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What Lies Ahead in the Future of Omnichannel?
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The importance of omnichannel operations is well established, and that is driving customer expectations higher than ever. In 2020, Gartner estimated that 60% of B2C brands will move toward a functional, effectively channel-less organizational approach by 2025, up from just 30% mid-pandemic. We are now approaching that year, and omnichannel seems bigger than ever, yet only 11% of companies believe they have a sophisticated implementation of the necessary technology.
With developing technologies like AR and chatbots turning the e-commerce experience into an ever-evolving playground, it becomes easy to forget that the brick-and-mortar side of omnichannel is just as important. However, 85% of sales still take place in stores, according to CB Insights, which means retailers need to seriously think about how their latest innovations can improve not just the experience on their website, but the wider customer journey.
Proof of this can be seen in Coresight Research’s study, which found that current mall traffic actually surpasses pre-Covid levels. Recent traffic growth was partially attributed to retailers using malls as locations that blur the line between channels by using them to handle online return drop-offs and as alternative pickup locations to speed up e-commerce orders.
Retailers also need to remember that the omnichannel experience doesn’t end after a purchase. Research has found that companies with extremely strong omnichannel customer engagement retain 89% of customers on average, compared to just 33% for retailers with weaker omnichannel customer engagement, according to Mindy Support. A key element of good omnichannel customer service is letting shoppers retain the same representative across multiple channels, which can be complicated when designing support across in-person, digital, and phone options.
Some companies are already embracing the potential of omnichannel in ways that both enhance and enable benefits beyond convenient ways for shoppers to handle research and purchasing. For instance, Hy-Vee recently expanded its retail media network across all channels and will now let its brand partners reach customers wherever they want to be seen. This could potentially boost sales and bring in more ad revenue for the grocer while creating new experiences for shoppers.
The key to the future of omnichannel will likely be creativity. Truly omnichannel shoppers engage with retailers across multiple channels during each journey — 48% of global consumers get inspiration for purchases when they are online, according to Google. Breaking down the barriers between research and purchase, no matter where these steps take place, will be essential to retail success in the coming years.
Discussion Questions
How do you expect the omnichannel experience to evolve in the coming years? Are there any aspects of omnichannel that you think retailers are over- or under-emphasizing?
Poll
Loading …BrainTrust
Neil Saunders
Managing Director, GlobalData
An early goal of successful omnichannel retail was to replicate the in-store shopping experience online. As shoppers continue to return to physical stores post-pandemic, the opposite may be true today — those in-person shopping experiences need to mirror the online breadth of assortment and ease of navigation as much as possible. The trickiest piece is the assortment planning, given the space limitations of a typical physical location.
Omnichannel his an industry buzzword which means connecting channels so they work together. The customer, of course, doesn’t really think about channels: they just want a seamless experience that works, regardless of how they’re accessing the retailer or brand. Seamless doesn’t necessarily mean the same – different channels are used in different ways – but it does mean consistent and integrated. This is where many retailers still fall down: pricing that differs widely online to stores, stock visibility that is inaccurate for online pickup and leads to cancelled orders, staff in store not able to help with online order issues, and so forth. These are all basics that need to be fixed, even though the systems that support and drive them are complex and fragmented.
If my math is correct, then 89% of retailers want to do omnichannel right, but don’t feel like they have all the pieces in place. It’s always the combo of people, process, and tech that creates the system for success. I’m glad to see that creativity is now also considered key.
Omnichannel retailers need to rethink everything in terms of their customer’s perspective. I think inventory visibility is critical for the customer, but under-emphasized by retailers. It is so annoying to see something you love but can’t get. You try to see if it’s in stock in the store by checking online—but can’t—and delivery is too late for your need. We need to make Omnichannel real-time inventory visibility a priority, which few retailers have done.
Long story short, customers want products that feel like they were made just for them. Then want them at what they believe is a good price. They want to receive them wherever and whenever it’s best for them. And then they’ll probably return them anyway, and you’d better make that easy and free. So, the impossible dream. But is it? With the right approach, the right technology—tweaked to your brand—and the right communications, design, training, and everything else, it is possible to get omnichannel right. So, back to the beginning: do the hard work to listen to the voice of your customers. If you build it, they will come.
