At the start of 2020, the concept of omnichannel retailing was nothing new. Consumer behaviour and buying trends were changing and most retailers aspired to provide a seamless integrated online and in-store experience — even if their aspirations didn’t always match their current capabilities.
However, in the space of less than a year COVID-19 has rapidly accelerated the demands on retailers to deliver online-centric shopping experiences and introduce fulfilment processes that are no longer a ‘nice to have’ but are central to meeting customer expectations for safety and convenience.
New omnichannel benchmark study
Over December 2020 - January 2021, Retail Express conducted an omnichannel benchmarking study across multiple sectors comprising a total of 22,000 stores.
The purpose of the study was to understand the degree of adoption of key omni-channel best practices that will be critical for retailers planning to position their business for future growth.
While the study revealed encouraging evidence of omnichannel best practice from some retailers in certain sectors, the overall results demonstrate a significant opportunity for improvement and need for large-scale business transformation.
For each of the key omnichannel practices studied less than half of the retailers have implemented them. For most of these practices, the retailer uptake is less than a third.
Of the 26% of retailers offering Click & Collect, only 32% were offering the same day pickup that Australian consumers consider to be a 'satisfactory' timeframe.
Furthermore, when it comes speed of home delivery only ~1% could deliver within the same day. The vast majority were only offering 2+ days.
Omnichannel best practice
The quality of a retailer’s eCommerce store Click & Collect services and home delivery speed have become key factors in who consumers decide to shop with. It has divided retailers into those who are able to step up and leverage this as an opportunity to grow market share and those who have struggled to adapt.
For Click & Collect to be a competitive Advantage over your competitors, instant, or at least same day Click & Collect is now the benchmark, and it's the same for home delivery.
Some of the other omnichannel capabilities that are now becoming critical for every retailer include:
Cross-channel vouchers - the opportunities from promotional and gift vouchers are wide-ranging and high impact, however many retailers aren’t realising their full potential. Instead they only offer a disconnected experience with vouchers only able to be purchased and redeemed in-store or online — not both. This significantly impacts the experience for existing customers and leads to a poor first experience for new customers acquired through the promotional campaign.
Ship from Store fulfilment – the shift toward eCommerce is driving retail leaders to rethink the role of the store to improve omnichannel fulfilment performance and better utilise inventory. One of the ways that retailers have leveraged store inventory is with a ship from store fulfilment model. Those retailers that can enable omnichannel fulfilment options while strategically balancing cost and service will drive additional profitability and meet consumer expectations.
Endless Aisles and Special Orders – The idea of endless aisles & special orders is that you leverage your supplier’s ‘endless’ product range as well as available stock from your other stores, to offer a much wider range of stock than what you hold within your stores.
Automated stock replenishment – today’s shoppers are unforgiving, and the retail landscape is cut-throat. If you don’t have the right stock in the right store at the right time, you’re in trouble: consumers will find another retailer who can. As physical stores increasingly become an enabler for faster, decentralised fulfilment of online orders, this places additional dependencies on them to be suitably stocked. An automated replenishment system based on intelligent algorithms ensures that each store is optimally stocked based on actual demand and supply data rather than relying on gut instinct or Minimum Stock Levels.
The outlook for 2021
One thing we learned through 2020 is that disruption is the new normal.
In 2021, digital transformation is the number one priority as retailers look for ways to create agile businesses built to adapt to future disruptions. Omnichannel is naturally be high on the agenda, with investment in the right technology stack and business processes to enable these capabilities.
By utilising agile, integrated omnichannel software systems, retailers can switch different practices on and off based on what is happening out in the market.
Rather than backing off on IT spend in 2021, retailers need to double down and keep digital transformation at the top of the investment agenda. Now is the time for retailers to plan and design a robust and flexible operating model including a review of current systems and technology looking for all possible efficiency gains.
Those retailers that have embraced the latest omnichannel capabilities along with lean, agile operating models should be feeling very optimistic for 2021.
How do you compare?
If you'd like to see how your omnichannel practices stack up versus others in your category, contact us today for a free omni-channel benchmarking scorecard report on your business.