Omnichannel Retailing: Sell more, spend less

Multichannel vs omnichannel

Are you keeping up with customer expectations?

3 reasons to invest in your omnichannel experiencea. Insightful marketing and salesb. Seamless customer experiencesc. Unified store operations

Conclusion

Contents

She walks to the store, makes the return and spends the rest of her gift card on accessories.

A week later, Emma receives a personalised coupon on her mobile phone for a matching.

What makes Emma’s experience stand out? Did anyone tell her she could only use her gift card on the website, or refuse the return because it was bought online? Did the store forget all about her immediately after her purchase, or consider her an in-store custo-mer exclusively? No! Everything was wonderfully seamless at all touch points, attentive and geared specifically to her needs and preferences. Emma’s experience is what we call omnichannel.

EMMA BU Y

BU Y

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The omnichannelbuyer’s lifecycle:

After they’re delivered, she decides to keep the green one but return the orange one.

For her birthday, Emma gets a $100 gift card for her favorite local clothing retailer.

She visits the store’s website and spends half the gift card on two shirts.

$100

Shop About Press

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TOTAL

$50PAY

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Are you keeping up withcustomer expectations?

The new omnichannel customer

You’ve probably heard: it’s the age of the customer. Empowered, data-driven customers are forcing companies to become “customer-obsessed” to succeed. Analysts are telling us that traditional com-petitive strengths – things like product quality and distribution systems – are taking a back seat to a company’s ability to engage with and serve customers.

Retailers like Amazon that were born online have set the bar high. As a result, consumers have beco-me accustomed to seamless transactions that answer all of their needs and customise their experi-ence. And when they don’t get what they want, they vote with their feet.

For the first time in retail history, customers are asking to do things that many merchants cannot support. Modern consumers want to buy online but pick up (or return) at the store. They want to browse product information on their laptop or smartphone, get coupons or discount codes, even make a purchase on their mobile phone while in a store. New consumers are naturally combining channels as they browse, research and buy. And believe it or not, early omnichannel adopters are supporting all of these desires – and reaping the benefits.

1Richard Garneau. The Age of the Customer. Forrester Research, September 2014.

Multichannel versus omnichannelOmnichannel retailing goes far beyond multichannel. Multichannel simply means you sell to and communicate with customers through multiple channels, but with little in-tegration among online, mobile and in-store experiences, devices and systems.

Many say that omnichannel is multichannel done right. Omnichannel means provi-ding a seamless experience as you sell to, communicate and interact with customers through integrated online, mobile and in-store experiences, devices and systems.

Omnichannel relies on a true integration of all channels, not just an ad hoc cobbling together of different systems. But once channels are truly integrated, the potential for retail success is much greater than the sum of all channels.

8 Think with Google. Macy’s reorganizes for omni-channel success. Aug 2015.9 Think with Google. Rebecca Minkoff empowers millennial shoppers. Aug 2015.

The omnichannel opportunity

Why are so many retailers behind? Some are limited by technology. Others, mindset. Either way, restrictions on buying behaviour can seriously discourage purchasing.

The real winners are the retailers that are actively lowering or removing barriers to purchase by understanding and delivering an omnichannel experience. By combining bricks and clicks, many stores are seeing their customer value and total sales rise:

• Macy’s moved quickly to unite organisational silos when it discovered its omni-channel custo-mers are eight times more valuable than customers who shop through one channel alone.8

• By integrating online and in-store channels, millennial fashion retailer Rebecca Minkoff saw a six to seven times increase in its ready-to-wear sales in less than six months.9

By combining bricks and clicks, many stores are seeing their customer value and total sales rise.

The mobile moment

Mobile is the biggest disruptive technology in commerce right now. Smartphone owners are active consumers, with mobile’s share of global online purchases growing to 40% by 2015.2

45% of smartphone users make a mobile purchase every month3

82% consult their phones on purchases they’re about to make in a store4

33% have switched intended brands due to information received during a purchase decision

25% “showroom,” or shop in-store for an item they later buy online

73% of mobile searchers later make the purchase in a physical store; 16% on the phone5

There are as many strategies as customer types, from traditionalists to exploiters to those who seek great buying experiences or lowest prices6. As the customer journey is no longer direct, retailers must be ready for this new world. Omnichannel strategies prepare retailers to engage with and benefit from these many new types of consumer.

