Big retailers are lacking in their omnichannel offerings

UK department stores are failing to introduce omnichannel experiences at a pace that keeps up with consumer demand, new research finds, meaning they lag behind their US counterparts.

The collapses last month of retailers BHS and Austin Reed have raised fresh questions about the future of the UK high street. The brands have over 200 years of history between them yet both have failed to adapt to the rise of online shopping and the emergence of new competitors. As administrators seek buyers for the stricken chains, marketers in the retail sector should consider whether other high-street brands are safe from the same fate.

Analysts argue that BHS, which has 164 UK stores and 11,000 staff, was slow to develop its online presence and website following its acquisition by retail entrepreneur Sir Philip Green in 2000. The business was sold to Retail Acquisitions for £1 last year, but the new owners were unable to find a solution to its £1.3bn debts. Critics also suggest that the BHS store estate is in urgent need of renovation and that its product lines have failed to attract younger shoppers.

Similar accusations are levelled against Austin Reed, which has 100 shops and employs 1,200 people. The brand’s owner, Alteri Investors, pumped £6m into the menswear retailer last year to develop its digital operations and clothing lines, but such measures were not enough to keep it afloat.

These business failures tally with new research suggesting UK retailers are falling behind their US rivals when it comes to ‘omnichannel’ retail. The claim is made in a report by customer experience agency Rockpool, which identifies significant room for improvement in areas like customer service and personalisation.

Commenting on the research, British Retail Consortium CEO Helen Dickinson says: “Shoppers are looking to physical retailers to go beyond the transaction, provide richer experiences to the consumer and to play an even greater role in their lives and the lives of their community. Therefore, there is a need to think differently about the retail offer, whether digital or in store.”

“There is a need to think differently about the retail offer…digital or in store“

UK retailers fall behind

The Rockpool research was conducted between January and March 2016, before last month’s failures of BHS and Austin Reed. It involved using mystery shoppers to rate eight department store chains from the UK and US according to their overall “omnichannel capability”.

The retailers selected for the study were Debenhams, House of Fraser, John Lewis, Marks & Spencer and Selfridges in the UK, and Sears, Macy’s and Bloomingdale’s in the US.

Each retailer was judged against four criteria and, within these, 32 sub-metrics, with the scores weighted to create an overall index. The four criteria include the extent to which customers are put at the heart of the experience; the ability for customers to access consistent pricing, promotions and customer service across channels; the breadth of the retailers’ delivery and return options; and the retailers’ ability to create and utilise a unified view of its customers using data and technology.

Sears is the clear leader in the overall index with a score of 83, followed by Macy’s (62), House of Fraser (61), Selfridges (59) and Bloomingdale’s (57). UK retailers John Lewis (57), Marks & Spencer (54) and Debenhams (47) make up the bottom three.

Rockpool CEO Bruce Griffin believes that Sears’ success is rooted in its focus on providing  “a highly cohesive and engaging” customer experience across channels. “A company like John Lewis is often touted as a great example of omnichannel, but it is not consistent across all the different areas that make omnichannel effective – whereas Sears is,” he says.

Sears’ success is rooted in a ‘cohesive and engaging’ experience

“More than any other brand [in the research], Sears has embraced personalisation. The combination of equipping employees with data to have personal interactions [with customers] and making that stick across all the channels is what sets it apart. For all of the UK brands, personalisation was either not present at all or very, very poor.”

On average, the US department stores outperform the UK in all of the four main metrics. The US average score for ‘data and technology’ is 65, compared to just 44 for UK stores, while the US scores 63 for ‘cross-channel experience’ versus 54 for the UK.

Griffin believes this disparity is partly down to “the customer service culture and higher expectations in the US”, but also a willingness among US retailers to adapt their strategies at a quicker pace. “The UK department stores have focused on developing their operational and delivery capabilities, with the expectation that they can improve the retail experience once they’ve got that underlying foundation,” he says.

“In the US, they’ve been braver and said ‘we’re going to plough on with our retail experience and back-fill the operational stuff as we go’. There’s a slightly different philosophy between the two countries that has allowed the US to push the boundaries of the retail experience.”

Getting the basics right

Whether the research points to a wider malaise in UK retail is open to debate. At Marketing Week Live last month, John Lewis’s chief privacy officer Steve Wright spoke about how the chain is using data to develop more seamless customer experiences. However, he also highlighted that such opportunities impose new duties on retailers to respect consumer privacy.

“It’s about having an upfront communication [with customers] that says ‘[you can use free wifi] to enhance your journey as you go around our store [but] we want to profile you so that we can send timely offers as you walk past [different products]’,” he said. “That’s empowering for people and a greater use of the data, but you need to be upfront with consumers about what you’re doing with it.”

Critics said BHS’s product lines failed to attract younger shoppers

Rockpool’s Griffin also points out that developing omnichannel strategies is not the only answer to the woes of retailers like BHS. The department store chain may have failed to adapt its online and in-store offer in recent years, but these flaws stem from a fundamental failure at management level.

“Omnichannel is not a silver bullet,” he says. “You’ve still got to have the right products and right people in your business. If you’re selling the wrong products, onmichannel is not going to make your business successful. Omnichannel is an accelerator for a business, but not a replacement for the right product portfolio or the right mix of pricing.”

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