RBTE 2014: What is omnichannel retail and who's best at it?

Many retailers dislike the phrase "omnichannel retailing", but over the last few years it has gained momentum as a term used to describe the way they must serve the modern, mobile-focused customer.

So what exactly is it and which retailers are the closest to achieving it?

This week's RBTE 2014 at London's Earls Court focused the spotlight on the major elements involved in omnichannel retailing and also provided a platform for some of the industry players viewed as beacons of good practice in modern retail.

John Lewis, House of Fraser and Topshop were all highlighted as companies close to achieving omnichannel success, this week, but the managing director of Boxwood Insights, Paul Martin, argued on Wednesday that all retailers are currently fighting hard just to stay relevant. Effectively, he said, no-one is achieving exactly what consumers require and "no-one is ahead of the curve".

New retail world profit warning

"The investments required to become a very good omnichannel retailer are high," Martin explained during a presentation entitled Omnichannel – Cannibalisation and Profit Killer.

"The days of high margins are gone. Retailers need to be really transparent that investments they need to make due to legacy systems and maintaining pace with modern requirements are significant."

His comments came after Tesco CEO Philip Clarke announced at an investor event in February that the grocer's profit targets need to be reduced if the business is to achieve the technological shift required to meet modern shopper demands.

According to Martin, other publicly listed retailers – not to mention private businesses backed by equity houses – will soon realise that this way of thinking is the new reality for their companies, too.

An organisation aiming to provide advice and guidance on the new retail environment, the International Omni Retailing Markets Association (IORMA), defines omnichannel retailing as "the structured world of the retailer meeting the unstructured world of the consumer", and Martin – who is a member of IORMA's board – says it is "astonishing" how many retailers still operate in channels, as opposed to putting the consumer at the heart of their strategies.

He also argued that the omnichannel approach is the "purest form of retailing today", with his ideal scenario being a business that ensures each channel – be it store, eCommerce, mobile or social – is integrated from a customer data perspective.

"My belief is that the power [in retail] will shift to data aggregators," he explained.

"The likes of Google will be the main players as they have a holistic view of the data. If you're a retailer and not engaged with data aggregators, you'll lose."

Fashion trends

While fashion retailers used to only have stores and print platforms to showcase their new designs and ranges, the advancement of digital technology arguably means they can now promote products and trends in richer and more interactive ways.

Research released this week by professional services firm Kurt Salmon showed that Arcadia-owned Topshop stood out from the competition for creating engaging online content, and "a clean and highly functional mobile site" with well-integrated social media channels. In-store, it was commended for a strong service proposition, which included personal shopping facilities.

A total of 25 UK fashion retailers were surveyed on their performances in-store, on web, mobile, cross channel and via social media between January and March 2014, with John Lewis and Marks & Spencer acclaimed for their mobile sites. House of Fraser topped the polls on cross-channel and on social, with consumer engagement said to be strong throughout its omnichannel, click & collect and mobile offering.

Siobhan Gehin, a partner at Kurt Salmon and one of the range of leading industry figures to speak at this week's RBTE, said that not one retailer in the survey demonstrated best practice across all customer touch points, with order fulfilment viewed as particularly poor.

"Retailers just do not have the glue they need to link all the channels together, so they are disappointing customers and losing sales," explained Gehin.

"Retailers who do mobile well recognise that the customer has [his or her] mobile phone in [their] pocket 24/7, yet, for instance, one retailer with more than 20 million likes on Facebook does not even have an enhanced mobile site which is tragic."

Advising retailers on what they require to be "more than average" in terms of their omnichannel offering, Kurt Salmon lists the following points for consideration:

​John Lewis sets example

Both Boxwood Insights' Martin and Kurt Salmon picked out department store chain John Lewis when giving examples of best practice in modern retailing.

With 57% of all John Lewis click & collect orders picked up from Waitrose branches, amounting to 2.5 million collections in total, and customer visits from phones and tablets accounting for 50% of traffic to Johnlewis.com last year, the business is clearly ticking a number of boxes in terms of proving its multichannel strength.

Simon Russell, director for retail operations development at John Lewis, gave some indication of why his company is held in such high regard for its work in the retail industry, during a keynote presentation at RBTE on Wednesday.

"We call ourselves omnichannel – and our aspirations are to be market leading," he noted during the session.

"We spend lots of time trying to understand our customers better [… and …] increasingly we're focusing on the end-to-end customer experience."

He added that much of John Lewis's work has revolved around ensuring its staff are in tune with the wider business strategy, making them feel like "brand ambassadors" for the company, while significant focus has been placed on understanding what triggers a purchase online, the devices customers are using to buy an item and the time of day products are bought.

Crucially, it seems, the investment John Lewis has placed in technology and the work covered to cater for mobile users and online shoppers, is always closely linked to what happens in-store, meaning the traditional platform for selling goods remains key to the customer journey.

"What is the role of shops?" Russell queried. "We still think they are the absolute heart [of what we do]."