Omnichannel a work in progress

Print Friendly, PDF & Email

The transformation of the retail business continues apace, but the outright revolution promised by the adherents of e-commerce and digital media still appears to be a ways away.

That’s one of the insights gleaned from new research conducted by the National Retail Federation (NRF) and Forrester. Based on responses from 69 retailers — a mix of store-based merchants and pure-play e-commerce companies — in North America, “The State of Retailing Online 2019: Omnichannel, Marketing and Personalization” concludes that, to borrow a phrase from Mark Twain, the rumors of the death of brick-and-mortar retailing are greatly ­exaggerated.

Fifty-four percent of respondents indicated that their company plans to open new stores this year, and 36% said that their store count would be higher in 2019 than in the previous year. A mere 7% expected the number of stores their company operates to be lower at the close of the year than it is now. Those figures hardly support the prophesies of the complete collapse of retailing as we have long known it that were so prevalent a few years ago.

At the same time, the e-commerce business is becoming more costly. About a third of the retailers participating in the survey said that expenses are rising for everything from information technology and marketing to customer service and fulfillment. An increasing number of internet merchants also noted that the value of the average order has fallen, despite impressive increases in sales.

One doesn’t have to look far to find evidence of the unsettled state of the retail sector. Amazon, the quintessential e-commerce company, owns the Whole Foods chain of brick-and-mortar stores, along with a handful of bookstores and AmazonGo convenience outlets, where advanced technology eliminates the need for shoppers to visit a checkstand to make purchases. Since acquiring Whole Foods in June 2017 for $13.4 billion, Amazon has worked hard to build synergies between the stores and its burgeoning online food business. Reports in recent weeks indicate that the company is now considering the launch of a second supermarket chain to give it access to a broader swath of the market than the premium-priced Whole Foods.

On the flip side of the coin is Kroger. The nation’s largest operator of conventional food stores is reorienting its business to embrace a full range of omnichannel options. The retailer is currently working with Ocado, a British online grocer and technology company, on the development of the first of three advanced fulfillment and distribution centers for online orders. In addition, Kroger is one of several major retailers that have recently entered into partnership with Microsoft. Under the deal, the two companies will open experimental stores — one in Monroe, Ohio, the other in Redmond, Wash. — where digital signage, cashierless checkout systems and other advanced retail technology will be put to the test.

Despite the high level of interest in omnichannel retailing and a consensus in the industry that it is the wave of the future, NRF and Forrester found that a lot of work remains to be done to make that vision a reality. At many companies the basic building blocks for a true omnichannel offer still aren’t in place. For instance, 56% of respondents said that inventory visibility and accuracy were problematic at their company, and 65% reported that they lacked planning tools to accurately predict cross-channel demand.

Ensuring that people at every level of an organization are aligned around an omnichannel strategy is another major challenge. The researchers found that many companies are uncertain about how to measure the impact of what goes on in the store on the overall business, and associates often need more training if they are to deal effectively with customer questions about offerings that extend beyond the store.

In light of those findings, it comes as no surprise that the top two areas for investment this year are order management technology and ­education.

“Retailers are evolving with customers’ shopping behaviors by creating a seamless shopping experience online and in-store,” says Mark Mathews, vice president of research development and industry analysis at NRF. “From pop-up stores to social marketing, retailers are finding innovative ways to engage and acquire new customers.”

That’s not entirely true. One unexpected result to come out of the research is that there are still an awful lot of people running retail companies that aren’t sold on the pressing need to embrace omnichannel. Some 20% of survey respondents said that the leaders of their company did not see investing in such capabilities as an imperative and are instead concentrating their efforts on the things that have sustained the business in the past.

The pacesetters in the retail business think otherwise. A look at where Rodney McMullen is taking Kroger or Jeff Bezos is taking Amazon, to name just two of many possible examples, demonstrates that henceforth mass market retailing is omnichannel retailing. Anyone involved in the business who ignores that fact does so at their peril.



Comments are closed.