Five integrated components to fortify omnichannel retail

An “omnichannel” approach relies on using the strengths of e-commerce and brick-and-mortar cohesively, in which one can improve the other. Yet operationally and informationally, both are typically siloed, even though the customer views them as the same part of one brand.

To build off the example above, organizations should be oriented around “data as a service,” but oftentimes e-commerce has been treated as a channel to be managed separately: separate staffs, skill sets, data architectures, metrics and budget. Today, the challenge is: how does e-commerce become part of the integrated whole and not a standalone? A unifying mission centered around greater customer lifetime value requires unifying functions and the intelligence that informs those functions.

To lower the cost per customer acquisition, this is also an opportunity to scrutinize talent and reimagine or upskill functional alignment for greater efficiency. One of the largest big box retailers has focused diligently on cross-training staff both for e-commerce and in-store domains, ensuring a consistent customer experience. Their approach to functional integration includes unified data analytics to optimize inventory, marketing and customer service strategies.

The result: Greater operational and data integration provides the foundation for better marketing, inventory management and fulfillment — the entire customer experience — to truly deliver on the promise of omnichannel for greater growth and scale.

This is the lifeblood of personalized experiences to enhance satisfaction and loyalty, with analytical tools and techniques to transform this data into actionable insights for digital channels and stores — including inventory, pricing, promotions and customer service.

Modernized point-of-sale systems can integrate physical and online store operations for holistically checking inventory, tracking customer buying habits and preferences, and managing loyalty programs — a mobile solution for capturing insights that also improves experiences. And through cellphone data, store Wi-Fi, cameras, smart shelves and other methods coupled with AI, you should also be understanding customer behaviors and actions in stores, not just online, even when a transaction hasn’t even taken place.

Combining this data with e-commerce analytics offers a full view of the sentiments and intentions of your customers and how they are shopping. Behavioral science can point toward possibilities with targeted, limited-edition products and closer customer collaborations. One recent example is a leading beauty retailer that uses a combination of in-store technology, such as augmented reality mirrors, and its mobile app to collect data on customer preferences and behaviors.

These insights are used to offer personalized product recommendations both in-store and online. This data is also integrated into their loyalty program and helps to inform customer purchases and preferences across all channels, allowing for tailored promotions and offers.

The result: Insights from each channel combine to create a detailed picture of each customer’s habits and preferences, which not only enhances the potential for personalization but also can drive increased operational scale and lower cost of acquisitions for better margins.

Inventory visibility and optimization integrated with consumer insights and analytics is the key to both efficiency and customer satisfaction. It’s critical for businesses to fine-tune their physical inventory-tracking processes to capture changes in real time, whether items are being fulfilled online or in-person.

Again, turning to the power of data, retailers should use this information to inform their assortment and what channel they are typically sold through, furthering your mission of “right time, right place.”

Processes should also account for converting returned items back in as inventory in a certain location on the same day they are received. One fashion retailer allocates inventory by location, factoring in local demand patterns, and another has been simplifying processes from procurement across the rest of the supply chain to reduce inventory costs and satisfy demand.

The result: Less standing inventory drives operating costs down, and fewer sellouts enable better customer experiences, thanks to greater insights into customer demand and flexible fulfillment options.

Retailers should be continually assessing their third-party logistics networks based on cost, speed and delivery radius — negotiating with new potential partners and maintaining favorable relationships with existing ones. Diversifying delivery couriers is a practice that must defy complacency.

Also consider how a partner’s existing logistics technology integrates into your omnichannel fulfillment investments. For instance, one large grocery chain partners with local third-party services for delivery while also enabling online ordering with associates that pick products off the shelves for you. Meanwhile, smart logistics solutions are also evolving, like autonomous delivery vehicles for distribution and drones for last-mile delivery, and AI can be deployed for holistic demand planning and greater supply chain resilience.

The result: With the right partners, you can enable faster end-to-end delivery times with less bottlenecking — crucial for securing customer loyalty amid increasing expectations, but also reducing costs to improve margins.

Which of your customers wants to go to a physical location, and which would prefer never to step in a store ever again? Age is a key factor, but other demographic data you have should be used to regularly scrutinize real estate footprints, encompassing fulfillment centers and strategically located storage/distribution centers. Naturally, this exercise should be looked at for efficiencies as well: existing stores and inventory should be prioritized to fulfill orders so as not to overspend on real estate and hold excess inventory.

In the US, leaders maintain a ratio of fulfillment centers to stores of no more than about 2%. One retailer of kitchen goods has been transitioning its stores into omnichannel fulfillment hubs, which helped it meet demand during the crucial holiday shopping season. Another department store chain has unified its inventory across channels and is now fulfilling over 75% of orders from its stores.

The result: Increased productivity of an existing real estate footprint helps retailers — and customers — get the most from stores and sharpen fulfillment options that customers demand.