Filippo Battaini
Filippo Battaini (Retail Manager, IDC Retail Insights, Europe)

We are going through challenging times, especially if you are managing a retail business. Supply chain bottlenecks, staff shortages, talent retention issues, inflationary pressure, and other adverse macroeconomic factors continue to put pressure on retail operations. On top of that—courtesy of the recent pandemic—retailers are facing systemic changes in consumer behaviour to which they need to adapt rapidly.

These developments are calling for more digital transformation, turning concepts such as omnichannel retail into tangible customer experiences, and opening new opportunities for companies that manage to get their omnichannel strategy right.

Source: IDC Retail Insights, 2022

But what should retailers look at when thinking about the future of their omnichannel operations?

I have gathered together a 4 ideas from my day-to-day interaction with the retail industry in the hope of providing some food for thought to readers thinking about their omnichannel strategy:

  1. The best omnichannel experience is the one you didn’t see

This summarises what omnichannel retail should be: so foundational and pervasive that it shouldn’t even make sense to talk about it; so frictionless that shoppers won’t even know they are experiencing it. Today’s shoppers are channel-agnostic, they expect a certain type of experience, it doesn’t matter how and when that happens. Equally, store associates should be empowered to see the whole picture in interactions with the customer. To succeed, retailers should scale up the user experience (UX) for both customers and staff. RFID and OMS are some of the key technologies retailers are looking at to reach this goal.

  1. Marketplaces should be in your channel mix to access new audiences

Marketplaces have seen significant expansion in the last few years. On top of the “established” names such as Amazon, Alibaba, and eBay, some of the largest retail brands—Carrefour, for example—have expanded their own. Companies selling on marketplaces can reach new markets without the associated costs and operational hassle and test, learn and gather plenty of data on what sells and where. Once operations scale up, however, the lack of control, flexibility, and end-consumer insight—which is typically retained by the marketplace operator—could make marketplaces not the best tool to consolidate growth. As a result, many companies use the marketplace to enter new segments and markets, but then work to transition newly acquired customers to their ecommerce transactional sites.

  1. No one size fits all in omnichannel logistics

Omnichannel logistics and fulfilment continue to be a pain point for retailers. Shoppers’ expectations are rising, as are operational costs. Retailers are testing innovative ways to meet expectations and increase efficiency. The best omnichannel logistics strategy depends on the market in which the retailer operates—its priorities and goals. What works for a retailer might not work for others in different segments and markets. Some companies see greater efficiency in DC + Micro DC combinations, others find leveraging the store as a fulfilment centre less capex heavy and great for speed of delivery.

  1. Creating an impact on people through AI

AI and ML are precious for retailers to make sense of customers and operations data. Typically, profit maximisation is the key metric through which companies measure the effectiveness of data leveraging. Focusing only on the bottom line, however, could be seriously short sighted. As retailers suffer from staff shortages and high turnover, a greater focus on the impact that AI can have on employee experience and talent retention should be considered. Is data analytics capable of enhancing staff experience? Is your workplace becoming happier and more rewarding for employees? Are you able to optimise your employees’ experience to make your company more attractive for talent? Retaining talent is likely to become one of the top competitive advantages for retailers and understanding the impact that the use of AI and data analytics can have on people is key to ensuring long-term success.

Figures Don’t Lie, but Liars Figure

Data and technology play a big role in the successful rollout of omnichannel operations. How to Lie with Statistics, a book by Darrell Huff written in 1954, shows how numbers are used to deceive. The risk for strategists is to deceive themselves by using data to validate their own bias.

Many companies pull together big data lakes or pick and choose technology and then think of what to do with it. The process should be in reverse: companies should start from the problem they need to solve, the decision they need to take, the kind of customer journey they aspire to offer, and leverage relevant data to inform their actions and the technology to make it happen.

Connect with a Great Retail Executive Community for More Insight

If you are looking to share your thoughts, interact with fellow European retail executives and gain further perspective into your retail strategy, do not miss the opportunity to attend our IDC Retail Summit on September 22, 2022.

Together with our community of leading European retailers, during the Summit we are going to talk all things retail including leveraging purpose-led retail strategies, generating customer lifetime value, loyalty and trust, seamlessly connecting online and offline operations for effective omnichannel experiences, and leveraging intelligent omnichannel logistics and fulfilment.

We look forward to seeing you in September!  

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