then they have to wait the same few days for the product to be posted to the store as they would have waited to get it sent to their house.
At this higher level, you now have a live data feed connecting your channels together. Store stock can be displayed and sold on the website, and colleagues in store can easily complete a web order for a customer from the till. Click and collect orders can be collected in minutes if the product purchased is already in stock in the collection store. You have, effectively, a single view of your stock and a single stock level for a given product regardless of channel. (Guess what, though, I bet you still report online and store sales in your daily reporting as if they were separate things).
Finally, at this highest level, you have married your single view of stock with a single view of the customer. If a customer has explored specific products or added them to their basket online, that information is visible to colleagues when they come into a store. Similarly if a customer buys particular products in store, your website will show them complementary products or accessories when they next visit. You are really good at incentivising customers to identify themselves so that you can deliver this kind of seamless experience, and you can therefore talk meaningfully about Customer Lifetime Value, the role different channels play in different sales journeys and about the best messaging strategies to get a customer from initial enquiry through to successful and happy purchase.
Our womenswear store from this week, you will hopefully agree, is at level 2 on this scale. That’s disappointing given the prices they charge, and amazing once you realise that they are a small sub-brand of one of the largest and most successful womenswear retailers in Europe - they definitely lost out when the IT budget was being allocated.
Astonishingly, you will still find plenty of retailers on the High Street stuck at level 1. In fact, if I was to offer a very broad-brush ‘hot take’ on the current state of ‘omnichannelness’ of UK retail I’d say there is a small tragic tail at level 1, most retailers are at level 2, the best and most successful are at level 3 and almost no-one is yet at level 4.
That’s not surprising, by the way - the IT transformation which each of these steps requires is formidable, expensive and not really in the skillset of many retail technology teams. And each of these changes is not just a technology one anyway. I had one jaw-dropping exchange with the digital lead of a huge retailer in the UK who explained that they had the capability to operate at at least level 3, but kept their online and store experiences separate because “the two teams don’t want to work together”.
But if there is one thing that 2023 proved beyond doubt, it is that no retailer these days can afford to leave a single sale on the table. With costs rising all around us and consumer demand still suppressed, we have to convert every sale we can into hard cash. The reality of the 4 levels I’ve outlined above is that each one of them represents an incremental opportunity to do just that. If we’d been even slightly less determined, our womenswear retailer would have missed out on selling that dress, and they will be missing similar chances every day.
If you want a retail New Year’s resolution for 2024, then a pretty good one would be to take your retail business one level up the Omni-channel ladder. That’s an investment worth making.