From The Editor | May 17, 2012

A Look At Omni-Channel Retailing

Erin Harris, associate editor

By Erin Harris, associate editor

What is omni-channel retailing, and how does it differ from multichannel and cross-channel retailing? Your business is impacted by these terms, and today’s shopper is a consumer whose experience is characterized by connectivity and multiple touch points. Recently, I spoke to Ravi Bagal, VP and global managing director, retail and distribution at Verizon, about the true definition of omni-channel retailing, its importance in the retail landscape, its impact on customer satisfaction, and the technologies necessary to build an omni-channel strategy.

What is your definition of omni-channel retailing?

Bagal: The best way to think about omni-channel is to think about the evolution of retail. It’s been a 20-year journey, and it wasn’t that long ago that retail was synonymous with brick-and-mortar. With the advent of e-commerce, we created the second channel, a second place where the consumer could engage with the retailer — not just to buy products but to experience the brand. At this point, we realized it was important for us to figure out a different way of relating to the consumer, which is when we started to see the evolution of multichannel retail. It was an idea that a consumer could experience a brand from two or three touch points. With the evolution of e-commerce in the late 90s, we made some mistakes as an industry. Increasingly, we found that retailers implemented independent technology stacks, operations, even inventories to support their e-commerce or their Web channels. And, then you had silos, and for the consumer, it was a terrible experience.

We went from single channel to multichannel, and in the 2000s, the phrase was cross-channel. We started to see more integration between brick-and-mortar and Web channels as well as more functionality between the two. But, it was episodic. Omni-channel is the final step of the evolution, from a single channel to a complete and holistic experience that merges these various touch points. The omni-channel ideal is that the consumer should be able to come to the retailer from whatever touch point is appropriate to them at whatever stage in the retail process they are. So, the journey goes from single channels to multiple channels to some cross-channel and finally omni-channel, which is the blending of these various capabilities to meet the needs of the consumers wherever they are.

How can retailers improve customer satisfaction through an omni-channel approach?

Bagal: We start with the assumption that shopping doesn’t occur at the purchase. Anything that you might buy from a retailer, with very few exceptions, is not an impulse or point of transaction purchase. For the vast majority of things you do, you develop preferences through engagement with people, with e-commerce, with advertising, and you start developing brand interest that turns into brand loyalty. There may be a magic moment where you may be converted from a shopper to a buyer even before you enter a brick-and-mortar store or a website. Then there may be a set of things that happen after you buy, whether that is post-transaction services or a conversation about the experience on social networks. If that’s true, then omni-channel gives the retailer an opportunity to insert itself into the conversation at all the critical touch points when the consumer is in the mode of thinking and researching. An omni-channel retailer will create information and content that educates and delights the consumer that can be deployed at any of the places the consumer may be. Retailers must adopt the theory that consumers have their own journey from shopping to buying to the post-purchase experience and these milestones might occur at any of the potential channels — at Web at store and at mobile. It’s critical for retailers to build systems, solutions, and operations to deliver the appropriate kind of content and experiences across any of these touch points so the consumer chooses how they want to relate to the retailer rather than the other way around.

How is technology aiding the omni-channel approach?

Bagal: Omni-channel is a new wrapper on a very old principle, which is that retailers want to establish a conversation with their consumers. Retailers would like to extend their reach and their relationship by any means possible. Technology gives the retailer the opportunity to extend the reach of the retailer’s breath far beyond what they do with traditional brick-and-mortar approaches. Technology is a way of turning retail into a better version of what it always was. The advent of mobility is a sea of change for the retailer. The consumer has leveled the playing field from an information standpoint. In some ways, it’s a threat, but it’s also a huge opportunity. The mobile phone is ubiquitous in the sense that consumers will never walk out of their house without their phone. The phone is two things — the target of messages and promotions and ideas that the retailer can deliver to the consumer wherever they are. It’s also the source of rich information.  As we move into the world of location-based services, where on opted-in basis consumers can acknowledge through the retailer that they’re in the store or near a display, we’ll be able to understand consumer preferences based on that data. The phone becomes the target of our messages but also the source of rich information.

To hear my conversation with Ravi for yourself, click here. And, for additional information on omni-channel retailing, download our 2012 Cross-Channel Retailing Special Report, which provides rich research on the topic from Aberdeen Group.

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