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Omnichannel the biggest disruption in retail since Amazon

Martina Mercer
May23/ 2014

By Martina Mercer

The latest ResearchFarm report, Omnichannel 2014 – In store technology, logistics, retail as a platform, finds that omnichannel is the most significant tipping point in retail since the migration to online and the emergence of Amazon. The frictionless symbiosis of smartphones, tablets, online and physical store channels at the front end needs to be matched with a back end logistics network that produces consistent customer satisfaction, throwing up a considerable execution and investment challenge. The competitive environment and shoppers demanding omnichannel capabilities combined with the potential to add turnover means retailers are moving towards a model that significantly erodes margins through the associated cost structure of an omnichannel proposition. The future challenge then is to move from the current margin-erosion to a mutually beneficial set up for retailer and shopper through innovative technology solutions.

 Apart from the online marketplace and social media, ResearchFarm believe that the key channels to focus upon are smartphones and tablets (and perhaps wearables) because they act as the crucial connector between store and online, the hardest obstacle to overcome to link up the customer seamlessly across channels. The huge opportunities in m-commerce and mobile payment in the years to come further demonstrate the central role the devices will play in omnichannel retailing and the report finds them to be the catalysts in the omnichannel transformation.

This does not mean that the traditional bricks & mortar stores will decline in influence though. Conversely, the authors are adamant that the omnichannel model needs to have the physical store as a foundation to which the other channels are connected. “The physical building needs to be the building block from which to devise the strategy”, says Edward Bickel, retail analyst and co-author of the report. Careful alterations will be needed to transform the bricks & mortar store into one fit for the digital age through technology solutions such as footfall tracking, beacons, clienteling and AR.

Another key area of the business to focus on to make omnichannel a success is how to adapt logistics with the proliferation of click & collect and next day delivery services for example. The authors predict this area to become a competition differentiator for retailers to win customers over with an extensive range of fulfilment options and efficient returns policies. “Just look at the investments Amazon have made into their fulfilment operations to understand how fundamentally important this is to retailers”, adds Edward.

To make the transition into omnichannel retailing seamless the authors recommend the following three actions:

  • Micro-manage and have a keen eye for detail. Adopt technologies that are relevant to your business rather than trying to incorporate all of them, gain specific insights from customer data and combine with a single view of customers and the stock to develop personalised and contextualised strategies and consider price arbitrage techniques for the different channels.
  •  Be innovative. Adopt a 70-20-10 mindset to ensure a steady stream of ideas flowing through the business and launch R&D centres to find solutions to future problems before they arise and become the market leader in a new space.
  • Think about security issues. New security threats emerge with the vast amounts of personal information now online and the potential for hacking new technologies. Ensure procedures designed to protect the long-term health of the business are in place.

A useful starting point is to think of three Ss: System, Skills and Structure. Ensure an effective IT system that not only captures customer data accurately but also mitigates the growing online threats. This requires employing the best technical people out there who have the skills to extract actionable insights from the data. Support this foundation with a well-defined yet flexible logistics structure that meets customers’ exacting standards”, concludes Edward.


Martina Mercer

Martina Mercer is an award winning copywriter and digital marketer. She specialises in psychology delivering marketing that identifies consumer profiles and connects customers with brands. As an expert in proximity marketing, Martina is one of the only experienced beacon marketers in the UK highlighting her commitment to developing her skills in an ever changing consumer focused world.