Omni Channel Retailing: Easier Said than Done
Brian and I just finished writing this year’s Cross Channel Benchmark report, and I think it’s fair to say we were a bit surprised by what we found in the data. The issues haven’t changed, so that wasn’t a shocker. Cross-channel (or omni-channel) retailing is no longer a nice-to-have. The consumer has driven the industry to the point where a consistent cross-channel shopping experience is table stakes. And those table stakes include every possible path to purchase and delivery. That’s where the “omni” word originally came from, after all.
What was surprising, however, was the apparent slowness of adopting efficient omni-channel efficiencies and organizations. Sure, several high-profile companies have created positions and departments called “omni-channel,” but those seem to be more about customer-facing activities than they are about managing inventory, customer and order data.
Let’s take a look at a few data points:
We asked retailers to rate the level of channel synchronization in the organization for thirteen different processes ranging from fulfillment to customer segmentation. Less than 20% reported “full synchronization” of ANY of the processes or technologies including (somewhat mind-bogglingly to us) traditional advertising. On a positive front, more than a third reported “full synchronization in progress” for inventory visibility (also the second most frequently cited high value process for enabling the omni-channel strategy),demand forecasting, and just under a third reported full synchronization in process for their digital channels. Virtually every other process is limping long to synchronization – with “some synchronization in progress.”
Retailers feel the pain. More than half still believe consumer expectations continue to outpace their ability to deliver a consistent cross-channel experience. The largest retailers feel the most pain, as fully 83% of those with annual revenue greater than $5 billion USD cited this as a top-three business challenge.
it’s not like retailers haven’t been throwing money at the problem. Unlike respondents to most of our other benchmarks, very few (15%) cited budget or IT resources as a top-three internal challenge. That’s a big difference from last year, when 38% cited IT resources as an issue. Instead the problem is about symptoms, not causes. The need for a single view of the customer across all channels and the need for a single view of inventory and order management were the most frequently cited organizational inhibitors. But this begs the problem: what’s it going to take to fix the problem and get more efficient?
We believe there are several issues, both organizational and technological. Most enterprises haven’t aligned their organizations around the brand, and if they have, they haven’t quite got their incentives set up to be channel transparent. This must change. Secondly, it’s not clear that adding more “scotch tape and baling wire” to existing technology infrastructures is going to be helpful. In fact, those that have been involved in cross channel activities the longest (five to ten years) tend to be poorer sales performers than those who entered the cross channel arena over the past two-to-five years. They represent the largest percentage of Retail Winners in our respondent pool.
We understand it’s not easy to change the wheels on a train that’s racing at 100 miles (or kilometers) per hour. Yet it seems that’s what the situation calls for. Read the report and let us know what you think. You can find it here or just copy this very long link into your browser window: http://www.rsrresearch.com/2013/06/11/omni-channel-2013-the-long-road-to-adoption/. Our reports are always free for anyone to read, and we always welcome feedback.