History of omnichannel part three: the store is in trouble

This is part three of an on-going series on the history of omnichannel. Part one addressed the point when customer centricity and 'cross-channel' (the early days of omnichannel) first merged and became the foundation of what most people mean when they say omnichannel today. Part two talked about the tipping point of executive awareness, when online sales become big enough that they become more than just the online equivalent of a large or flagship store – and the implications this had on executives looking after the store business.

So far in my brief, personal history of omnichannel, we started in 2003 and moved along into 2007. Our story picks up again in 2008, when I started sounding an alarm. I saw a future where stores were going to be in trouble. In fact, that was pretty much the title of almost every speech I gave in late 2008 through 2010: 'The Store is in Trouble'.

Online was shaping up to be a much better experience than the ones customers could get in stores. As retailers were getting their arms around what a consumer needed to buy with confidence online, it suddenly became clear that we were reaching a point as an industry where consumers would actually be at a disadvantage if they started their shopping journey in stores instead of online.

At the same time, you need to remember the economic backdrop (it's kind of hard to forget). A week after the market crashed in 2008, I attended a conference in Orlando on Pricing. Up until that year it was a great conference, focused on retail, had a strong, supportive user group. Growing fast – at least 150 people came in 2007.

In 2008, 30 people showed up. And that was when I knew that whatever this economic thing was, it was going to be bad. And obviously, it was. But it was also really interesting timing for this whole omnichannel thing. Gasoline prices went through the roof and nobody had any extra money to spend (and even the people who did have money didn't want to look like jerks by going out and spending it when no one else was). And rather than be tempted by products they couldn't afford at a mall that was too expensive to drive to, consumers turned to online, where they could shop with laser precision.

They researched prices – 2009 was the first year of real price transparency, and that was before mobile shopping really hit stores. They found coupons and deals, and used Google Maps to plot shopping trips to save on travel costs. And they bought online and had it shipped to their homes, especially when it meant saving on sales taxes.

These trends were already in play in 2009, but the economic downturn accelerated them. Would omnichannel have turned out differently if the recession had been avoided or prevented? Maybe. But it doesn't change the fact that retailers are stuck with the consequences – and are still struggling with them today.

So while 30 people showed up to the Pricing conference the week after the economic bomb dropped, they turned in relative droves to eCommerce. eCommerce became something of a saviour during tough times – growing fast while store traffic and sales were flat or declining. But even in the midst of all that, most retailers seemed to believe that this was a temporary thing. Their expectations were that once bad times were over, people would return to stores. And I thought that was a big mistake.

It hit home for me in the summer of 2009. I attended a roundtable conference, and was sitting next to the VP of eCommerce at a fashion retailer, one in the upper end of mid-tier prices. And in between sessions, we got to chatting about stores. He said that his greatest goal for the eCommerce business was to make the experience more like stores. He felt that his company's store experience could not be beaten.

I happened to be a customer of this retailer, and I told Mr. eCom that while I loved his company's products, I found the store experience very frustrating. I could never find my size, I could never get help, I always had to wait to get a fitting room, assuming I could find a store associate to open one up for me in the first place. The only pleasant part of the experience was checking out, because you could always find the store associates hanging out behind the checkout counter, so there was never a line.

I tested out my theory on him. I said that it would not be very long before the online experience was much better than the store experience, because unless there is some technical glitch, your online store will always look better and more put together than even your best store on its best day, and even your best store has days when it does not look so good. Online, there's way more information available, and you don't need to find a store associate for a fitting room because you can either test fit at the store and just know what sizes work, or you can order multiple sizes and return the rest. And try it all on in the comfort of your own home. And you don't have to paw through racks of clothing to find your size. It's either there or it's not. They ship it right to you. There is no store experience that can compete with that.

