Opinion

Omnichannel not multichannel

Marcus Fox, Chief Operations Officer | marcus@worthretail.com | 12.07.16

Marcus Fox discusses the opportunity for smaller businesses

Anyone paying even cursory attention to the business press over the last few years cannot fail to have seen companies, investors and analysts hailing the advent of ‘multi-channel’ retail and its merciless march to steal customers’ spending away from traditional bricks-and-mortar stores. Of course, what people really mean is ‘online shopping,’ and of course we can all personally recognise that the shift is a real one; we increasingly shop, browse and interact on mobile devices, and as we’ve increased our confidence in these channels over the last years, so too have we increased our expectations of how slick and effortless the service needs to be.

Companies, too, have clearly recognised that the retail dynamic has changed. I’ve recently read financial reports from a sizeable handful of large companies trading in the UK spanning numerous industries; fashion (Burberry), food (Sainsbury’s and Morrisons), DIY (Screwfix) to name just a few – and they all have one thing in common; they all refer to ‘multi-channel’ retailing as central to their strategy for the years ahead. Some call out their success in this area as responsible for their strong performance of late; others acknowledge their lateness to really developing this channel as a contributor to their struggles. But either way, they acknowledge it as ‘the future.’

What’s also common across all of these businesses is the absence of any ambition to provide customers a with a real ‘omni-channel’ experience. There’s a big difference between the two: multi-channel is essentially just giving your customer access to your ‘store’ in a couple of other ways – probably a traditional website and a mobile phone version. Creating an omni-channel experience, on the other hand, is all about your customers gaining consistent impression, service standard, engagement level and ease of shop in whatever channel they choose to shop with you. Almost without exception, businesses are nowhere delivering this experience to customers. Don’t believe me? Think of any home delivery you’ve ever received, or call centre you’ve called in the last 6 months. Has it wowed you? I’ll bet not!

The same analysts, consultancies and commentators also agree vehemently that becoming truly omni-channel is the holy grail; it has the potential to create massive brand advocates of your customer base and keep them spending with you again and again. In the supermarket chain I previously worked for, we established over a good number of years that customers who shopped with us across a number of channels (in store, online and in convenience, for example) were 82% more likely to stick with us than go to a competitor – even if we weren’t the cheapest in the market place, and even if we got small things wrong once or twice. By the way, they also spent a lot more with us on average than single-channel shoppers.

So, what is ‘omni-channel’ retailing and why isn’t it happening?

The simplest example of the gap between being truly omni-channel and the current multi-channel reality is customer service. I’ve previously been into one department store chain to buy an item. The service I received was incredible (as evidenced by the fact I’m still talking about it 3 years later). The sales assistant (whose name I can still remember) was delightfully nice, extremely helpful but not pushy, made me laugh with the odd joke, and helped make my experience in the store totally memorable. Great!

This week, I ordered an item from the same company online. Leaving aside for a moment the difference between the aesthetic of the store versus the web experience (worlds apart!) the equivalent of the in-store purchase experience is the delivery I received at my house. In complete contrast, the delivery turned up with a scruffy, dirty third party courier who lobbed the fragile box at me and literally didn’t say one word. The two experiences couldn’t have been more different.

If this business was really ‘omni-channel,’ there would be as much thought, planning, training and invested into all methods of delivery, ensuring that my experience on my doorstep was as good as my experience in the shop. The former kept me coming back; the latter has probably now sent me elsewhere.

The same contrast between good and bad can usually be found by comparing a store layout to a web layout, or a helpful customer services colleague in a store to a call centre or online forum, or easily getting a refund in a shop versus having to fill out a myriad of forms and have a battle at the post office to send something back and so on…

If this seems obvious, then the killer question is why aren’t businesses doing a better job?

Smaller businesses have an opportunity to market lead and make customers ‘stick’

Having led e-commerce development in a supermarket business for the past 5 years, I’m fortunate to have seen some of the better practices out there, and worked in teams who are probably amongst the closest in the UK to delivering an ‘omni-channel’ experience. Food retail has been delivering online shopping for a lot longer than most others, and so tend to be further ahead in both thinking and execution.

I’m convinced that smaller businesses have an opportunity, right now, to change the game; smaller businesses tend to have more nimble ways of working, and therefore the ability to change faster.

So, what are the key areas for small businesses to focus on, to be as good as food retailers delivering omni-channel experiences and reaping the sales rewards?

Marketing, communications and your brand – Have a coherent and consistent brand, communications and messaging across all your channels. Do you update and communicate in the same way on mobile as you do in stores? Is the quality of your brand put across in the same professional way online as it is in-store? In even simpler terms; you need to be able to communicate with customers in the way that they like being communicated with. If they send you an email, have you thought about the tone of voice of your company responses?