Customers will always want to Explore + Experiment. Omnichannel has vastly expanded the ways in which a customer can Explore, but Experimenting is still best done in person. And in person now means there’s a huge array of digital tools that can heighten a customers overall experience. I think retailers are going to have to be careful not to put customers on choice overload. The temptation is to offer an ever expanding menu of choices that can ultimately cause more confusion, and returns, than will be healthy. So how the retailer Executes will be critical in making a difference between heightening the Experience or creating distractions and confusion.
Explore + Experiment + Execute = Experience³
It’s not a simple sum of the parts. It’s Exponential.
Refinement of the existing model will be the emphasis. The refinements will include, accurate on-hand inventory in every inventory location (item-level RFID tagging will play a bigger role), seamless interactivity (integration between systems that support each channel, communication with customers at every step in the process and at every touchpoint, and integrated to a solid return process/mechanism based on the business rules set by each retailer.
Over the medium term, retail companies will invest in gaining a single view of individual customers. Integrating all omnichannel data will smash silos that prevent holistic shopper insights.
Retailers have wisely pivoted from metaverse experimentation to retail media revenue generation. Monetizing store and digital assets with B2B ads will be a 2024 priority for retailers.
I think the most important thing is making omnichannel pleasant for customers and profitable for retailers. I’m not sure we’re quite in either place yet. The pandemic created huge spikes and as is their nature, retailers just bruted it through or outsourced to companies like DoorDash and Uber.
There will be adjustments to people, processes and technologies to make this work.
unlike many of my counterparts, I don’t think charging for returns is going to be a positive. It will drive shoppers elsewhere. I believe some data is coming out on that topic already
The Holey Grail is omnichannel visibility to customer and inventory data to enable consistent customer service and optimised inventory availability and fulfillment. Some retailers are getting closer, but many have a long way to go. Legacy systems for different channels that aren’t fully integrated is the main problem. Accurate real-time inventory won’t be achieved until retailers invest in RFID tagging at the item level. The most underemphasized area is real time inventory visibility. Once retailers have this, it will open up the opportunity for enhanced customer experiences and increased revenues.
Omni Channel is going to expand in maturity and become more seamless in the current places we see it. A major growth area will be D2C. However, the largest expansion will be in the places we least expect, including C-stores and the SMB vertical. The maturity of software and process available for providing pre, during and post Omni-shopping experience in these two segments will see tremendous growth.
Omnichannel was a step up from multi-channel. It’s easy to have multiple channels that allow customers to communicate and buy from you. It becomes Omnichannel when the customer can switch from one to another and not start over. A better word or phrase could be “Any-Channel.” After all, the modern customer wants to use whatever is closest and most convenient. The future is not about channels. It’s just about being easy and convenient. That’s how retailers must think.
We have evolved well past thinking in terms of shopping and fulfillment channels. The term omnichannel was devised by strategy consultants 15-plus years ago to integrate the emerging ecommerce shopping channel with the dominant physical retail store channels. As digital has become such an omnipresent force in all of our lives, consumers are engaging with brands on a 24/7 basis. Omnichannel as a strategy is a foundational element that has evolved into unified commerce and, with all the emerging technologies and social commerce capabilities, immersive commerce. With that said, companies have to have the capabilities, strategies, and technologies to support a 24/7 channel-less world.
The average consumer has never heard of the term omnichannel and is simply looking to engage with a brand on their terms and convenience. Modern commerce in the digital world is not limited to the constraints of shopping in a physical store with its 85% share of the retail dollar and across ecommerce and marketplace apps (Amazon, Walmart, TikTok Shop, etc.).
With the emergence of social commerce, livestreaming, and retail media networks, retailers and brands must consider far more complex customer journeys and touchpoints when developing customer-centric strategies. With the ultimate goals of driving conversions, AOV, engagement, etc, product discovery can happen across physical and digital channels, and the customer is seeking new, innovative, and experiential ways to engage with a brand in a channels-less world.
I maintain what I have been saying for 5 Years. Omnichannel was just a cute way of saying that you sell through more than one channel with mostly lip service attention paid to connecting them.
The real play is Unified Commerce (where marketing, consumer journeys, tech, supply chain, content and P&L are fully connected.
