Customers want simple, consistent, and relevant experiences across all channels, touchpoints, mobile screens and devices.
Gen Y and Millenial segments increasingly call the shots and success will be based on how well companies, and every frontline employee, decipher the growing disparity between “what they say” vs. “what they actually do.”
Focus on the user and all else will (or should) follow.
No brainer strategy right.. but cohesive multi and omni-channel experiences that are satisfying, fulfilling, and engaging are proving to be non-trivial to engineer or execute. Just watch Walmart as it plays catchup with Amazon.com. Or ask K-Mart, Best Buy and others as they attempt to transform. Every retailer today struggles to prioritize omni-channel and multi-screen initiatives in order to meet customer needs and drive maximum $ impact given scarce organizational resources.
Just when firms think they have the omni-channel experience figured out they have to evolve to address mobile channel or social channels. There are more mobile-connected devices than there are people on earth. Typical mobile users check their screens more than 150 times a day. There are more than 1.25 billion Facebook accounts across Facebook, Instagram and now WhatsApp. The half-life of a piece of content shared on social networks Twitter and Facebook is 3 hours.
The challenge for large retailers is not just having a strategy but efficient digital execution. The large retailers have an architectural IT and analytics challenge that more nimble startups don’t. They often try to build comprehensive platforms a part of a wider strategic initiative which aims to support, provide and deliver digital services in the multi-channel, multi-device, multi-format, multi-sku, multi-language, multi-country and multi-culture world that they operate in.
Not an easy solution set to build or get right. Amazon.com took almost 15 years and $10+ billion in app+infrastructure investment to get to a low cost-to-serve digital model. Competing with them and trying to build an equivalent in 18 months, with even $500M investment, offshore low-cost developers etc. is an impossible task even for the likes of Walmart. They can do me-too things but experience innovation is next to impossible.
Transformation of Retail Underway
In 1999, multichannel retailer Circuit City pioneered the option to buy a product online and pick it up in-store.
Today, as digital & mobile channels transform the customer experience and engagement, retailers like Best Buy, Lowes, Barnes and Noble, Saks, Macys, Nordstrom are very worried about becoming showrooms for online retailers.
This “showrooming” trend is a steady seismic shift and poses a strategic problem in consumer electronics, books, shoes, appliances where a growing number of consumers are going to retailers to test drive products and then go online with mobile phones to transact at a cheaper price elsewhere. Best Buy and others are in danger of turning into Amazon.com’s “showroom”, which has the advantage of low-touch self-service, and other lower overhead costs (e.g, automated warehouses).
To create shopper stickiness retailers are trying parallel strategies (1) offering the buy online, pick up in-store or ship-to-store options; (2) price match; (3) same-day delivery options; (4) more “consulting” and shopping assistants.
Amazon.com, on the other side, is playing offense by increasing same day fulfillment, increasing distribution warehouse footprint and automation with the Kiva purchase (robotic fulfillment), and also partnering with brick-and-mortar footprint companies including Staples, RadioShack, and 7-Eleven, to place Amazon delivery lockers in stores.