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Why it’s time to refocus on omnichannel
June 14, 2021
True omnichannel in retail has proved frustratingly difficult to achieve. But the seamless physical and digital customer journey remains a goal worth pursuing, and finally there’s a way of getting it right.
The pandemic pressed the accelerator on a long-term shift towards integrated physical and digital experiences. It also exposed the cracks in existing business models. Fragmentation of traditional retail is hardly new. Nor is omnichannel, a solution to the fragmentation problem which has long promised to deliver seamless experiences across stores and digital channels. But, true omnichannel in retail has proved frustratingly difficult to achieve.
Omnichannel is difficult
It’s not that we don’t ‘get’ omnichannel. Everyone understands the idea of making the customer experience seamless, but when it comes down to it, they still get blocked by traditional siloes. Businesses haven’t been able to execute true omnichannel because, for many clients, digital or eCommerce sits apart from the rest of the organization. It’s managed differently with separate incentives. With true omnichannel, brand, human, digital, physical and operations are all part of one integrated approach.
The culture problem
Because omnichannel is multi-dimensional, it’s not enough to simply reshuffle IT systems to enable individual elements (something most businesses are reasonably adept at). Technology, customer vision, products, platforms—they all need to move at the same time as part of a cultural shift. Do it one-by-one and it won’t work.
Typically, organizations aren’t structured to work in concert like that. Each part of the business has different goals and objectives and every channel is dealt with separately.
There are exceptions. Walmart is a great example of the merging of physical and digital to create a truly seamless customer experience. Under fierce competition from Amazon, Walmart evaluated its core strengths—distribution and store network (nearly 80% of Americans live within driving distance of a Walmart)—and built upon them. In 2014, they designed the click and collect experience from the ground up, not just as a bolt-on to their core business. Since then, Walmart has added $400 billion to its market capital and used the click and collect learnings to launch one of the most sophisticated digital businesses in the world. It’s also no coincidence that Walmart’s CMO reports to the Chief Customer Officer.
Covid-19 accelerated the change
When the pandemic hit, retailers faced multiple issues simultaneously. They had to quickly invest in digital capabilities, building online channels fast and at scale. They needed to change the purpose of their physical spaces and find new ways to interact with consumers.
Consumers changed—becoming far more fluid in their habits—and expected high standards of service and unique experiences. They easily switched between brands if they overpromised and under-delivered or if other options were available to them.
Competition changed too. At one point, for example, it seemed as though a new venture capital-backed food delivery startup was popping up almost daily. Niche players have suddenly become just as available to consumers as big chains who’ve invested fortunes in being near the consumer.
Not all of this change will stick, but the expectation is that it will. As a result, things that were tentatively on the transformation roadmap have taken on a new sense of urgency.
Getting omnichannel right
A true omnichannel approach requires a holistic vision that cuts across traditional retail siloes and aligns the organization around the direction of travel.
When EPAM was developing its Omnichannel Retail Playbook we realized that, as omnichannel challenges span customer, business, technology and organizations, it needed to address all four as a single system too.
A holistic vision based on the customer perspective is crucial. Without it, it really doesn’t matter which new platform or eCommerce channel you invest in—the needle will barely shift. But how do you engineer this sort of holistic transformation? In terms of complexity, time and cost, most businesses simply can’t afford to modernize their legacy ecosystems.
What’s needed is a model that enables customer-focused innovation while keeping the retailer in control. We believe that one simple way of achieving that is through an innovation platform that sits alongside the existing corporate tower. The platform provides a ‘safe space’ for piloting small, niche projects in-region and in-brand without damaging legacy architecture. The innovation platform space enables you to find and unblock complexities before migration, which makes it quick and simple, with no need to re-platform the entire stack for change to happen.
We’ve used this approach to help grocers build integrated roadmaps. With teams in place, we’ve supported organizations in turning their hierarchies 90 degrees to focus on customer value. And we’ve turned the ‘theory’ of the omnichannel customer experience—with all its interconnectedness—into app-based reality.
There is a perception that engineering omnichannel means investing in everything everywhere. It doesn’t. It means meeting customers in context, with a customer-centric channel strategy that maximizes channel strengths and maintains the focus on ROI.
The omnichannel reward
The innovation platform approach enables retailers to adapt, at speed, according to market need. It means they can come to market quicker, learn rapidly and be more adaptive than their digital native rivals.
The journey is one of years, but you can map it in weeks—and it doesn’t take long to start seeing the benefits. Yet retailers should be in no doubt: there is an urgency to this. Retail has changed. Customers have changed. The competition has changed. Retailers have to respond—which means the potential rewards have never been greater for those who get omnichannel right.