Trends come and go, but the omnichannel retail experience is definitely more than just hype—it’s a legitimate means to reign in all retail sales channels under one umbrella, to more efficiently provide products to consumers where and when they want it. Now it’s up to solution providers to build the mechanisms to support this business model.
In an omnichannel model, consumer information, inventory, product data, content and operations are integrated to function together—rather than as individual silos separated by line of business—with the objective of offering customers a similar, highly-engaging experience whether shopping in a brick-and-mortar store, on the web or via a mobile device. This experience ideally includes the ability for consumers to start their shopping trip in one channel and finish it in another—for instance, ordering merchandise online and picking it up in-store.
The optimal omnichannel model also calls for consistent pricing, promotions and brand messaging across all retail touch points, with targeted offers automatically pushed to shoppers’ smartphones when they enter stores.
Over the past few years, omnichannel retailing has garnered recognition as the remedy to a growing tendency among consumers to use technology to research prices, and then make prices the defining factor in their purchasing decisions. The premise here is that merchants that offer the best, most customer-centric brand experience, rather than the lowest prices, will always win the game and boost revenues at their competitors’ expense.
While many Tier 1 retailers have embarked on an omnichannel path to cater to increasingly demanding, technology-savvy customers; battle showrooming and distinguish themselves from the competition using weapons other than discounted prices, a majority of SMBs lag far behind.
“Most have barely scratched the surface of e-commerce, let alone omnichannel commerce,” says David Gosman, CEO, pcAmerica (www.pcamerica.com). Gosman, like other sources contacted by VSR, attributes the lag to two factors: a shortage of integrated systems and the perceived value of migrating to an omnichannel model versus the cost of doing so.
While Tier 1 companies have bigger budgets and more reasons to roll out an omnichannel initiative, SMBs can adopt some elements of the omnichannel model. Toronto-based Henry’s Camera, which operates 33 stores along with several traditional and mobile websites, is a prime example. The retailer recently added a “Reserve Online, Pickup In-Store” feature that allows consumers to view store-level merchandise quantities by tapping into a master multi-location inventory database supported by software from OrderDynamics (www.orderdynamics.com) and accessible via computer or mobile device.
Store staff can access customers’ online and in-store purchasing histories and behavior profiles via tablets. This information is used to better gauge the preferences of, and make appropriate recommendations to, customers shopping in person as well as to engage in upselling when online orders are picked up in-store.
Similarly, Tennis Plaza, a Miami-based retailer of tennis apparel, accessories and equipment, has armed its employees with tablets that have built-in magnetic stripe readers and barcode scanners. Staff use tablets to determine product availability across all four stores and the retailer’s website, as well as to complete transactions at the point of decision. The latter includes accepting payments and making shipment arrangements for items that are temporarily unavailable in one location but in stock at another store or available in the warehouse that handles online order fulfillment.
How Soon is Now?
Leslie Hand, research director, IDC Retail Insights (www.idc-ri.com), believes company size should not factor into any discussion or debate about whether to embrace the omnichannel model. “No matter where they’re shopping, today’s consumers want to experience brands wherever, whatever, and however they desire, be it in a store itself, on a mobile phone, through social media, etc.,” she says. “Small store or large, omnichannel is the way to fulfill that promise.”
Gregg Brunnick, director of marketing, Epson America Business Systems Division (pos.epson.com) corroborates Hand’s comments, adding that it is essential for SMBs to incorporate omnichannel because “their customers are already there.” In other words, consumers are already adapting to the concept of using mobile devices to shop and have become highly accustomed to using technology to get the merchandise they want, when they want it. Given a choice between patronizing a small store that does not offer these capabilities and a larger one that does, they see no reason to opt for the former.
Other observers don’t quite see it that way. “While I think we can all agree that the consumer has an unprecedented level of power and higher expectations for their retail experience, saying that omnichannel is a ‘must’ isn’t the way to go,” states Robert Grabowski, vertical marketing manager, Honeywell Scanning & Mobility (www.honeywellaidc.com). Rather, he suggests that VARs ask SMBs how they are engaging customers in a meaningful way. The solution presented may indeed be omnichannel, but it may also be “leveraging a world-class loyalty program to drive in-store traffic with customized offers,” Grabowski asserts.
Christophe Naasz, director, business development, Star Micronics (www.starmicronics.com), concurs. “Moving to an omnichannel model is not a must for every SMB; it really depends on the business and volume of the SMB client” and what it is attempting to accomplish, the executive says. For example, a mom-and-pop retailer with a loyal client base, a highly specialized merchandise focus and few competitors in its market—online and otherwise—probably has no need to embark on an omnichannel initiative.
