The new rules of omnichannel: how to make bricks and clicks add up

2020 was the year that omnichannel went truly mainstream.

As consumers looked for safe, contact-free ways to stock up on essentials during the Covid-19 pandemic, hybrid shopping options combining online ordering and physical pickup soared in popularity. 

A report by Incisiv and Manhattan Associates suggests that 85% of US shoppers significantly increased their use of curbside pickup during the pandemic, and 79% say they now consider contactless store pickup to be very important.

In response, brands and retailers have had to accelerate their digital roadmaps. According to DigitalCommerce360, more than half of US retail chains now offer curbside pickup compared with 6.6% in early 2020, and 68.7% offer buy online pick up in store (BOPIS) services, up from 54% in April 2020.

And the imperative to embrace omnichannel isn’t going anywhere. Significant numbers of consumers expect to stick with new digital behaviors such as BOPIS and curbside pickup well beyond the pandemic. No wonder two thirds of US retail executives say the growth of omnichannel and digital shopping is the most significant trend – and challenge – affecting their industry right now. 

So, how can brands and retailers rise to that challenge and make bricks and clicks add up?

Quality of experience matters

Contactless services such as BOPIS and curbside pickup offered obvious advantages during a global pandemic. Now that we’re emerging from the crisis and shoppers aren’t making as many distress purchases, retailers and brands need to raise the bar on service and experience. The Incisiv/Manhattan Associates study shows many shoppers find current pickup experiences lacking, with poor availability of pickup slots and wait times common complaints. 

Retailers are trying to address this in several ways. Some use location-tracking technology to better predict when shoppers might arrive at the store. Others are creating “speed zones” near the front of the store to make it easier for delivery partners to pick and pack orders. Most significantly, omnichannel pioneer Walmart is converting some of its physical stores into automated micro-fulfilment centers to speed up picking and offer shoppers more – and faster – delivery and pickup slots.

At the same time, we’re seeing efforts to enhance eCommerce with elements of the physical retail experience. Albertsons, for example, deployed virtual assistants and live chat to complement its online grocery service during the pandemic, while ShopRite offered shoppers access to a registered dietitian via a virtual chat service.

For brands this means shifting the focus to understanding how to generate personalized offers and seamless experiences across different online platforms with many launching direct-to-consumer sites (DTC), but also aligning these experiences with in-store purchases to foster loyal consumers. “It’s the on-going interconnectivity that endears loyalty and generates purchase” as Phil Kafarkis puts it.

These are all signs that suggest retailers and brands are thinking seriously about how to marry up physical and online retail to create a compelling experience for shoppers. But there remain fundamental challenges to overcome.

Omnichannel model vs omnichannel view

One of the biggest challenges around omnichannel today is that it means different things to different people. 

The current media and investor buzz around omnichannel has only made this worse. There’s lots of pressure to be seen to have an omnichannel strategy, so any initiative that vaguely combines physical and online elements tends to get badged as ‘omnichannel’.

This is unhelpful for several reasons. It risks undermining the credibility of the omnichannel concept and those who advocate for it. It robs us of useful vocabulary to describe an important consumer trend. And it risks distracting us from what really moves the needle on omnichannel success.

One common area of confusion is the difference between having an omnichannel model and being able to create an omnichannel view.

True omnichannel should be about delivering a single, integrated experience for the customer, regardless of whether they buy online or in-store. A true omnichannel retailer or brand can see every piece of information and touchpoint related to a customer, and tailor the experience accordingly. The general consumer won’t think of it as ‘omnichannel’, of course; they’ll just think of it as their retailer knowing them very well.

Similarly, true omnichannel retailers and brands are able to view and manage availability, assortment and supply chains in a way that’s channel-neutral and integrated. They are not running out of stock in one place or over-delivering on stock in another because various divisions don’t talk to each other. They see and take into account demand across all their different touchpoints, and tweak their availability as needed.

In reality, we’re some way away from this. Recent research by the Retail Industry Leaders Association and McKinsey found that 65% of retailers base store decisions on brick-and-mortar performance, and just 35% consider the impact on omnichannel.

Instead, what you tend to see is a version of omnichannel where retailers connect data across silos. Their in-store and online operations continue to be run as separate units, with separate infrastructure and separate datasets – but because those datasets meet in a data lake at some point, the overall setup is classed as ‘omnichannel’. Same goes for brands that fail to connect their brand messaging across their CRM communication and social media or miss syndicating user generated content across retailers as well as their DTC sites.

This version can be an important stepping-stone toward an omnichannel business, but we shouldn’t mistake it for the real thing. There’s a big difference between the ability to wrangle data in creative ways and operating in a manner that’s truly integrated.

Breaking down organizational silos

Leading retailers and brands recognize this. Walmart’s John Furner recently spoke about how the retailer is changing its internal structure to meet the demands of the omnichannel age. “A couple of years ago, we would have had a sporting goods buyer in stores, and we would have had another sporting goods buyer online who somewhat did the same thing in different channels,” Furner said. “Now, we have got teams of people – including our customer teams, our marketing teams, logistics, and finance – all across the business that are serving customers across their businesses.”

Brands like Starbucks or challengers like Beyond Meat have been laser-focused on fueling loyalty through frictionless omnichannel experiences. Their ability to unite their service and communication channels to fulfill today’s shopper needs – particularly through social media – gives them a competitive edge. 

Of course, changing internal structures doesn’t happen overnight. In most cases, silos exist not because retailers don’t want to be more integrated but because they’re struggling with legacy issues. Forging new technology with decades-worth of systems, processes, and legacy technology is a huge undertaking, but it’s a challenge retailers and brands must now face up to. 

Silos are the enemy of omnichannel success. Both entities can’t deliver a seamless, frictionless experience for customers if their internal structures remain disjointed. To make bricks and clicks add up long term, retailers and brands must break down silos and put in place structures that enable them to operate in ways that are truly integrated.

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