Consumers’ demands on retailers have intensified in the past decade. Previously, having an online store to accompany your physical shop was seen as a luxury, now it is essential and online shopping has taken the next step to meet customer demand. Consumers want the ability to shop seamlessly across multiple devices anytime anywhere. Whatsmore, they want more than the promise of next day delivery and to have the opportunity to order online and pick up in store the very same day.
As the customers ask for more, retailers are struggling to keep up and falling behind in investment in the appropriate technologies that will allow for complete visibility of inventory, to enable pickup in store options and effective omnichannel experiences.
Christmas 2016 was the season for omnichannel
The brands that have implemented an effective omnichannel strategy have reaped the rewards. Throughout the 2016 Christmas period retailers such as John Lewis, Marks & Spencer and Sainsbury’s all reported an increase in profit over the festive season; with many seeing an increase in customers using their click and collect services.
For example, John Lewis reported a continued shift to mobile and multichannel purchases. The retailer reports that 52% of all online purchases were picked up in store with a further 18% choosing to collect from sister supermarket Waitrose. Additionally, multi-brand online retailer, Shop Direct announced that more than a quarter of 6.8m online orders were picked up from collection points in the UK.
With more retailers reporting their performances in the run up to Christmas, the evidence is becoming clear that those who offer omnichannel experiences have an edge over the competition. Whilst we can expect more brands to adopt similar strategies to maximise on peak shopping times, many retailers have long struggled with implementing a cohesive and efficient omnichannel process due to a lack of confidence in stock and a lack of understanding of their customers’ needs.
So how can retailers ensure that they leave their omnichannel challenges of 2016 a thing of the past and embrace omnichannel sales?
Embracing new technologies that help them leave inaccuracies in the past
Essentially omnichannel is all about delivering items from various layers in the supply chain to consumers across whichever channels the customer prefers and as a result retailers and brands can service customers better and build a deeper loyalty. Most retailers who have fully embraced omnichannel understand that servicing consumers in this new era of retailing hinges on understanding inventory accuracy and creating business rules around the realities of the inaccuracies that exist. Without up-to-date and correct information, omnichannel is simply an ill-conceived promise they won’t be able to deliver on and thus disappoint customers.
Some retailers are still using a 5:1 rule for fulfilling omnichannel orders which, understandably, can leave the CFO of the retailer disappointed because to solve the problem it is just bloating inventory levels. On the other side it often times still leaves the consumer disappointed as well when they discover the item they ordered online isn’t available to pick up from the store that day. In order to be truly omnichannel, retailers need the confidence in their stock accuracy. It is not uncommon for an apparel retailer to have inventory accuracies in the 70% range at the sellable unit level.
The brands that have seen the most success with their omnichannel experiences are those that have welcomed a new mindset to the technologies that are in place. Many retailers are hesitant, for whatever reason, to move to newer innovations that can simplify and better processes, such as taking accurate stock counts. However, those that continue to hesitate could find themselves left behind in the race to meet consumer demands.
Technologies such as item-level RFID have addressed the challenges of inventory management with the collection of more accurate and timely inventory data which retailers can use to make higher impact decisions to match customer demand. Furthermore, retailers are able to use the technology to gain better understanding of their customers’ behaviour which enables a smoother omnichannel execution.
Delivering a seamless omnichannel experience in 2017
Whilst there are already a number of companies effectively delivering omnichannel shopping to their customers, there are still many who are struggling. As the 2016 holiday season proved, a demand for an omnichannel experience is growing and without a smooth process in place, those retailers could find they are losing significant profits and long-term customer loyalty.
2017 will be a big year because we will see numerous testimonies come out of 2017 holiday season where RFID implementations will be game changers for omnichannel customer experience models. As the demand for omnichannel has increased, retailers need to shift their focus on their own strategies around inventory management to ensure they are keeping up with their customers’ needs in 2017.
[Source: Dean Frew, CTO & SVP RFID Solutions at SML Group]