2 Criteo. State of Mobile Commerce: Growing like a weed. Q1 2015.3 Omni-channel retail: A Deloitte Point of View.4 Lisa Gevelber. Winning Omni-Channel Shoppers in their Micro-Moments. Think with Google. Oct 2015.5 Lisa Gevelber. Winning Omni-Channel Shoppers in their Micro-Moments. Think with Google. Oct 2015.6 Aimia. Showrooming and the rise of the mobile-assisted shopper. Sept 2013.7 Lisa Gevelber. Winning Omni-Channel Shoppers in their Micro-Moments. Think with Google. Oct 2015.

Retail giant Target discovered that 98% of its customers shop digitally, 75% starting their experience on a mobile device. Target has declared mobile its new front door.7

It’s coming: the omnichannel revolution. As an independent small or medium-sized retailer, what can you do now to prepare? The way we see it, there are three big opportunities:

The more data points you have on each customer, the more complete your view, letting you:

• Recognise customers through a unique identifier, whether you are engaging with them in your store, through a mobile device or online.

• Personalise outreach to customers through more informed engagement on all marketing and sales channels. Knowing your customers’ end-to-end behaviour helps you focus your web presence and SEO to ensure specific products appear online when customers are looking for them. Personalised outreach also helps you retain customers for life.

• Increase transaction sizes through personalised offers and up-sell / cross-sell opportunities in your store, on your website and via mobile, using the online sales technique of “If you liked that, you’re going to love this.”

• Measure the effectiveness and ROI of marketing efforts across channels, fine-tuning your strategy and focusing energy on the activities and channels with the best results.

3 reasons to invest in your omnichannel experience

1. Insightful marketing and sales

Modern retailers have many ways of engaging with customers to market and sell: your physical store, your branded website, phone, mobile apps, social media, printed mail-outs, catalogues, and more. So many, in fact, that it can get confusing.

In an omnichannel world, retailers can unite data from every transaction and interaction on any channel into a unique individual file for each customer. Customer records can include previous in-store and online purchases, deliveries made, coupons used, gift cards purchased, comments on social media, phone interactions – anything and everything that can be used for a better understan-ding of the customer.

1. Insightful marketing and sales

2. Seamless customer experiences

3. Unified storeoperations

2. Seamless customer experiences

Today’s customers are demanding both relevance and immediacy. According to marketlive, 50% of shoppers expect promotions based on past purchases, browsing behaviour and preferences, and 55% expect consistency across screens and in-store.10 An omnichannel experience gives

customers stronger brand recognition across all marketing channels and a consistent and complementary experience through every touchpoint.

12 eMarketer. Why Retailers Should Offer Buy Online, Pick Up In-Store. June 8, 2015.

And because eCommerce lets you offer 24-7 commerce globally, your system should help you take advantage of that international market by supporting the multiple languages, currencies and eCommerce require-ments of your target countries.

Cross channel opportunities

A recent poll found that one in eight U.S. internet user finds the option to shop online for in-store pickup appealing, and more than half had done “click & collect” in the past year.12 Many people find this a compelling option that:

• Lets them make purchases at a convenient time • Saves shipping costs and inconvenient delivery times• Lets customers handle the product before taking it home.

Another big demand today is the ability to return to the store what was bought online. This is handy for customers who want to create an in-store experience at home by buying multiple options online, trying them at home and returning those not wanted.

Finally, ensuring gift cards can be used in whole or in part across all pur-chasing platforms keeps customer satisfaction (and sales!) high.

10 marketlive eBook: One-to-one holiday selling.11 Google/Ipsos/Sterling Brand . Digital Impact on In-Store Shopping: Research Debunks Common Myths. October 2014.

In-store

According to a Google study:

87% of shoppers “webroom,” or browse online before a store visit

79% browse during a visit

35% browse after a visit. 11

Switching between online and store is now a natural part of the shopping experience. When customers can move seamlessly from online to store to mobile and back, the buying continuum is unbroken. If you’re a small shop just starting to think about creating a website with eCommerce ca-pabilities, it’s the perfect time to think about an omnichannel experience for your customers.

Online experience

Your online experience should be easy and intuitive from the start. Through your eCommerce site customised to your brand, customers should be able to easily search products, view photos, enter coupon codes, read related reviews and blogs, and purchase with minimal clicks.

3. Unified store operations

• How easy are returns for customers and sales associates? For successful omnichannel, your POS system and store mindset must make returning goods second nature.

For best practices on managing your inventory for higher profits, read Lightspeed’s Inventory Guide.

