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Survey Says: Centralized Order Management Secret To Omnichannel Retailing Success

VP site only IBM Consulting
While retailers know that the omnichannel experience is a must-have for today’s always-connected consumers, many are struggling to provide consistent experiences across the channels these consumers shop, with in-store execution substantially lagging all other channels.

A look at the top-scoring retailers in a recent mystery shopper survey reveals that the most critical link to omnichannel success is a distributed order management system that is enterprise-wide, and is constantly aware of all possible inventory options — whether it is in a Distribution Center in California, a store in New Jersey, a third-party fulfillment partner in Tennessee, or in-transit from Asia. High-scoring retailers have in place a centralized view of inventory, order promising and a flexible fulfillment hub that supports omnichannel execution. It is the one system that touches all points in the ecosystem, enabling a richer and more consistent experience across customer touch points.

That telling insight was among the findings culled from the IBM Omnichannel Customer Experience Index, a shopping experience survey of more than 100 U.S. retailers designed to assess their performance in delivering on the omnichannel expectations of consumers. Since revenues from omnichannel shoppers are 21% more profitable than those from single-channel shoppers, retailers have incentive to optimize the experience. Also, since omnichannel is predicted by Forrester Research to account for $1.8 trillion (or 59%) of U.S. retail sales by 2018, retailers are scrambling to transform their operating models to meet ever-escalating customer expectations.

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With the stakes this high, the ability to deliver an optimal, digitally-integrated, omnichannel experience must be a primary focus for retailers of all sizes.

The survey focused on how retailers delivered against the top omnichannel customer expectations (as defined from a previous IBM study), which are the key factors in determining where a customer will shop in the future. The expectations are that retailers will provide the following across all channels: A personalized shopping experience; consistent digital and in-store experiences; accurate pricing, availability and order status information; a robust choice of convenient delivery options; and expanded mobile capabilities, especially flexible payment options.

What else did we find? Let’s take a look.

In-Store: Lagging Behind

Besides the need to adopt an enterprise-wide order management system, the survey revealed three other noteworthy findings that separate the omnichannel retailing innovators from the dawdlers. One was that brick-and-mortar stores lag significantly behind other channels. While most retailers are transforming the in-store experience, they face tough challenges.

Not only must they institute a cultural shift in re-training and redeploying associates to better serve customers, the cost and complexity of integrating the technology needed to succeed can be quite daunting. Clearly, in-store is the hardest channel to fix, but it holds the key to omnichannel nirvana and competitive distinction against broad digital marketplaces such as Amazon.  

Flexible Fulfillment Is A Must

Another important factor is flexible fulfillment. Retailers who offer variable yet seamless fulfillment were among those who scored the highest in the survey. Online shoppers are demanding more rapid fulfillment options, and expect to have same-day options on many items.  

Once a shopper experiences having choices in ordering and taking receipt of merchandise, she begins to expect it from every retailer, every time. Having the right technology is important, but figuring out how best to optimize and operationalize it — especially in-store — is the Holy Grail of fulfillment.

Case in point: One surveyed retailer offered an easy online ordering system with the option to pick up the merchandise in-store. But upon arrival, the mystery shopper could find no signage directing her to the pick-up area and once she found the location, she had to wait 20 minutes for an associate to assist. A shopper needs to only experience that nightmare once before moving on to a competitor.

Know Your Customer

The area retailers performed best, demonstrating a knowledge of the customer as an individual, still has room for improvement. While retailers were very consistent in the messages delivered and the pricing / promotions offered across channels, this doesn’t mean it’s by any means easy.  

Especially in-store, associates must be armed with technology and data to serve customers efficiently and effectively. And no retailer achieved a perfect score in aggregating customer information across traditional channels with social networks. As consumer technology moves from mobile phones to wearable technology and whatever comes next, the opportunity to personalize the interaction will be gated only by the richness of the customer profile and the brand permission to engage consumers in context, in real time.

Fixing The Problems

While some retailers shined in our mystery shopper survey, most were middling performers at best. Across all retailers surveyed, the average score was 48% in delivering on omnichannel capabilities demanded by today’s consumer. That should serve as a wake-up call for any retailer seeking to provide the best shopping experience for their customers across the business, and regardless of channel. Indeed, in a true omnichannel organization, the term “channel” becomes meaningless.

But how does a struggling retailer improve? The best place to begin for any retailer is to thoroughly assess its performance and then formulate the right omnichannel strategy for the business. That means taking into account the needs of customers, while delivering affordable, effective change that will drive sales and profits.

As mentioned, retailers playing catch-up in omnichannel need to address the issue of order management. Having a structured foundation across the enterprise provides the platform to successfully deliver on all other aspects of the omnichannel experience.

Even those retailers who scored well in omnichannel today cannot rest on their laurels. With technology evolving rapidly, and numerous retailers jumping on the omnichannel bandwagon, this year’s shining stars could again fall behind if they pause in their innovation efforts.

Clearly, retailers’ ability to deliver on the omnichannel shopping experience is critical for their long-term success. Those that don’t get it right are sure to lag behind more savvy competitors in winning the minds and wallets of increasingly sophisticated consumers, who have high expectations for a consistent and effectual experience regardless of the channel they choose — and low tolerance for retailers who cannot deliver the experience they crave.


Greg Tolman is the Retail Lead at IBM Commerce Consulting. He has been with IBM for more than 31 years, including nearly 20 years of digital commerce experience. Over this time he has worked closely with retailers, helping them strategize, implement, and transform their businesses to become more customer centric. In his current role, Tolman works with key retail clients across North America, helping them address key challenges. 

 

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