Phil Streatfield, Retail Partner at LCP Consulting looks at why retail businesses need to integrate their online and shop front operations to enhance brand loyalty
It’s no more than 15 years since the original move towards multi-channel really picked up in retail – and then the internet bubble burst. Since that time, the growth of the internet and mobile technology, coupled with increasingly technology savvy shoppers, has created increasingly segmented sales channels and, in turn, an ever more fragmented supply chain.
The need to deliver a seamless, efficient and integrated customer experience across all available shopping channels has prompted the development and rapid growth of an Omni-channel retail business operating model.
LCP caught up with Halford’s former CEO David Wild to talk about how retail is changing: “I start from the premise that digital technology is fundamentally changing retail. What winning retailers must therefore do, is recognise this and that it will touch every aspect of their business.”
Retailers have taken notice of the importance of using the huge amount of customer data available to build brand loyalty and US businesses seem further ahead than their UK counterparts in utilising data this way.
At the moment online shopping channels and stores are run as separate entities but they need to be integrated. This is a break with the norm and will mean changing roles and skills requirements within retail leadership teams, as well as re-purposing stores and the roles of front line colleagues.
“Building your understanding from a customer perspective: that was critical to us”, claims Dino Rocos, Operations Director, John Lewis Partnership. “Also you’ve got to be prepared to set aside the silos that inevitably exist within most organisations. Changes to supply chain have to be part of a more holistic business change: buying, retail, supply chain systems. All of us are on the same page chasing a single customer experience. In an Omni channel world you can’t do it in isolation.”
The research also found that delivering this change is complex and challenging. To do this successfully will require major changes to IT and Supply Chain infrastructure along with significant financial investment. Of those already on the Omni route, up to half of those surveyed are already investing as much as 3% of gross turnover, with nearly a quarter (particularly in the US) spending 3% or more. A major driver for investment is the need to change just to be able to compete.
Graham Barnes, Supply Director at Argos Ltd explained that “people are calculating the return on investment, but key question is: can you afford not to take the Omni route?”
Respondents highlighted the need to fundamentally change how their companies are run. A new, flexible, business operating model is seen by many as the key to success. This model needs to deliver increased sales, enhanced margins and improved availability of stock. Typically the change will take up to three years to land successfully.
The clear message from retail executives on both sides of the Atlantic is: if you don't have an Omni-channel plan in detail now, you're late and in danger…. it's a burning platform and it needs fixing!
The survey has revealed key aspects for success in the Omni-channel world. It has also highlighted the imperative for change. In our experience, regardless of cost, Omni-channel is becoming the ‘need to have’ model for the retail industry. It has almost reached a tipping point of change or fail.
LCP Consulting is a leading supply chain and operations management consultancy working internationally across many business sectors. LCP has advised many of the top 50 retailers in the UK and is currently working to design and deliver Omni-channel and multi-channel operating models across the retail sector. www.lcpconsulting.com