Simple reporting

To maintain the omnichannel experience for your customers, you’ll need to keep an eye on your performance. Make sure you can access all of your sales and store data in one place and report on your progress regularly.

Having a single view of all your data lets you analyse and communicate performance across physi-cal and online stores, weeks of supply, inventory sell-through, profitability per channel and catego-ry, and many more critical success metrics.

Read Lightspeed white papers Putting Your Data to Work and 12 Key Performance Indicators for Retail for more information on data and performance measures.

In 2013, the world’s largest electronics retailer was bleeding revenue to pure online shops.14 Customers were using

Best Buy as a showroom to kick the tires of products they later bought more easily and at a lower price on Ama-

zon.com. Best Buy had failed to embrace omnichannel early on and was burdened with an outdated website and

disparate inventories.

In 2014, Best Buy adopted a true omnichannel approach. Stores became an asset rather than a liability as they uni-

fied inventory across shops and warehouses, offered more competitive prices and started to market using their rich

store of customer data. Omnichannel helped this retail Titanic steer clear of the iceberg and sail on to better fortunes.

14 Fitzgerald, Michael. Best Buy Battles Back Online. Technology Review, November 20, 2013.

An omnichannel approach requires breaking down any existing silos in an organisation, whether between online and physical stores, among locations, or among functions like inventory and marketing. Doing this has both benefits and challenges.

13 JDA Software Group study, The Omni-Channel Fulfillment Imperative, April 2015.

Integrating inventory

As eCommerce has evolved, many established retailers have been saddled with separate online and in-store inventories. But unified inventory is probably the single most important aspect of the omni-channel experience – where the rubber hits the road between customers and their purchases. With omnichannel, every store can be considered a warehouse: ample stock that is close to customers.

By integrating your inventory systems, you can:

• Help customers buy what they want, when they want it• Easily transfer products across locations and ship to customers• Allow click and collect; or buy in-store, send to home• Reduce out-of-stock notices, satisfy demand and increase sales• Make work faster, easier and more satisfying for staff• Access a single view of critical inventory data like stock turn, sell-through and weeks of supply.

When all inventory is available and visible to customers and staff through any purchase channel, purchase barriers fall. To embrace omnichannel selling, new and established stores alike are bene-fiting from technology that treats inventory as one, regardless of location. Getting there might be challenging, but you will reap the rewards for years to come.

Controlling costs

An omnichannel strategy usually involves selling more online and transferring more stock among locations. This can ramp up shipping, returns and other fulfilment costs.13 Keeping these costs under control as you move into a more unified, seamless and insightful retail experience will be important. Again, the keys to overcoming these challenges are both technology and mindset. Ask yourself:

• How easy is it to ship products among your stores or warehouses and to the customer? Think like an Amazon: Integrated inventory and a delivery system built on economies of scale are crucial.

About Lightspeed

At Lightspeed, we build end-to-end commerce solutions that retailers can use to build, manage and grow their businesses by creating better shopping experiences. We do it by unifying point of sale, inventory management, eCommerce, customer management, and analytics across all channels, in-store and online. More than 34,000 businesses use Lightspeed’s tools to sell over $12 billion a year.

Start your free trial at LightspeedHQ.co.uk/omnichannel

Questions? Call us on 020-3695-9599

Conclusion

An end-to-end view of the customer; strong brand marketing; consistently great customer experi-ences; seamless inventory management systems: these are the elements and the promise of omni-channel retailing. You may not be there yet, but every step you take towards uniting your systems to provide a consistent customer experience will benefit you through higher profits.

15 Goulart, Karen. Don’t be a digital underdog -- it’s omnichannel or bust. TechTarget SearchCIO, November 2013.16 MarketWatch. Research Reveals Retailers’ Struggles To Unify Online And In-Store Experiences. Oct 21, 2015

“It’s the age of the customer, as the analysts are fond of saying, only this time it’s also the digital age – and they’re joined at the touch screen. You want the customers? You need to get them where they are, and where they are is everywhere. You’d best be too.” 15

– Karen Goulart, Tech Target

What are retailers thinking?16

95% of retailers agree that the store and the digital experience must be brought together for a continuous, seamless experience.

77% believe their legacy electronic point-of-sale (EPOS) is preventing them from providing a consistent customer experience across channels.

94% say inventory insight across all channels is important.

95% say real-time visibility into customer activity across all channels is important.