Omni-Channel Rocks, But Where's The Profit?

By Matt Pillar, chief editor

It appears that the omni-channel imperative has brought big trouble to the CFO’s office.

A new PwC CEO survey (sponsored by JDA) finds that only 19 percent of the top 250 retailers, and just 16 percent of retailers on the whole, are fulfilling omni-channel demand profitably. What’s more, over three quarters of retail CEOs say the costs associated with omni-channel order fulfillment are rising. They cite handling omni-channel returns, direct to consumer shipping, and buy online, pick-up in store as the leading cost culprits, in that order.

Just how sustainable is omni-channel fulfillment without the profit?

Here’s the rub: Retail CEOs are hell-bent on meeting customer expectations at any cost, even if that cost is to stakeholders. Asked about the challenge most likely to impact their businesses to a great extent, “failing to meet customer expectations across channels” was the leading answer. Not failing to manage the cost of omni-channel fulfillment. Not failing to meet profit/stakeholder expectations. It’s the customer, stupid. At any cost.

That plight is understood, but it’s unsustainable. It’s understood because competitive pressure dictates flexible omni-channel fulfillment as necessity. It’s unsustainable because omni-channel activity and expectations are both climbing rapidly. If the current level of omni-channel fulfillment activity is unprofitable for 84 percent of retailers today, what happens what that activity level doubles or triples tomorrow?

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