The other is Immersive Commerce – He act of making physical and digital habitats fun, immersive, experiential, 3D, social SHOPPING destinations. Immersive Commerce and Video Commerce are the future of successful Unified Commerce retail..
Good question, and I’m wondering if we might not see something of an “online backlash“: I was buying something in a store today, and thought “gee, this is fun…for a change” (Although I’m also expecting delivery of an online purchase, so my testimonial might not be all it seems). One thing, I think we’re going to have to see – eventually – is cost rationality; if some companies become essentially all online, then that will (presumably) facilitate costing by default, but companeis can’t continue to have radically different fulfillment costs, yet charge a uniform price because customers don’t think there’s a difference. In simper terms: no more “free everything“.
Not only is omnichannel the future of retail, it is the expectation of most consumers that retailers are already in the game. There are no more channels, just the journey and it is not linear.
Today, research and purchase can happen without ever entering a store. There is still great ease around this because so much retail revenue still comes from the box. However, smart retailers should be preparing for a future where stores take on different roles (experience, fulfillment, returns etc) and the mobile device becomes the point of purchase.
Retailers who are still divided between brick/mortar and digital are doing themselves a disservice, and likely their customers. Even while more purchases are still made in the box, increasingly, the factors that influence those decisions are not. An integrated omnichannel retail strategy is the answer.
Omni channel is about customers, not channels. Businesses need to focus on customer needs when developing alternative shopping & delivery experiences. Don’t complicate it but do invest in it.
Instead of omni-channel, I find it more helpful and accurate to think of the shopper’s journey as one continuous path to purchase that spans both online and offline touch points. Retailers need to integrate both digital and physical into their brand messaging, product merchandising and customer service strategies. Thinking this way frees the retailer up from the burden of feeling they have to develop their own robust e-commerce to accompany their stores, or vice versa and allows them to think more creatively about how to leverage partnerships, alternative formats, social media channels and more to give shoppers the path to purchase experience that serves them best — without overtaxing the retailers own limited resources.
In my opinion, the importance of offering a seamless shopping experience across different channels, known as omnichannel, is greater than ever. Many companies are moving in that direction, but only a few feel they’ve fully adopted the needed technology for going omnichannel. It’s not just about online sales; physical stores are still crucial. As recent data shows that people are returning to malls, retailers are using them creatively to merge online and offline shopping.
What’s equally important is keeping customers engaged after they buy. Businesses that provide excellent service across various communication methods will retain more customers; this means that the shoppers must be offered consistent customer support, whether they’re in a store, chatting online, or calling on the phone.
To succeed in the future, retailers need to be creative and make shopping easy, regardless of where the customer’s journey began. Ultimately, it’s about breaking down the barriers between looking for products and making a purchase, wherever those steps take place.
As others have said, “omnichannel” is all about a seamless experience in the eyes of consumers. For brands, however, “omnichannel” means much more. It’s an opportunity to engage with customers in new ways, increase brand recognition, drive loyalty, and fuel customer retention. One area that is still largely underutilized when it comes to omnichannel experiences is loyalty programs. Loyalty programs should be reflective of the overall brand, and customers are increasingly demanding the same experience from their loyalty program regardless of whether they’re shopping online, through an app, on social media, or in a physical store. Being able to seamlessly access rewards and perks across channels deters cart abandonment and puts customers in control of their shopping experience.
It’s still hard. At the end of the day, gaps in integrations between systems show up as gaps in what should be a seamless omnichannel customer experience. I think it’s going to be an iterative evolution and new solutions are layered on top of legacy tech to fill and smooth those gaps. But we still have a long way to go.
Just as consumers have demanded the same experience they get in-store in their online shopping experiences, they’re starting to expect the functionalities they access online, such as virtual try-ons when shopping in-store. Retailers can adopt a “phygital” strategy, a combination of physical and digital retail strategies, to create a cohesive customer journey. Today’s customers move seamlessly between physical and digital touchpoints when shopping (ex. BOPIS) so retailers must ensure customers receive consistent experiences regardless of the channel they choose. To that end, I think retailers underemphasize the checkout experience and how critical it is for customer retention given that omnichannel POS systems reduce the risk of cart abandonment.