Omnichannel: Customers and Data Shape Retail Today

By Steven Paull, Senior Vice President at Navigator

It was not that long ago when we only had two ways to buy stuff. We could either go a store or dealer and purchase something, or we could call in to a service center and order from a catalog.

Over the past decade and a half, we have added ecommerce to the mix, and our ability to purchase items through the Internet has transformed the way we buy. How many people today do all of their holiday and gift shopping without even entering a store? The impact of Amazon and other ecommerce brands has been astounding. 

However, historically, the supply chains of these channels were mainly disparate. The stores were supplied from regional distribution centers, and the direct order items were fulfilled from dedicated warehouses.

So how is life in retail different today? Where has retail veered and where is it headed? 

The answer is one of the biggest buzzwords in business today: Omnichannel. Omnichannel is the integration of inventory, fulfillment, marketing, and customer experience platforms that continues to revolutionize retail commerce. The concept of a store vs. online has become amorphous to the customer, and retailers are investing heavily to maximize customer data to understand buying patterns and preferences and deliver targeted marketing and goods via multiple sources.

For many years, customers at many retailers have been able to buy via catalogue or online and then return in the store. Or they can pick up their online purchases in the store vs. having them delivered to their home.

What is different today is that many of these items are now fulfilled out of the brick and mortar stores themselves as opposed to a warehouse. This “single view of inventory” across all channels and the ability to fulfill from anywhere is a way to minimize inventory on hand and maximize margin, speed, and customer loyalty. Order routing optimization, as it is referred to, has transformed retail supply chains.

And when a customer makes an order online, potentially via an ad they saw on Twitter or Facebook, their order history and preferences are then stored for all channels to see. Online-only retailers then begin marketing of complimentary products or promotions. If that retailer has a storefront presence, then when the customer is in the store, they may either be recognizable from their smart device and receive promotions directly while in store, or they are catered to by sales associates based on a lookup of their profile in an integrated customer data system. Customer data is even captured across competitors based on data stored from browsing history online.

The challenge of omnichannel lies in the systems required to enable the view of inventory, customer preferences, order integration, and supply chain. Many of these applications have been built specifically for the channel they served. Point of sale (POS) systems have served the brick and mortar retail shops, while online ordering applications have enabled Internet purchases. Complicated integrations are required to maintain accurate inventory, and the ability to fulfill from any retail location, whether it be a store or warehouse.

Virtually, all retailers have prioritized their capital spend on implementing new platforms and simplifying integrations between these systems. Compounding these investments is a pressure to move to the cloud to reduce overhead and complexity with their other back office Enterprise Resource Planning (ERP) applications. The functions of Human Capital Management, Payroll, and Finance are critical to retailers that need to manage a high turnover environment where margin pressure is intense.

Application vendors like Workday, Oracle Fusion Cloud, SAP, NetSuite, and Ultimate are providing retailers with the opportunity to move to private or multi-tenant cloud environments. This allows for a simplification of the management of legislative changes and enables business process consistency with mergers and acquisitions and a rapidly evolving international footprint. While these retailers may lose some of the customization capabilities they have had with their on-premise applications, they gain cost advantages, simplicity, and risk management.  

Retail has always been a dynamic industry. As we evaluate the technology and customer trends, it is clear that the evolution of retailing is not going to slow down anytime soon.