Omni-channel retailing spawns the omni-channel conundrum

From the Principal’s Office

Retail sales have been soft in most markets with the usual bright exceptions here and there. A man with a lot of security experience but absolutely no retail business experience was named the CIO of Target following the security breach.  Knee-jerk reaction?

Mobile POS sans traditional POS registers will become more of a reality than a dream. A number of articles are being written around the shrinking of the number of retail doors across the land (re-purposing malls) and about reducing the square footprints of many retail stores. It’s time for malls and airports to provide robust telecommunications infrastructure to its tenants.  It’s been poor up to now.

Much continued conversation around the topic of omni-channel retailing; the subject of our article this month.

Bob Amster – Principal, RTG


Omni-channel retailing spawns the omni-channel conundrum

By Robert Lawson – Senior Consultant, RTG

Omni-Channel opportunities and the maturity of the Omni-Channel practices continue to evolve.  At the same time key influencers continue to evolve and impact this initiative.  Fundamental examples of these influencers include:

  • Proliferation of consumer and commercial technology
  • Ongoing business and customer process evolution, re-engineering and optimization
  • Top-down adaptive organizational structures, roles and responsibilities
  • Customer-Centric service and communication preferences
  • Master Data Model strategies
  • Expansion of Omni-Channel domain to Omni-Banner (for multiple brands) and Omni-Coalitions (with multiple partners)

The sheer number and dynamics of these influencers lends itself to what I call the Omni-Conundrum.  Everyone may share a common set of Omni-Channel practice objectives and corresponding implementation strategies; however, based upon each retailer’s business and technology environment, the implementations can produce radically different results.

For example, two separate retailers implement a similar Omni-channel loyalty program promotion designed to increase a targeted segment’s average basket size:

Retailer A, who has great real time supply-chain inventory visibility (SCIV) across their enterprise, integrated loyalty promotions into their merchandise forecasting, and does not have support for enterprise returns, might see excellent results for the targeted segment’s top line; however, gaming cross channel on returns could adversely impact the segment’s bottom line.  Retailer B, who has poor SCIV across the enterprise, limited factoring of Loyalty promotions into their merchandise forecasting, and does not have support for enterprise returns, might see some improvement to the top line and some erosion to the bottom line due to gaming.

Additionally, a percentage of customers who tried to participate in the promotion could be discouraged or, worse yet, leave the loyalty program altogether when promotional merchandise goes out of stock.

An observation with a simple recommendation:

Periodically, the fundamental concept that Business should drive Technology decisions gets reversed when innovative Technology starts to drive Business decisions.  During these periods of innovative technology change and adoption, many desired benefits are obscured or never achieved because early adopters expedite and force new technology upon the existing business environment.  If you are an early adopter, minimize your risk of failure by examining in great detail how new technology / business processes will impact your existing technology / business processes.  The devil is in the details; be thorough and augment your knowledge with Subject Matter Experts (SMEs) who understand the issues and opportunities.  If you are not an early adopter, do the same and learn from the early adopters what is working and not working.  Keep the Business in front of Technology.  For more information on how to handle the Omni-Channel Conundrum, and for help implementing the necessary changes to achieve true omni-channel retailing status, contact the SMEs at RTG.