Mr. eCom was adamant: our stores are the best. Our store associates are the best. Maybe you had one bad experience, but that's not how our stores are run. He felt that if he could just somehow capture the way the best store associates worked in the online format, he'd have an online experience he could be proud of. And I politely disagreed. The day when the store experience was the pinnacle of the retail experience for customers was rapidly coming to an end.

So, six months later I was in one of his stores in Manhattan. It was January 2010, a few days before NRF. I stopped in because I remembered what Mr. eCom had said about his stores, and I figured mid-January was a fair time to see if he was right. Enough time to recover from the holidays, plus low traffic, so not too busy.

The store, in Midtown, was trashed. I mean, completely and utterly trashed. On a Saturday morning in January. It looked like a bomb had gone off in this store. There was clothing off the hangers, piled up in corners and under display tables. The one fitting room door I tried would not open because of all the clothes on the floor. The accessories table was dusty. Dusty! And the store associates were, again, huddled behind the checkout desk, chatting. They didn't even acknowledge me when I walked in.

I was floored. I sent Mr. eCom a picture, asking if he felt this was a better experience than his online site. He didn't reply.

My sense of urgency on the matter appeared to be far greater than retailers'. Part of the reason I was so frantic about it is because I know how long it takes stores to change. In 2009, the discussion of whether to somehow publish online ratings and reviews in stores was just getting started. And price transparency was starting to become a concern, though even as late as 2009, most of the concern was focused on researching online before going to a store.

But that was just scratching the surface of the deficiencies of the store experience. In 2009, I was showing two pictures in my speeches. One of the in-store experience of shopping for a vacuum cleaner – a fairly high consideration item – in a Walmart, including the information on a typical price tag in Walmart. The other of a Google search of the term 'vacuum cleaner', which returned 15 million search results, of which the first page alone offered me at least 20x the information on vacuum cleaners than was available on a product's box in Walmart, forget about the price tag.

While retailers were focused on whether they would get into trouble if they printed out a product's rating and posted it next to an in-store product only for it to change online (is that false advertising?), they were missing the point! There was – and still is – far more information available about products online than there is in stores. And it is increasingly even the low consideration items that are impacted by this information gap.

To address that gap, retailers need in-store technology. Even if we're only talking free public Wi-Fi so that consumers can access online information on their phones, it's still a technology investment. And the role that a store associate plays – as an expert – is done. It was done in 2009. But these are pretty big structural changes. Technology roll-outs in stores fall prey to the store multiplier effect – what seems a small expense per store turns into big numbers when you have 500 or 1,000 stores. And it takes a long time to reach every store. In 2009 I knew retailers who had at least three different versions of PoS in the field because they knew they needed to update it every two years, but it took five years to roll anything out across their base of stores. So before they were even halfway through one update, they had to start rolling in another.

Five years is not a random number, either. If you're talking about changing the way that store employees engage with consumers, you're talking about a cultural change. A major shift in strategy and process. And the general rule of thumb for changes on that scale is that it takes about five years for the organisation to adapt and absorb the change.

So fast forward to 2015. At NRF this year, it was clear that retailers finally got the message about stores: if the show was about anything, it was about the store. The store needs help. The online experience is better than the store experience. Store sales are generally flat or declining, and the people who turned to online during the recession haven't really come back.

But here's the heads up: you can't change stores overnight. You can't even change all of your stores in a year or two, not even if you have only 20 stores instead of 200 or 2,000. It's going to take at least five years for the visions displayed at NRF this January to become an acculturated reality in stores – and not just test or flagship stores. And in the meantime, the pace of online change is much, much faster. So for stores to incorporate more of an online experience, it's a moving target, and the target is rapidly accelerating beyond stores' reach. And, let's not forget how expensive it is – which means investing in a "today" in-store digital experience risks spending on something that will be obsolete before you get it implemented into even half your store base. Very few retailers can take on that kind of risk.

Which means, here we are again. The store is in trouble.

This article originally appeared on The RSR Research website. It is reproduced with the organisation's permission.