Omnichannel approach yields higher sales – but only when systems are fully joined-up: report
Taking an omnichannel approach to trading has helped major retailers report sales growth of between 10% and 20% over the last year, according to new research.
But moving towards omnichannel can present a problem for retailers who concentrate on the front end rather than building a fully integrated omnichannel model, LCP Consulting
report The Omnichannel Dilemma
has found. More than a third (37%) of the 50 UK retail executives questioned for the report reported a rise in the number of complaints received from customers whose growing expectations of fulfilment had not been met.
The report, to be published in October, includes interviews with a panel made up of Graham Barnes, supply director at Argos ; David Wild, chief executive of Domino’s Pizza Group ; Dino Rocos, operations director at the John Lewis Partnership , and Neil Ashworth, chief executive of Collect+ .
Dino Rocos, operations director at John Lewis
, said: “I’m seeing some retailers who are building organically on their current model and I am flabbergasted because it is self-evident that three, four or five years down the line that’s not going to be the right model. They should be pausing, evaluating where they are investing and then investing in the model that is appropriate for the longer-term.”
Stuart Higgins, retail partner at LCP Consulting, said: “Retailers may attract customers by managing the front end but that is only half the story. How likely will they be to return when the experience doesn’t match the promise?”
The report defines four retail archetypes, and says retailers must understand which they are, and whether omnichannel, multichannel or pureplay models will work for them.Omnichannel pioneers:
fully committed to transforming front and back end operations to deliver a seamless experience to customers.Omnichannel followers:
recent converts to investing in omnichannel retailing without a fully integrated business model. Retrospectively fixing their back-end systems to keep up with omni leaders, and as a result, running the risk of not establishing the core systems for long-term success.Optimised multichannel or pureplay retailers:
have made a strategic decision to adopt either a multichannel or pure-play approach – often very effective.Challenged multichannel retailers:
trying to adapt to a multichannel world by bending existing bricks and mortar infrastructure. Clear warning signals that this group is in danger of terminal decline, with lacklustre growth reported.
The report suggests successful omnichannel offers a consistent customer experience, seamless order management and customer experience, fulfilment excellence and effective personalisation.
David Wild, chief executive, Domino’s Pizza Group
said: “If retailers take the view that they’ll fix the back end later, they’re intrinsically planning for failure. They’re saying that online will be a minority part of their business and therefore doesn’t need an efficient suite of back end systems.”
Phil Streatfield, retail partner at LCP Consulting, said: “When multichannel retailing emerged 15 years ago, the emphasis was on home delivery, access to broad range and speed of response. Today’s omnichannel retailers are taking advantage of both their bricks and mortar infrastructure and multiple channel access for customers to provide truly differentiated service propositions.
LCP Consulting commissioned market analysts, Research Now
, to conduct the independent research with retail board directors and department heads in the UK and US. The research was conducted during July 2014. In total, around 50 executives were interviewed in the UK and 50 in the US. More than half of respondents worked for retailers with more than 5,000 employees and more than a quarter for retailers with more than 25,000 employees. All had annual turnovers of more than £50m.