Where observers do agree, however, is that even if an SMB is a good candidate for a transition into an omnichannel business model, VARs should not attempt to execute a complete transformation overnight. Once prospects understand that an omnichannel solution is scalable and can be implemented gradually, their level of comfort with the change will increase, observes John Nicewick, vice president, marketing, ELO Touch Solutions (www.elotouch.com).
Nicewick explains that helping SMBs to introduce an endless aisle component via interactive kiosks or all-in-one computers a viable, low-risk strategy for moving ahead and assessing to what degree target customers accept the new shopping experience. “If (retailers) see adoption and sales growth, they can start improving their web interfaces, perform hardware upgrades as needed, etc.,” Nicewick explains.
Moosejaw Mountaineering, a Detroit, Michigan-based outdoor retailer, made its initial foray into omnichannel via an endless aisle methodology. The merchant’s 11 stores carry only 4,000 to 5,000 products, but the fulfillment of online orders is handled by a warehouse that holds approximately 80,000 items. Store associates use mobile devices to assist customers in the aisles, assessing product availability in-store, checking warehouse stock, and processing orders and payments for in-stock items, as well as for desired goods that are sold only on the website. Associates also extend store aisles by utilizing the technology to research competitors’ prices, offer price matching to shoppers to save the sale and accept payments.
As pressing as the question of whether SMBs should forge ahead with omnichannel, are the issues of whether and how legacy systems can be used as part of omnichannel strategies in the SMB world, and if VARs can develop the right omnichannel solutions for their SMB customers. Some proponents hold that legacy systems have a place in the SMB transition to omnichannel, in part because many vendors have created plug-in/bolt-on modules that update inventory data and sync them between traditional POS systems and e-commerce/mobile commerce sites. Some payment processors have added the capability to track SMB shoppers using a traditional payment connection and some back-end reporting.
Additionally, Gosman says, “several legacy systems allow for an exchange of data, such as the insertion of outside transactions into the existing system’s database. The required integration isn’t necessarily easy, but in the case of several legacy systems, it’s achievable.”
Gosman suggests that VARs ease the process of figuring out how to integrate various components and systems by creating a “dummy” retail business with various sales channels, including in-store, on-line, mobile and social. “Experiment how they all connect and tie together back into one system,” he urges.
Other players contend that the use of legacy systems in an omnichannel environment is limited at best. “Whether or not legacy systems can be used…really depends on the level of integration the retailer would like to reach,” Naasz asserts. “Omni-channel is not just about a new web applications or hardware. Rather, it is the architecture of both hardware and software technologies to merge online and offline retail. You might be able to get away with replacing a few components to start, but eventually you will need to upgrade your old system to support the architecture of your omnichannel platform.”
Sources agree that through integration and, where needed, partnerships with vendors, fellow resellers and ISVs, VARs can assemble and/or develop appropriate omnichannel solutions for the SMB market. Such solutions should, first and foremost, allow a single, virtualized view of all inventory items. More importantly, inventory management and visibility must be in real time. “Like their larger competitors, SMB retailers are not well served by solutions that tell them an item that a customer wants is available in the warehouse or at another store, when that item was really spoken for five minutes ago,” observes Scott Moreland, retail solutions principal, North America, Motorola Solutions (www.motorolasolutions.com).
A clienteling component is also a must. Clienteling solutions permit retailers to rapidly and efficiently collect a wide swath of customer data, from demographics to purchasing histories, preferences and loyalty club participation; information harnessed from CRM databases can be integrated as well. In turn, they can create segmented customer lists, effective contact strategies and discount offers that match the shoppers’ profiles, preferences and purchasing histories.
“Three years ago, it was enough to have inventory data, but it is impossible for even the smallest retailer to call itself omnichannel unless it works from a more comprehensive picture of its clientele,” says Kerry Lemos, CEO, Retail Pro International (www.onesteppos.com). Like access to real-time inventory information, such data constitutes value VARs can bring to retailers, Lemos states.
Finally, there is the need for smarter, more flexible, payment solutions. Henry Helgeson, CEO, Merchant Warehouse, says these solutions should not only identify customers across every physical store and e-commerce location and facilitate sales, but also permit seamless handling of returns should a consumer attempt or wish to return in-store an item that was purchased online.
“Inventory management is a huge can of worms, and unless it’s fully integrated with all tender types across all channels—including returns handling and consistency of tender types from the store to the website to mobile—there is no way for SMBs to” reap return on their omnichannel investment, notes John Berkley, senior vice president, product, Mercury Payment Systems (www.mercurypay.com).
Unquestionably, SMBs have far to go when it comes to joining the omnichannel revolution and VARs will almost certainly find that making the move is not in the best interests of every SMB client. However, pursuing the business of those retailers for which the model is a match—and approaching the table with a proper omnichannel solution—is a huge step in the right direction.