Converged Commerce: Getting Omni-Channel Retail Going
Tuesday, January 30, 2018

Categories: Click & Collect

Converged Commerce: Getting Omni-Channel Retail Going

Why bother with moving to omni-channel retail? After all, it is a hard offering to get rolling. If it were easy, then all retailers would already have it deployed. Despite some recent reports about most of retailers having in-store pickup, if you have looked around and tried it for yourself, you know this is definitely NOT the case. So why bother being among the minority? A change that will grow sales, leverage a retailer's assests effectively, and keep cost contained

Painful Learnings

Early 2017 will be remembered for the perceived decline in retail stores, with early headlines screaming that 5000+ retail stores closed, up 218% year over year. Bankruptcies of big brands like Sears, Toys R Us, RadioShack, Payless ShoeSource, HHGregg, Wet Seal, Eastern Outfitter, Gymboree, and Aerosoles, support this feeling. As such, there is a clear need to drive a change in retail that will grow sales, leverage a retailer’s assets effectively, and keep costs contained.

IHL published an excellent report detailing how the decline is exaggerated. It is easy to be panicked by the headlines. And the psychology of confirmation bias kicks in, letting you remember the reports of declines more vividly than those of growth in retail. IHL’s research showed an empirical and balanced approach to reviewing retails store closures, and balancing that with the new store openings. However, even the sound empirical approach it shows that removing restaurants, food related stores, and pharma; left traditional retail with physical store declines of 1,393 stores. Yes, there was a decline in retail stores last year when you look at a strict definition of retail, but it was not the disaster initially overblown.

2017 Store Growth Calculation

No doubt, 2017 was a year of rebalancing. In that regard, every retail executive needs to consider their own retail conditions in 2018. In this environment, retailers need more foot traffic in-store. Yes, online is growing, but in-store is still the best way to engender loyalty. It is an opportunity to provide a service experience you just don’t get without that personal touch.  In-store, retailers can drive greater sales. Both from additional item purchases and from customers climbing the value chain of the merchandise bought (to higher end products). Retailers need to find ways to drive greater stock turns in their in-store inventories. All of which points to shifting the sales paradigm to converged commerce in retail (omni-channel).

Does the Opportunity Still Exist? 

It depends on which report you trust. Is it already working for most of retailers, and are you really playing catch-up? Or are most retailers trying to figure it out, and you have an opportunity to leapfrog the competitors? Again, it depends on which research you trust. Two recent reports screamed out that “62% of North American Retailers offer BOPUS” and “95% of retailers (in EU) offer the service (click & collect).” Does your business sense agree with that or rather with:

Retailers offering Click and Collect

(OrderDynamics, Forrester, L2, IDC)

From our perspective, the first two reports are the result of using opinion based research methods. This type of research can be extremely useful. However, the results fly in the face of the other research highlighted above, and the consumer’s perspective (that we are not there yet).

Get Will the Real OMS Please Stand Up? WhitepaperTrusting the second set of research answers the opening question of whether an opportunity still exists. The answer is a resounding “YES”. Opportunities definitely exist for retailers to deploy omni-channel practices, and benefit from the positive results. It is true that European markets are more advanced than North America, South America and Asia Pacific / Australian. However, in Europe the most advanced omni-channel market is that of the UK. Sixty seven percent of retailers in the UK have actively deployed click and collect services. That still means that 23% of the market is playing catch-up. For US the figure is 29.1%, Canada is at 23.5% and Australia is at 25.5%. True, there are more opportunities to leapfrog retail competitors in the less developed countries, but the beneficial opportunities exist for all areas. This being especially true for retailers which have not yet developed their converged commerce strategy.

Why is Converged Commerce a Best Practice?

Converged Commerce means using retail tech to improve internal operations, practives & ultimately operating margins It is interesting that most of the panic about the demise of retail came from North America. As a region only 29.1.0% of North American retailers have deployed in-store pickup services (click & collect). Whereas, for Europe that figure is significantly higher, as the UK stands at 67.0%, and Nordics Region at 57.0% (OrderDynamics, Oct 2017). Naturally this is not the only, nor perhaps the primary factor that can save retail. But it clearly is a factor in helping retailers with physical stores better leverage their market position, assets, and brand.

Whether your retail situation is deploying against competitors who already have an omni-channel strategy working, or that your operation wants to leapfrog the competition – taking on the mission will results in a stronger business practice. If your business operates in the UK where 67% of retailers truly do have omni-channel practices deployed – then it is a matter of catching up to stop the loss of customers seeking better retailing options. Here too, converged commerce means using retail technology like advanced order management systems (OMS) to improve internal operations, practices, and ultimately operating margins.

Converged commerce brings the best of the online and physical worlds together. Better yet, it does NOT rely on a single vendor to do so (sometimes called singular commerce). It is built on the best that the industry has to offer, and is brought together into a fully unified solution. For any retail executive, the last thing you want is to fail to adapt, and have your brand join the waste-bin of failed retailers.

What was my Omni-1000 Score?

Are you a retailer working on your converged commerce offering? You may be one of the retailers in the OrderDynamics Omni-1000 research. If so, we would be delighted to share your omni-channel score with you. If interested, please reach out to us on our Contact Us page. Mention that you would like to know if your retail chain is part of the Omni-1000 research, and if so that you want your score. Allow us to contact you in-person to gather a few details, and voila! You will receive a customized report analyzing your omni-channel capabilities. With a comparison against a few of your competitors, and a few recommendations on how to improve (best practices).

Please note that this offer is ONLY available to retailers in the regions studied with 10 or more physical stores.

 

Author:

Charles Dimov - Director Marketing OrderDynamicsCharles Dimov is Director of Marketing at OrderDynamics. Charles has 21+ years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.

 

 

 

 

Related:

Omnichannel Solutions: What is the purpose of a store?

Get the Competitive Advantage with Click and Collect

Staring Down Retail Armageddon With Unified Commerce