Thinking Differently about Retail Omnichannel Strategy
When people think about “omnichannel strategy” in retail, they tend to think about the seamless customer shopping experience across multiple channels. To retail executives, omnichannel can be that and more: it can also be a method of increasing sales, improving inventory productivity and generating higher margins. There is an opportunity to drive growth and make the shopping experience better for the customer. Rather than focusing only on the front end opportunities, like incorporating mobile technologies, a real opportunity lies in the back end around inventory and fulfillment.
Traditional retail strategy can be siloed. Generally, online inventories and store inventories are kept separate from one another. But the retail industry has changed, and today, many shoppers are using smartphones in stores to aid the shopping process. Customers are online and in the store at the same time – the two are no longer separate. Given the convergence of the digital and the physical, the traditional way retailers think about their assets can start to fall apart, and accounting for P&L as separate channels makes less sense. Inventory no longer belongs to a channel, it belongs to the enterprise.
Instead of thinking separately, think differently:
- Provide visibility into inventory and do not fulfill by channel. If a customer shops online and clicks to purchase an XL shirt, many retailers will say it's not in stock if it's not in the warehouse. Chances are, it's probably somewhere in your stores. Visibility into store inventory can bring an increased opportunity to sell products.
- Fulfill smarter, reduce markdowns. If I am selling a purple parka in my stores, chances are the Florida store will sell fewer parkas, at a greater markdown, than the Kansas City store. Smarter, strategic fulfillment based on demand can help reduce markdowns.
- Fulfill from anywhere. Think about purchasing bedding supplies. As a customer, I could stock up on everything in the store and head to the car carrying a Santa-sized sack of pillows and comforters– or I could order everything from the store and have it delivered. The next day. No sleigh required. Stores can have less inventory on hand by fulfilling from a centralized location, such as a Direct-to-Consumer (DTC) warehouse. Now, a retailer's 700 stores don't need to stock ten of each type of pillow in every store.
The bottom line? Opportunity for more revenue, higher margins, better inventory productivity and improved customer experience.
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