‘Omnichannel’ retail is the latest big thing in the retailing sector. As local retailers scramble to catch up with their international homologues, we spoke with Laura Mcfarlane, Vice-President of Global Strategy at SapientNitro about the phenomenon.
This week, Vice-President of Global Strategy at SapientNitro, Laura Mcfarlane gave an exclusive presentation on the future of retail to retailers in Melbourne entitled, Engineering The Retail Brand Experience. The presentation focused on how consumers are now driving massive changes in the retail industry, as well as how these changes are accumulating and blending into a phenomenon known as ‘omnichannel’ retailing.
Fortunately, Mcfarlane had enough time to grant us an interview shortly after her presentation, in which we posed questions about this phenomenon as well as how Australian retail is appearing on a global level.
There are always new buzzwords appearing in the retail industry, but ‘omnichannel’ is one that has all the retailers in a flap. What is omnichannel retail, in your own opinion?
We’ve moved from the concept of multi-channel to omnichannel and I think it helps us to understand the shift. Multi-channel referred to brand efforts and presence on different platforms, for example, brands would say, “Ok, I have a retail presence. I have a website. I have a brochure,” which was effectively just ticking the boxes to establish some kind of presence on emerging channels. Omnichannel, on the other hand, is really about a fully-integrated customer experience that works across multiple channels – across all those touchpoints with the consumer. So I think the real difference is the idea of delivering a connected and consistent retail and brand experience across all the places and channels where the customers are and that includes online and bricks and mortar presence.
Why this distinction between multichannel and omnichannel? Why is the ‘connected experience’ only coming to the fore now?
Obviously a large part of this is driven by technology but what’s really interesting is much of the push for omnichannel experiences comes from the consumer whose adoption of new channels and technologies is forcing the rapid evolution of how brands and businesses operate.
It’s hard for the brands to keep up. Consumers expect brands to be where they are and to provide a level of service and utility – supporting their needs and enabling them to do the things they want, when they want, and there’s a sense of frustration when they’re not, or when the experience is discrete in different channels and it isn’t connected through.
For example, you can engage with a particular website and enter in all your details there, but then when you engage with the same brand in another channel and it says, “Who are you?” and you have to reenter details, the customer becomes frustrated. Or when brands don’t manage the expectations of customers and offer different products and services online than are available in the bricks and mortar store. The customer doesn’t know that there’s a complex infrastructure required to deliver – all they’re thinking about is, “Why can’t I do what I want to do? How come they don’t know me? Why can’t I get this product in the store as well as online and how come the people in my local store don’t seem to know anything about the online store?” This is not a good or rewarding experience.”
At the end of the day, the brand needs to think about how the experience is delivering and supporting the overall brand experience through all the experiences they’re offering their customers. Is this really the experience they want to represent the brand?
What are some of the practical methods you’ve seen that brands are putting in place to become omnichannel?
It’s still early on and there aren’t that many organisations that have established this entire brand ecosystem across all the different consumer-brand touchpoints. But we’re definitely seeing many different components of connected experiences across online, mobile and instore starting to emerge and evolve.
Rather than just being reactive (as many retailers are), brands should step back and say, “Ok, what’s our vision? Where are we headed? What’s the roadmap that’s going to get us there? What can we realistically start to do and what capabilities do we have that will help us achieve this?”
Understanding the opportunities and the potential for the brand, and then aligning internal stakeholders around this vision is critical. Unless you start to do that, you’re in danger of creating siloed experiences in different channels without necessarily understanding how all the components fit together. It’s all about starting to build a consistent and connected customer experience that evolves over time and having an organisation that understands and can support this.
For example, Nike provides NikePlus, a service and product that promotes the experience of running in all sorts of ways that deliver a much deeper connection between the brand the consumer. Victoria’s Secret’s teen brand Pink, created mobile apps for their young customers that includes the ability for parents to load up credit on the app so that their customers, who don’t necessarily have access to credit cards or money, can use the mobile phone to pay for Pink products online and instore.
As well as benefiting the brand, this type of product feels like good and efficient customer service. And of course, customers like good service and they like brands that know and understand them wherever they’re shopping. Increasingly they’ll migrate to those brands that provide experiences that meet their needs and expectations.
What barriers exist to companies that are seeking to become omnichannel retailers?
Many brands have rushed to get an online presence up in response to competition from online-only retailers. But without a longer term game plan or vision, and without considering the bricks and mortar experience these retailers can end up cannibalising their own instore traffic, or creating experiences that don’t support or map to their overall brand vision or brand purpose, and this can be confusing and frustrating for customers. It’s critical to understand the relationship between the physical retail presence and the online presence and wherever possible integrate them or at least create a relationship between them. The bricks and mortar presence is a powerful advantage that should be leveraged as a crucial component of the omnichannel retail experience. In fact, many online retail brands understand the value of a bricks and mortar presence and have started to create their own real world versions of their e-commerce sites.
On the whole, the biggest barrier retailers face is organisational. Most organisations are very siloed, and are in need of what I call ‘silo-busting’. It comes back to having and supporting a vision at the most senior levels of the organization and getting everyone – all the stakeholders – to buy into that vision.
The real challenges are often getting different groups, different skills to effectively connect and communicate with each other. We’re starting to see the emergence of new roles like Chief Experience Officers, hybrids between marketing and technologists, and we’re starting to see product, marketing and IT departments working much more closely together. For example, JC Penney has made a major long term commitment to omnichannel retailing and this is reflected in organisational changes they’ve made. We’re seeing their IT people transitioning across to marketing and new leadership introduced that represents a break from traditional retail thinking.
Of course, it’s also important to realise that return on investment isn’t something that happens overnight. You have to take a longer term view and be prepared to make those investments rather than expect instant ROI.
How do you see the Australian retailers performing on a global level?
Everybody knows that Australia has been a bit of a laggard, but that’s not necessarily a bad thing.
It’s not always good to be on the ‘bleeding edge’ of development. This can be a painful and expensive experience. Australian retailers are definitely finding themselves playing catch-up, so you’ve got brands like Myer and David Jones who recently came out with announcements of significant new investments and commitments to omnichannel.
I think you’ll see Australian brands learning very quickly from everybody’s experiences, and there is a value to coming to the industry a little late – you can leapfrog. What we’re hoping to see is some serious leapfrogging. Having said that, we’re seeing brands like Woolworths working on mobile solutions like the BigW price beater app and others like IGA introducing tablets on shopping carts, so we’re seeing pockets of innovation and that’s great. That’s what they’ve got to do: to not be afraid of failing and actually start to promote more of these initiatives. They appear to be realising that omnichannel retailing isn’t an option – it’s critical to their survival.