Any time, anywhere, any product with retail omnichannel

Retailers are adopting strategies to shape perceptions of value and are using technology to transform business models. John Minchillo / AP Photo

The retail environment has never been more dynamic. Price is no longer king and perceptions of value including customer experience score over superior service, convenience, personalisation, speedy delivery and choice.

In response, retailers are adopting strategies to shape perceptions of value and are using technology to transform business models and build omnichannel environments which serve the consumer in-shop, online and on the go. In omnichannel retailing, the retailer’s brand effectively operates as a single channel.

Omnichannel retailing is similar to multichannel retailing, with the focus on creating a seamless consumer experience through any and all shopping channels – mobile, tablet, computers, bricks-and-mortar shops, television, radio, post and catalogue. Shoppers expect an integrated, shopping experience no matter the chosen channel.

Imagine a scenario where your retailer already knows what you are likely to purchase based on personal preferences. So when you log on to a website to buy a product, you are likely to be prompted based on certain customisations. The result is a quicker, more efficient shopping experience. For the retailer, this involves capturing critical information sooner and acting upon it sooner than the competition, ensuring synchronisation of sentiments conveyed through social media and other analyses of in-shop and online behaviour.

It is hard to believe, but it has been almost 20 years since online stores launched. In the mid-1990s if you were shopping online, you would have found only a few places to make a purchase. Online-only shops such as Amazon dominated the internet.

Even as the dot-com bubble burst, US retail e-commerce sales increased to US$27 billion in 2000 from $15bn in 1999. By 2002, retail e-commerce sales were still rising, up to $44bn, according to a report by KPMG and the NRF Foundation. Today, cross-border online purchases between the six largest markets are estimated to have passed the $100bn mark.

The KPMG report estimates that in the US e-commerce is now a $200bn industry, and as more retailers open shops online, e-commerce will continue to account for a larger share of sales.

In the UAE, the e-commerce market is valued at more than $2bn, and is expected to grow significantly in the next 10 years.

Omnichannel retailing will also create opportunities to get into markets across the GCC.

To execute omnichannel strategies, there are some areas which are critical to getting started, including integrating customer-facing platforms, using data to understand what customers want, when and for what purpose, unifying pricing including base pricing consistency and channel-specific promotions and managing cyber-risk.

Continuous innovation and updates are necessary. Last year the top priorities and investments for online retailers were site conversions (getting consumers to purchase) and mobile and tablet initiatives. Other top initiatives and priorities include site redesign and multichannel efforts.

Some notable omnichannel innovations in recent times include the American retailer Kroger, which recently installed infrared cameras that detect body heat that help to determine the number of checkout lanes to open. Macy’s started to use its stores as fulfilment centres to ship items faster to customers who buy online. The US-based Home Shopping Network uses extensive consumer data to create a seamless shopping experience, customised across all media platforms and shopping channels.

In the UAE, there has been talk of omnichannel retail and retailers have been exploring the use of technology and social media to engage with consumers in unconventional ways.

According to several retailers, e-commerce should deliver the same experience as shopping in-store.

In Dubai, organisations that adapted to the rise of e-commerce, customer mobility and other disruptions of the past decade are showing some early signs of breaking away, while others remain at the starting line. All of them, however, realise the critical importance of having an omnichannel business strategy and model. Despite the associated costs, it has become an industry standard and an imperative for organisations. In a 2009 report McKinsey said consumers who shop across a number of channels annually spend about four times more than those who shop in a single channel. The benefits are obvious.

Executing an omnichannel strategy comes with challenges. In selling “any time, anywhere, any product”, retailers are putting immense pressure on internal organisations, leaving no room for inefficiency. In this new world of retailing, the store remains the linchpin.

There is general agreement, despite the huge growth in online purchases, that well over half of all online purchasers use a physical shop either before or after a purchase. And a significant number use more than one channel at a time – usually to check the online price via a device while in a physical shop.

With more choices and empowerment, customers are sharpening their expectations for the kind of experience that will attract and keep them.

How well a company is positioned to compete in this evolving landscape will be determined by how well it adapts its conventional business practices and incorporates new capabilities. For now, retailers are being challenged as customer demand runs ahead of their ability to fulfil.

Ian Gomes is the head of advisory for KPMG Lower Gulf

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