A couple of years ago, a customer tweeted Sainsbury’s to complain about some fish they bought, and made a fish-pun in the tweet. The customer agent responded with a fish pun…and this then continued for the next 4 hours, 28 puns later, and a viral response online. Being this clever with your interactions with customers takes research, time and careful thought – but since this little moment got 38,000 retweets in 3 days, it’s worth it for the brand exposure!

Consider your physical presence – The reality of the continued move to omni-channel is that few customers want to shop exclusively online, or in store. The majority of customers want to be able to buy from you across both mediums, and if you have no physical presence your business will struggle to grow rapidly. However, the role of the bricks-and-mortar store, whilst still important to customers, is fundamentally changing from what it once was. Smaller businesses don’t need to be dismayed at not being able to incur the massive cost and risk of a big store site, but think carefully about the role a physical presence in some kind of store could play for your business, and develop it accordingly. For example, the prevalence of customers wanting to ‘click and collect’ products is increasing rapidly – so it may be that your physical space simply needs to cater for this, which can be very small and very mobile.

Similarly, there’s increasing evidence that pop up shop activity can generate a significant buzz for your business; these can be very inexpensive and, if done right, link well with online ordering and payment capabilities to jump start your sales and engage customers in a unique, fun and engaging way that traditional retailers can’t compete against.

Sainsbury’s and Argos, who I have also worked with in the past, are both great examples of companies moving quickly to respond to what customers want.

In Sainsbury’s, we offered click & collect for grocery shopping a long time ago in London Underground stations. It failed miserably – customers coming home on the Tube don’t want to collect the whole weekly shop on top of their briefcase. So, we very quickly moved our offer and instead, simply parked vans outside Sainsbury’ stores in more residential areas, where customers are closer to home and love the convenience of collecting.

Argos have similarly developed a very impressive supply chain operation, which enables customers to order any one of 80,000 products to whichever store they want within 4 hours, for collection.

Service – As described above, give careful consideration to your remote purchasing experience. If the majority of your sales are generated online, the only interaction your customer will have with your business is on the doorstep, or (heaven forbid) with your customer service solution if there’s a problem.

The industry standard in this area is still simply to pick and pack the item you’ve sold… and then put this experience completely in the hand of another company to get it, unbroken, to your customer.

More and more companies, however, are realising that there are cost-effective ways to do this differently. It doesn’t cost the earth to brand a delivery driver to represent your business, and more and more companies are developing expertise to handle picking packing and logistics requirements in a personal and professional way. There’s a big difference between ‘delivering to a customer’ and ‘serving a customer on their doorstep’ – and doing the latter well is not only unique in the retail landscape at present, it offers a real opportunity to delight your customer and generate repeat purchasing.

The ‘last mile’ of fulfilment is the single biggest reason a customer leaves you - Kantar research estimates it’s responsible for as much as 78% of the switching activity between brands. It’s a sensible investment to ensure your business is different!

Again, food retailers are generally stronger here; Sainsbury’s consistently receives 9-9.5/10 in industry surveys about the services its drivers provides on the doorstep – and the training, policies and engagement with driver colleagues that sits behind this is immense. For example, a new driver with the company will undergo 3 days training with the AA, and 2 days internal customer service training, before they even see a van and think about delivering to a customer. All customers who have had an order for the first time are called to check the driver was OK; the drivers are trained to ask the customer where they’d like their shopping and deliver it exactly there, there’s a mystery customer programme to incentivise drivers to wow customers at the doorstep – and the list goes on!

Fulfilment – Linked to service in many ways, the reality is that customers now expect to be able to shop in a number of ways. Consistency of the offer is key, but businesses need to accept that offering a number of different delivery options, including next day, and click and collect, and cross-delivery with another store, are all accepted norms for consumers now. The pressure for immediacy will only increase, and businesses have an opportunity to delight customers by being faster to serve than clunkier rivals.

In conclusion, multi-channel retailing is already here and is a fact of selling to customers today – even the smallest businesses cannot ignore it. If you have shops and no web presence, you probably won’t survive; and the likelihood is that in the future the same will be true of those who trade online-only. Supermarket retailers, given their volume and maturity in the omni-channel space, represent some of the best practice out there today – and other companies would do well to learn from their experiences. The companies, who truly have an opportunity to capture the edge now, are those who focus on the customer experience holistically, are quick and nimble to adapt and change their business model to suit how customers want to shop, when and where.

Smaller businesses, in particular those who focus on omni-channel service and invest in their logistical, fulfilment and remote selling capabilities, have the perfect opportunity right now to accelerate their growth above others. By understanding the intricacies of omni-channel solutions, Worth Retail’s experts help businesses of all shapes and sizes to grow their retail offering.