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Why Omni-channel is a key success factor for growth in retail

Bruno Berthezene

Bruno Berthezene

July 7, 2015

 

For the third year, the KPMG and The Consumer Goods Forum survey of senior consumer manufacturing and retail executives has been released: “To stand still is to fall behind: 2015 Global Consumer Executive Top of Mind Survey” is an instructive wealth of information for manufacturers and retailers about the reality of the international market for this particular sector catching up an expected economic rebound. The purpose of this blog post is to extract the insights brought by this survey on Omni-channel, Solocal Group UK’s area of expertise.

This survey aims “to help industry executives better understand the ever-changing impact of industry disruptors, competition and the economy on their companies’ strategic priorities”. Two notable facts are mainly highlighted in this survey asking 539 influent senior consumer manufacturing and retail executives over the world about their own strategic priorities for the coming years. The first one is the general focus on expansion or top line growth shared by all the panel. The second one is the way to achieve this top line growth.
For this second point, if the solutions are various to reach the growth, one particular mean seems to prevail. And this prevailing action is to develop the disruptive tool to stay into nowadays game for every retailer: omni-channel retailing.

Omni channel

 

Among all the priorities, one seems persistent: omni-channel  

Growth is without any doubt the main target and according to the survey 73% of the respondents said expansion or top line growth is very or critically important. To be more precise about 40% said it was critically important, and 42% said it was their number one focus.
Then arrives the Consumers trust and the Omni-channel strategy, which also represents for 25% of the respondents their greatest challenge.

The omni-channel strategy is rarely the first priority or the first investments, But the omni-channel strategy is always mentioned as one of the priorities or one of the strategic investments. If omni-channel strategy is a priority -but not the top priority- it is yet perceived as the best growth driver (53%) and this is probably why it is persistent. Omni-channel strategy is not a goal but a driver, and probably more by being a new conception of retailing.

 

Omni-channel is perceived, rightly, as an absolute tool for increasing the consumer trust, necessary for generating growth. It is obvious to say consumers always have a technological lead over retailers, and their capability to use new consumption means are a key point to take into account, in a way to satisfy them and create a deeper engagement and trust. For retailers, digital tools and an omni-channel distribution are necessary to provide an expected service for their customer.

As the survey mentioned it “The omni-channel is still relatively new, but technology disruptions are, by now, par for the course for the consumer-driven industry. It has – and will remain – on the bleeding edge of change. Omni-channel has the ultimate goal of letting every consumer shop and purchase on their terms – a tall order indeed.”  For that reason omni-channel is considered as both a key area targeted for investment and a top challenge. Digital retailing is on an edge; on one side there is the threat of being too conservative and then overtaken, on the other side the opportunity to take serious competitive advantages over one’s competitors. The right balance is into the consumer’s hands and experience, asking for new sales and distributions channels and a shopping experience using tools he knows best.

 

Omni-channel use is a pillar of nowadays goods and services distribution organisation

Omni-channel retailing is a proof of customer understanding. By offering the customer the possibility of using new sales and distribution channels, retailers are improving customer experience. This point is strategic for any expansive customer acquisition strategy. At the question “Which of the following strategies are most likely to drive your company’s top line growth over the next two years?” the first answer elected, before customer retention, customer acquisition and targeting new demographic groups, is new sales channels and distribution strategies. The reason is simple; new sales channels and distribution strategies would automatically bring more customers, maintain the former ones and reach the new demographic groups already using the new channels.
The two most common strategies for developing loyalty identified through the survey are “exceeding customer expectations” and “engagement in social media conversations”. How to exceed customer expectations without using digital retailing tools when online, and especially mobile, has become so important in the customer purchasing behaviour? How to engage in social media without developing a new digital channel up to the supply chain?

The supply chain process should evolve completely to be part of an omni-channel distribution process. Supply chain through an omni-channel scope is a clear enabler to growth. A customer-driven industry, as retail is, needs to rethink from the beginning to the end its supply chain. Nowadays, customers identify and localise shops before purchasing. They also look after local store inventories to know where the closest place to get a product is and if the product can be delivered or collected on the same day. The digital disruptive promise is to purchase whenever and wherever. The whole supply chain needs to be built accordingly to a competitive omni-channel strategy and offer. Linear and analogic processes are replaced by horizontal and cross-channel strategies in nowadays digital reality.

 

Innovation always has two sides of a coin. It might seem risky but also might be a key competitive advantage. To convert any innovation into growth, customer behaviour knowledge is necessary, and a key point to create loyalty is to answer to customer’s use expectations. There is more to lose by being overtaken by competitors who provide the expected disruptive omni-channel shopping experience, than by innovating.

The use of technologies use has radically evolved these last five years. Rather than destroying stores, the disruption brought by the digital tools and online shopping have changed the way one’s goes in them. This disruption does not take customers away from shops but creates new means of experience. Customers ask for more detailed information, such as opening hours, product availability, promotions, delivery time and are ready to create a truly new relation with brands through the brands’ digital and physical assets, creating new connections between retailers and customers.      

 

Omni-channel is the retail new pillar, a disruptive pillar which is radically reversing common processes. Answering customers’ will is perceived – rightly – as a key for growth and as the retailers’ main goal today. Omni-channel revolutionises linear organisation systems and imposes a diagonal and cross-channel vision in every retailing aspect.
Omni-channel strategy is the core of a new retail vision, driven by customer behaviour which directs any external growth ambition. This distribution model becoming the new retailing, marketing and distribution strategies matrix because it imposes to redefine each supply chain step – from provision to delivery, through ordering, stock management, communication and CRM.
Solocal Group UK has been aware for long of the digital tools disruptive impact and the upheaval this results in consumer habits as this was covered in a previous blog post on “Bridging the gaps on the customer journey”. In particular, Solocal Group UK’s web-to-store solution Leadformance has been developing and operating a SAAS platform of digital tools that enable retailers to adapt to these new consumer patterns. This platform is currently used by more than 160 brands worldwide. Please contact Solocal Group UK team if you want to discuss further how your brand can grow its business by implementing omni-channel solutions fitting the expectations of the customers.