Omnichannel is the key evolutionary driver of our current retail market–a market that has already weathered some fantastic storms, such as the explosion in online retailers, world-wide economic troubles, and game changing advances by market leaders and consumer technology. The competitive race towards multi-channel integration has created a new reality for retailers, especially for those in the European market. What are the omnichannel challenges that consumer retailers in Europe will face in the coming year? Amongst the many, here are three that stand out to me.
#1: Hitting the moving target of consumer expectations. Advancements in digital technology are creating an escalating series of ‘new normals’ which are shifting consumer purchase behavior. Retailers who cannot keep up with expectations for seamless, compelling and innovative experiences across mobile, web, and brick & mortar lose both mind and market share. The challenge of 2014 is for retailers to understand and act on the current shape of their customers’ path of purchase across all stages of the multichannel customer journey, from search, rich media, web sites, and ecommerce, to mobile, CRM & social. More strategic is for retailers to build the institutional capability of recurring assessment, and to have the intelligence that this gathers feed directly into an omnichannel marketing plan which has seamless interoperability to all customer touch points. Retailers who do this find that their marketing efforts succeed in driving revenue through a consistent brand experience, whereas their competitors who rely on traditional marketing experience diminishing returns on their investment.
#2: Integrating the supply chain. European retailers include some of the most innovative multi-channel formats, many which have accelerated the evolution and connectivity of the supply chain from the producer to the consumer. Yet most retailers still function in traditional models characterized by information hoarding, self-serving goals & metrics, and transactional relationships. The challenge of 2014 is for retailers to understand and act on the strength of a unified, collaborative supply chain focused on serving the customer, with unified metrics and shared rewards. More strategic is for retailers to convene a network which can flexibly respond to the pace of technological evolution and consumer expectations, unencumbered by legacy systems and process constraints. Retailers who do this find that their customer insights & touch points multiply, inventory investments reduce, and COGS shrink–all on account of system-wide transparency & cooperation, whereas their competitors who rely on traditional chain-focused inventory management continue to be in a reactionary state (instead of strategic) with little to no visibility to supply chain customer & inventory issues.
#3: Adapting the organization. The single greatest threat to a retailer’s adoption of omnichannel strategy is found internally within their own organization, and is created by legacy structures & success metrics which drive silo-oriented behaviors, non-cohesive customer touch points, and cross-divisional misalignment. The challenge of 2014 is for retailers to redefine functional roles and platforms such that planning, marketing, warehousing, check-out, returns, and delivery each span the gap between the store, the screen, and the supporting home office team. More strategic is for retailers to also unify goals, rewards and success metrics. Retailers who do this find that their internal alignment enables true focus on serving the customer at multiple touch points in a unified approach that generates both revenue and consumer insight, whereas their competitors who maintain functional silos and divisional separation between brick & mortar and e-commerce remain mired in internal battles for resources and revenue.
Who will win the retail race within Europe in 2014? Online retailers continue to make progress and gain market share. Yet brick & mortar players have the advantage of physical proximity which drives so many key shopping occasions. My view is that those brick & mortar retailers who invest in overcoming the three key challenges mentioned here will emerge victorious at the end of 2014, and strategically positioned to evolve with the new omnichannel realities to come. Retail is, after all, survival of the fittest.