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  March 2014
 

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Developing an Omni-Channel Strategy: A Checklist for Retailers
Dwight D. Hill, The Retail Advisory LLC


The topic of omni-channel retailing continues to inundate the retail trade headlines. Challenges abound for retailers as empowered customers switch between brick-and-mortar and online, in some cases forcing retailers to rethink their entire brick-and-mortar footprint as a result. Seen the headlines for RadioShack and Staples lately?

Several good examples exist of retailers winning in this area; however, many more are still struggling to determine what it means for them and their customer. While they may have an omni-channel road map, all too often it may consist only of point solutions that enable "ship from store" or additional inventory visibility, not including the implications across the entire retail operating model from distribution center to customer.

 

This checklist suggests a more thoughtful approach that, when combined with rigorous advanced planning, can increase your chances of success:

  1. Define what "omni-channel" means for you as a retailer and your customer. Retail executives must shift their perspective toward the true meaning of the term omni-channel - "customer experience." The focus must be on understanding how your customer is choosing to interact with your brand and plan your response to her shopping journey(s) accordingly - whether online, mobile, or in store. Mapping out the typical customer paths to purchase will increase your chances of success. Consider the following questions:
    1. How is your customer choosing to interact with your brand?
    2. What elements of your shopping experience drive incremental conversion? Is it all about price or is there a convenience/personalization factor as well?
    3. Does she shop online first, then brick-and-mortar?
  2. Develop a merchandising strategy that is relevant across channels. The availability of information in the hands of the customer has resulted in tremendous product and price transparency. In addition, customers are increasingly seeking differentiated and personalized merchandise. Key questions to address include:
    1. How should the assortment differ online versus brick-and-mortar? Can your merchandise teams handle the increased workload of the online channel?
    2. Is your private label strategy sufficient or should more depth and breadth be considered?
    3. What motivates the shopper - a dynamic or more promotion driven pricing strategy?
  3. Determine how your stores must operate differently. RadioShack is closing 1,100 stores and Staples is closing 225 stores. These are just two examples of retailers in recent headlines being forced to rethink their store footprint as a result of the office supply and electronics category shift to e-commerce. But don't think you are immune to these strategic shifts in consumer behavior if you are an apparel or other type of specialty retailer. Consider the dramatic traffic declines in Holiday 2013 primarily as a result of the shift to the e-commerce channel. Additionally, consider the following questions:
    1. How can you most effectively leverage your stores as omni-channel distribution points?
    2. Is your store operating model designed to run as efficiently as possible at lowest possible cost?
    3. What technology can be added to the store experience, effectively merging the online and store experience?
  4. Consider how to leverage your supply chain and inventory as a key differentiator. The promise of omni-channel is that inventory will be made available when and where the customer wants it and it can be shipped anywhere - and increasingly, at no charge. The reality, however, is very different as this demands, in many cases, an entire refresh of supply chain and distribution processes. Key questions to drive this discussion include:
    1. How can inventory be made visible in real time across all customer touch points and what technology should be considered as an enabler?
    2. What elements of inventory allocation and planning models must be reevaluated?
    3. What fundamental changes in core business processes will be required?
  5. Develop an organization structure that is nimble and flexible, allowing an unencumbered dialogue between all key functions including merchandising, supply chain, e-commerce and stores. There is no one "right" organizational structure as this relies on many factors, but leading omni-channel retailers have either established an omni-channel leader or have an integrated organization structure. Specific questions retailers should be considering include:
    1. What is the best organizational structure or design to ensure all key functions from e-commerce to merchandising have a seat at the table as well as one view of the customer?
    2. How should incentives be aligned to support any new omni-channel organizational structure?
    3. What metrics should be reevaluated to ensure alignment with the core omni-channel strategy?

Many retailers have been on this journey for years while others may just be getting started. One thing is certain - starting with your own definition of omni-channel and how it will satisfy your customer's shopping wants and needs will get any retailer off to a good start on this journey.


Dwight D. Hill, whose background includes leadership roles with Neiman Marcus and Deloitte LLP, is Founder and Retailer Strategist, The Retail Advisory LLC. Dwight can be reached at dhill@theretailadvisory.com.

 
 
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