Results Count ... everything else is conversation.: Declaring that you are omni-channel does not “Make it So”

Retailers require more than words to deliver a seamless experience

You have to be living under a rock if you haven’t seen the seismic shift in consumer shopping patterns. While US retailer stores did ok on Black Friday traffic, sales were flat. Contrast that with online shopping which was up 20+%. I can’t begin to count the number of retailers saying that they’ve got to beef up their online presence and address mobile marketing. The battle cry is going out from traditional retailers that they “have to be omni-channel”! It reminds me of the famous line of Captain Jean-Luc Picard: “Make it So”. What many retail execs don’t seem to realize is that saying it doesn’t create a seamless consumer experience. Making it so requires the infrastructure of a starship and a very talented team.

Those d*** consumers are so demanding! They want it all … right now!

Let’s face it. You and I are spoiled. We have unprecedented choice in item selection. Online literally carries millions of makes, models, styles and colors at our finger tips. Not only can we see all of those items and specs, we get instantaneous pricing. If we don’t like a particular price on a particular site, we can literally access an app on our phones to search for best prices across multiple sellers. And, if we don’t feel like going out in the cold and snow, we can click to have that order shipped to our home in 48 hours or less.

Traditional retailers can’t put the genie back in the bottle. The consumer is in charge … of how, where and when they shop. Today, we as consumers are shopping any time, everywhere on the device we prefer and our preferred location. And, online is always open 24/7/365 whether the store doors are open or not. Stores opening early or staying open 24 hours does not mean consumers will come.

Make it So... The incredible price of making online a success

There is no question that more sales are shifting online, especially to the ecommerce specialists. So, at first blush it is understandable that bricks and mortar Retail Execs would heavily focus time and resources to expand their online presence. But, just being able to offer expanded assortments on an ecommerce site is not sufficient, effective or profitable. Online, products quickly become commodities and today’s consumers are masters at ecommerce price shopping.

One of the major blind spots traditional retailers have about omni-channel retailing is that online will make up for lost store volume and lost shoppers. Maybe, but all of that comes at an extreme cost. One of the major core competencies for effective online selling is extremely agile price elasticity and change. Consider the following stats from a recent article in Digital Report:

Amazon implements more than 2.5 million price changes each day!

In contrast, Walmart and Best Buy made less than 55,000 changes in all of November!

To fly the starship that is Amazon requires incredible infrastructure, systems and people. Being that fluid on price changes enables Amazon to win volume, but also raise prices very selectively to increase their profitability, all the way down to the zip code level.

Make it So... The incredible complexity of “seamless experience”

At the end of the day, what consumers really want is a “seamless experience”. What that means is incredible flexibility to start the shopping journey any time and complete the purchase anywhere, with final delivery at location of choice. Sounds very tempting and many traditional Retail Execs are proclaiming “Make it So!” Be careful what you ask for or proclaim. A truly seamless experience requires incredible strategic commitment and investment.

Major Big Box Retail FAIL this holiday! Having suffered far too many Black Fridays with my kids, I tend to shop after the big event. I do like going to stores to check out things I’m buying for close family and friends. Like most, I started my journey online to see who had what. Instead of clicking to order, I used the retailer’s site to see who had the product in stock. The seamless experience should be being able to find which stores have the product in stock for purchase, and then being able to go see it in store and make a purchase there. In my experience, Walmart was 0 for 10 tries. I couldn’t even call a Walmart store and ask someone to verify that they had a product there for me to purchase. And, Walmart claims to be the next big omni-channel competitor to rival Amazon?

By the way, kudos to Best Buy. They had the best seamless experience I personally encountered for online store integration. Service level on the Big Blue floor … not so much.

BIG Bets required for omni-channel retailing

Omni-channel retailing is the ability to shop across channels, online, in store, mobile. It is the consumers who vote with their plastic that will make it so in terms of requirements for successful retailing of the future. Before any Retail Exec team proclaims that they will become successful in omni-channel, they would do well to carefully analyze the critical success factors:

Incredible online systems and infrastructure. Amazon continues to set new bars for both the infrastructure and services levels required to compete both on price, and quality of service after the sale.
No silos. Traditional retailers have been store centric. True omni-channel execution requires seamless integration of stores, web, mobile, social media. There cannot be separation of “store merchants” from “online buyers”. Nor can there be separate marketing for stores, online and mobile.
Big data. Perhaps the biggest challenge for traditional retailers is that data and systems are separate. Most legacy systems were built for stores and products. Seamless omni-channel execution requires that the data “follow the customer”. Retailing of the future will be all about integration of customer and service relationships, not mere counting sales at checkout.
Supreme Supply Chain Integration! What’s the delivery company that has the TV ads about “logistics”? The brown truck guys have it right - omni-channel execution is all about logistics, supply chain and then some. Increasingly, inventory will become virtual. It will take incredible flexibility and investment to provide the consumer with real time purchase and shipment capability anytime to anywhere and everywhere.
Strategic Leadership. One thing that the Jean-Luc Picard meme on “Make it So” has right is that omni-channel success requires leadership and commitment. It is leadership beyond incremental improvements. It requires the courage and ability to turn everything upside down to switch strategically from product centric retailing to consumer centric relationships.

I often quote the case study of John Lewis department stores in the UK. There has never been a more unlikely candidate for retail transformation to omni-channel in that they were a classic high street, department store. Their journey to omni-channel started at the very senior levels saying that we must “make this so” … or we will not survive. The critical difference is that John Lewis leadership laid out a very strategic plan and significant investments over a 3 year period to get to the amazing results they have achieved today.

Making it So requires more than a bold captain and crew … it truly requires a "Starship" that goes beyond the boundaries of traditional retail stores.

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Sources:

Associated Press: Big data has role in holiday-shopping season, Ann Flanherty; December 10, 2013
Morning News Beat: The Price of Online Success, Kevin Coupe; December 10 2013
Meme: Memegenerator.net