Retailers’ Top 3 Omni-Channel Investments In 2017
RSR just published our annual benchmark on retailers’ omni-channel strategies. We found renewed optimism in omni-channel, but a tendency to discount strategies that leveraged digital – digital presence, digital insights, digital engagement – in favor of a focus on stores. Did that translate to their technology investment plans for the year ahead?
The short answer is mostly no. Retailers may not have been using the term “omni-channel” for the last 10 years, but they have certainly been making investments to help them better present one face to the customer for at least that long. Which means that a lot of their “core” omni-channel technologies are getting a little long in the tooth, and retailers’ businesses and their understanding of what omni-channel means to them have changed enough that it is time to re-evaluate what they have to make sure their technology investments are still hitting the mark.
Unfortunately, for large pluralities of retailers, they are finding that their existing systems need to change. The top 3 places retailers plan to invest in omni-channel technologies:
- Distributed Order Management – 46% planning a change, 14% with net-new budgeted projects
- Enterprise Content Management – 42% planning a change, 17% with net-new budgeted projects
- Enterprise Wide Inventory Visibility – 37% planning a change, 19% with net-new budgeted projects
- Bonus net-new investment: Enterprise cross-channel analytics – 25% with budgeted projects (the highest response for budgeted projects), 32% planning a change.
Enterprise-wide inventory visibility is probably the least surprising investment listed above, mostly because retailers do such a poor job maintaining inventory visibility today, and because ship from store and other cross-channel modes of save the sale are sending inventory all over the place, with little reckoning by retailers as to the cost of such efforts. I’ve come to suspect that retailers are so bad about inventory visibility in part because they don’t have a strong definition of the term – inventory visibility means something different to a merchandiser than it does to a store employee, and just putting the blanket term “Enterprise-wide” on it doesn’t go far enough to get internal organizations talking about what they really need, how “real-time” they need it, or how often they need it. I think without those discussions, retailers will continue to make very little progress no matter how much money they spend.
Of all the top areas for investment, enterprise content management is probably the most digital. Content management systems have evolved significantly to incorporate both product and marketing needs, and may yet evolve again to include capabilities like managing user-generated content that is posted on social media channels. If retailers are approaching this capability from the product side, it’s not surprising that there is a large contingent of respondents who are looking to change what they have. But if they are including digital capabilities in their evaluation, then it doesn’t speak well to their current investments, which should not be that old, that they are already looking for change.
A replacement cycle for distributed order management seems inevitable, and it appears that survey respondents feel the same way. DOM unfortunately has a reputation for being a long, difficult implementation, in part because it requires a lot of integration work and tends to uncover big process issues along the way – like the kinds of process gaps that create problems for inventory visibility. I’m pretty sure retailers have or will try to put this off for as long as they can, just because they don’t want to get back into all of that integration mess. But the fact is, DOM has evolved significantly over the last few years, especially if you include store capabilities that drive ship from store and other cross-channel save the sale activities. If retailers have implemented their DOMs in such a way that it’s not easy for them to take advantage of these new capabilities, then of course a replacement cycle must come – they can’t afford to lose that much control over their inventory just to save the sale.
And then there is the new kid on the block, enterprise cross-channel analytics. All of the other technologies are mostly driven by replacement cycles. At first glance it would appear that enterprise cross-channel analytics is in the same boat. However, retailers don’t really buy “cross-channel analytics”. What they do buy is enterprise analytics that can also look across channels. Retailers who have implemented analytics in such a way that they are looking at siloes only and maybe aggregating only financial data if anything, will find themselves stuck with their current solutions. The fact that a quarter of respondents felt that they need specifically to implement cross-channel analytics probably gives me the most hope out of this report for retailers’ omni-channel futures – because the most frustrating gap we found was retailers’ inability to tie digital insights to larger business decisions. If they can’t figure that out, I don’t know how they think they’re going to succeed with omni-channel shoppers.
This is just a sample of the things we learned from our omni-channel report – you can check out the whole thing here.