How to Be an Effective Omnichannel Retailer

The dream of omnichannel retailing – creating a seamless shopping experience whether the customer is shopping online, from a mobile device or at a physical store — got a wake-up-to-reality call at the National Retail Federation conference in New York City yesterday.

Keeping pace with customers’ fast-evolving mobile and social media use is an enormous and ongoing challenge, a panel of top business executives from Macy’s, Lowe’s and The Limited agreed.

“We continue to be surprised at the pace of (mobile) adoption,” said Macy’s Chief Omnichannel Officer R. B. Harrison. “We thought we had really stretched in mobile, but it’s not enough.”

Lowe’s Chief Omnichannel Officer Brent Kirby said customer expectations for speed, convenience and price competitiveness are “light years ahead” of just a year or two ago. “We’ve seen consumers migrate to mobile, looking for product and project knowledge. We have thousands of how-to videos on our website now.”

“It’s a difficult challenge,” agreed CEO Diane Ellis of The Limited. “As much as you anticipate channel behavior shifts, they continue to outpace our expectations.”

Even the title of Chief Omnichannel Officer – recently established at both Lowe’s and Macy’s — is a relative newcomer to the C-suite.

“Everyone hates the term ‘omnichannel’ because it has the word ‘channel’ in it,” said Cathy Hotka, president of Cathy Hotka & Associates, an IT retail consultancy. “What they’re really trying to express is about creating the seamless customer experience. Retail CIOs know it’s an imperative.”

The Omnichannel Dream vs. Reality

Becoming an omnichannel retailer requires a well-orchestrated blend of digital and traditional channels working as one to create deeper, more lasting relationships with customers. That’s the dream part.

The reality comes with the transition itself, which requires everything from restructuring business models, changing organizational structures and revamping inventory systems to investing heavily in innovative technologies in mobile, data analytics and social media.

“We can’t make the same decisions as in past about where to invest in technology,” Harrison said. “Most of you may not think of Macy’s as a technology company, but we spend hundreds of millions on technology to enable this.” All of Macy’s primary development work has shifted to mobile, he noted.

For The Limited stores, which target “sophisticated professional” women aged 25-45, omnichannel is more of a tactic than a defining strategy, the CEO said. “We don’t have the resources of a Lowe’s or a Macy’s, so we focus on what is most meaningful to our customers.” For example, an ability to reserve an item online and then try it on in the store is preferable to buying it online and having to return it.

The specialty retailer is now piloting an iPad app that allows sales associates to show shoppers recommendations on outfit combinations from social media outlets like Pinterest. “We want to engage on the floor with the client while she’s on her own mobile,” Ellis said.

Big Data and Data Analysis Drive Omnichannel Sales

Using more in-depth data analysis to create “different engagement channels” with younger customers is another tantalizing prospect for The Limited. Millennial shoppers want retailers to know more about them and respond with more specific product recommendations “that fit her lifestyle,” Ellis said. “They want us to be able to help create her closet.”

One of the more daunting omnichannel hurdles for retailers is creating “one version of the truth” from separate dot.com and store product inventories, said Lowe’s Kirby. “You have to break down barriers,” he said. “We have $1 billion in inventory selling directly out of stores now. It was clear we needed that one single view.”

“Few retailers are even close to the vision of omnichannel customer experiences,” Hotka said. After they conquer the inventory-visibility problem throughout their supply chains, the next issue will be “anticipating what sells best in which store,” the consultant said. “Big data is going to be huge.”