Destination everywhere: where is omnichannel heading?

An integrated omnichannel strategy has to be firmly on the executive agenda – it would certainly be a concern if it isn’t already. It’s what shoppers want, with increasing numbers expecting to move seamlessly between channels as they wish. In fact, on average shoppers shop 20 times a month across 5 different channels. What’s key though is not just offering multiple channels to consumers, but joining them up for cohesive customer experience – this is the difference between a multi-channel and an omnichannel approach.

What’s more, in the present period of eroded retail margins, it’s become even more important because omnichannel customers tend to spend 2-3 times more than in-store only shoppers.

It was timely, therefore, to take part in a recent Grocer Vision webinar in partnership with Akeneo discussing this very topic, with expert participants from Akeneo, Coca-Cola Europacific Partners and IGD.

There was full agreement that omnichannel must be a strategic priority for grocers, retailers, and suppliers – but it’s moved beyond understanding its importance now to really executing on it and delivering for customers.

The challenge is, however, that many retailers are still structured as businesses around channel, with “retail” teams and “digital” teams and “store” teams for example. One of the first steps is to break out of siloed internal thinking and ensure that an omnichannel mindset is embedded across every team, function and department. The customer must be at the heart – and, increasingly, they have multi-faceted buying journeys that can start and end on any channel. Teams need to mirror that thinking and behaviour in all of their strategies.

In such an environment, grocers and retailers have to be everywhere the customer might look – large or convenience store, online, in-app and be able to interact at every point along the journey. That includes creating the linkages – for example, where a customer in-store can access the app for loyalty offers. They have to be ready for the transaction wherever and however the customer chooses to make it.

There are a couple of interesting points arising out of this, which we discussed on the panel. One of the panellists made the memorable comment that “the entry to your business is no longer the door to your store, it’s a mobile phone.” That feels true, but nevertheless it’s also true that, post-pandemic, we’re seeing something of a comeback for in-store shopping.

Retailers mustn’t lose sight of the value of the physical outlet within the omnichannel offering. There’s an opportunity to integrate more digital elements into store offerings where they add value (digital screens in stores can be personalized to the individual and display those under and over indexed items that are desired to be pushed) and to boost the experiential elements that bring the shopping experience to life. Some store space could be re-engineered for parts of the omnichannel offering such as Click & Collect. 

A second element is loyalty and retention. The consumer wants the product at the best price and in as little time, whilst remaining as convenient as possible. Consumers tend to be brand-loyal, caring less about how the retailer is set up behind the scenes or which channel they use. In the tough conditions we’re entering retaining customers to your brand has become more important than ever. The retailers that utilise loyalty and reward schemes effectively, and especially those that make them omnichannel, can score a big advantage. For example, a large supermarket chain uses their loyalty scheme to help customers save money through exclusive discounts, and then can also use this data for insights into their customer's purchasing choices. This will then pop up in their online basket – showing that they really know the customer individually and are personalising the experience. We see another strong proposition at a rival major supermarket, whose scheme introduces an element of gamification as shoppers are given ‘missions’ to unlock rewards. It’s a great way of building engagement and enlivening the shopping experience. 

But what are the key levers to execute on omnichannel? Firstly, retailers must be clear about their business model. I see three realistic choices: become a platform ecosystem connecting other businesses relevant to the consumer; a truly omnichannel player across the entire product set; or a smaller niche-focused specialist delivering through omnichannel.

Whichever business model you pursue, data is critical. The challenge used to be getting enough clean data to analyse – now it’s about making sense of the huge amounts of data available and turning it into insight for key purposes such as:

• Informing the customer experience, especially in loyalty-driving initiatives founded on personalisation and making shopping easy
• Strengthening the delivery of the customer missions a retailer chooses to serve (such as Quick Commerce)
• Guiding investment in technology to make operations more efficient where that will add most value

The omnichannel agenda is with us to stay. The panel was in agreement that the cost of living crisis won’t diminish its importance – quite the reverse in fact.

KPMG’s recent research found that the cost of household essentials alone has risen £145 a month on average during 2022 – a frightening increase for many, and that’s before we even factor in the increased energy costs that began from 1 October 2022. It’s not then surprising that this research also found that many consumers are buying more products on promotion or discount and spending more time looking for bargains. They’re using all the different channels to help them do so more easily. Omnichannel can become part of a retailer’s response to the cost of living squeeze, their way of helping customers find the best value in the face of rising costs. 

Looking forward, we’re sure to see more integration of augmented reality techniques (something the beauty industry is leading the way on by enabling customers to ‘try out’ products online), the metaverse, social commerce and more. However, retailers must maintain focus on the 'basics', such as ensuring product availability which has been an increasing challenge over recent years.

The retailers that use the omnichannel concept to fulfil all a customer’s missions, across all/any channels, with personalised interactions, great levels of service, strong value for money, and gamification elements as an added bonus – these may be not just the dominant players of tomorrow but the survivors and thrivers through a choppy 2023 head.

In summary:

• Use data to create a customer-centric channel strategy
• Be clear on your business model and role within the ecosystem
• Make sure your teams are ‘thinking omnichannel’ in everything they do, even better rethink your business model to enable this
• Leverage loyalty and gamification
• Look for and support the linkages – in-app purchases in store, digital screens carrying special offers
• Keep across the wider conversation on social media and online – that’s where you can really see customer sentiment most clearly

If you would like to continue the conversation, please contact  Linda Ellett or Paul Martin.