Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Five warning signs for an omni-channel retailer – Part Two

In my previous blog I reviewed two possible consequences a poor omni-channel strategy could have on customer experience. Here I look at three further ways it could impact on a retailer's operational capabilities and what retailers can do to manage them.

1. You’re unable to accurately tell where your stock is

All of us, as consumers, have no doubt experienced the disappointment of being unable to purchase the item we want; yet few of us know a lack of stock visibility is a fairly common scenario for retailers. Worryingly, there are few retailers who excel in this area, despite the direct impact on customer service and the bottom line.

First and foremost, you are going to deliver a poor customer experience. Your customer has decided to part with their hard earned cash, yet you’re not able to quickly and efficiently sell them the product they want. How many times have your customers heard the phrase: “our stock numbers aren’t accurate; I can phone another shop for you?” This inevitably damages your brand as you can’t offer the customer what they want, when they want it. Customers have high expectations and want you to have the technology to locate and sell your stock. They are unsympathetic to legacy systems, poor back-end integration, poor forecasting, or lack of end-to-end stock visibility that can often prevent this being as simple as it should be.

This inefficiency hurts the bottom line. Not only are there missed sales, but also the higher cost associated with multiple staff members being involved in one transaction. At a time when staff productivity is more important than ever, this inefficiency is something many retailers do not factor into their operating model. Combine this inefficiency with a lengthy returns process, and retailers have a recipe for disaster.

2. You have not reviewed the role of your store channel in an omni-channel world

Many retailers have devalued the importance of stores in their retail estate, viewing this as an area where they can cut overheads and redistribute investment. BHS and Austin Reed are recent examples of this short term thinking and demonstrate it’s a dangerous strategy.

The best retailers are reviewing how their physical stores work as a small part of a much larger business - how their physical estate complements other channels instead of competing against them. They understand the real purpose of their stores - whether they are a showroom for online stock, a venue to provide tailored expert advice, or somewhere to inspire. They understand the format these shops should take, and how they can support the rest of the business by offering customers an enhanced experience.

John Lewis is one such successful example. They've diversified their store portfolio and now operate a range of different formats, including traditional department stores, smaller at home formats and compact shops at travel hubs. These formats have allowed them to increase cover throughout the UK and showcase the full range of products available online without having to open large, costly department stores.

3. Your KPIs are not designed to reflect an omni-channel operating model

From top to bottom, one of the most crucial factors is strategic alignment and sharing a clear, consistent vision and plan with your business. A key element of this is identifying the KPIs which foster an omni-channel mind set across the business. Consider store staff; instead of being targeted solely on store sales, they could work towards a target of catchment sales within their area. This will help shift the mind set away from the hard sell in the store to delivering exceptional service, which will drive better engagement with the brand, increase multiple channel use and metrics such as average transaction value  and conversion rates.  

A further big challenge is whether your systems allow you to behave and think as one business instead of many smaller, separate businesses. Do your systems allow you to spot trends across different channels; can you understand if and why a product has a better conversion rate in one channel; and can you identify trends in consumer behaviour early so you can adapt quickly? Understanding this will allow you to ensure all elements of your business are aligned to deliver as one, cohesive brand. If this isn’t the case, it may be time to review your IT infrastructure and strategy.

So what can retailers do?

Together these may sound daunting; however, there are a number of smaller elements you can review and changes you can make that have the potential to make a more immediate difference to your business:

  • Review the customer experience your staff provide across channels - is it as seamless as possible? Do they have the right systems and access? Is your learning and development strategy fit for purpose?
  • Review if your omni-channel services are seamless, simple and customer-centric - ease for you, may not be ease for your customer. Do you frequently ask for feedback from your customers? Are the two-way communication channels open with them, and are they used?
  • Review whether your systems support an omni-channel view of your business - are your staff able to monitor performance across channels to identify trends and opportunities to drive sales and make efficiencies? Are your customers able to move across your business seamlessly; and can you see that easily from within the business?

The focus in recent years has been on providing more and more functionality for customers, which many retailers have done whilst neglecting their back-end systems. This has come at a cost - the glue that underpins, and enables, the customer-facing parts is starting to crack. Many legacy systems were not built for an omni-channel world and the ability to configure them as such is questionable; they have limitations and can’t last forever. Is now the right time to review investment decisions and rejuvenate the tired systems?

About the author

Hannah Tharp
Hannah Tharp
Hannah is a Consultant in Operational Excellence specialising in Retail Operations. Hannah has 5 years' experience in the retail industry much of which she spent working for a leading British retailer.

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