Omnichannel retail isn’t new, but balancing channels is more important than ever

Even before the rise of ecommerce, customers could reserve stock in one store at the till of another. Now the key to retail success is making it easy to access the right channel at the right time – and having a product worth buying.

When I worked in a bookstore 14 years ago, the telephones on every till point were important. Customers would call my extension and ask if we had a copy of an Osprey title about the Battle of Bosworth, or the Shire book of Broad Gauge Railways. I would get calls from staff at other local stores, too, checking if I could locate a particular book before a customer was sent over to collect. Just because the EPoS inventory said we had one copy didn’t mean it could be located, and the whole process was often inefficient, the customer waiting on the line as I ran up- and downstairs.

That was omnichannel in spirit, even if it didn’t feel real-time or self-service.

Today, omnichannel retail is still all about convenience for the customer, who should still be able to use their phone to buy or reserve items. Bricks-and-mortar stores and web or app infrastructure work in tandem and, even though some people dislike the term, there are myriad ‘customer journeys’ that weave online and off-.

The pandemic has upped the ante for online merchandising

Let me give you a perfect modern-day example of a customer journey in lockdown. I wanted to replace the internal door handles in my house, because the old ones had a sharp point on one end that inflicted injury on my family from time to time. To make the process of replacing 12 door handles that little bit quicker, I wanted to buy some with a similar shaped backplate and that I could mount into the existing holes (all very Accidental Partridge, I know).

The problem was that, wherever I looked online, I couldn’t find product pages that showed where the mounting screws were located. So, I set off for my local B&Q and took apart all their display items, buying one I thought would match the holes in my doors. Once I had confirmed it fitted back at home, I went on my phone and purchased 11 more via click-and-collect across two different local stores. If Amazon had product pages with more imagery on them, B&Q wouldn’t have got my custom, but that’s the big bonus of bricks and mortar – I could get my hands on the merchandise. Whilst I was at the B&Q stores, I picked up some other bits and bobs, too.

For years, various different retailers have shared how omnichannel customers spend more than those who just shop in one channel, though undoubtedly there’s a bit of ‘chicken and egg’ involved. And over the last year and its lockdowns, omnichannel has boomed as customers have spent more time shopping online, reduced their store contact in many cases, and only been able to use ‘buy online, pickup in store’ (BOPIS) at some bricks-and-mortar locations.

Post-pandemic online dip

The general consensus is that behaviour change during the pandemic will stick to some degree.

Kroger CEO Rodney McMullen, for example, said on a Q3 2020 earnings call that the pandemic has accelerated the transition to digital by three years or so. He added: “It wouldn’t surprise me if it dropped off a smidgen, but I think it will continue to grow from that, because it is a long-term trend where the customer really expects to be able to get something in-store, pickup or delivery, and they expect to be able to bounce back and forth based on what’s easy for them.”

I think that’s true, though it can sometimes be dangerous to assume behaviour changes will stick. As Diginomica’s Stuart Lauchlan put it in an article in December 2020, “there will be a recalibration of customer intent and the likes of Kroger need to be aware of the need to find the new omnichannel balance that has proved so elusive in other retail sectors”.

We’re already seeing that “smidgen” of dropping-off in grocery in the UK, with figures from Kantar showing 143,000 fewer over-65s made digital orders in March, compared to February. That means online sales penetration dropped from 15.4% of total to 14.5%.

As for those other sectors, we’ve heard how difficult the balance is to get right, particularly when it comes to the cost of last-mile delivery, shipping from store, and picking in store for BOPIS. Not to mention, of course, the recalibration of real estate needed to adjust to changes in high street demand.

If you make it as easy as possible for a customer to self-serve across channels, they will do so.

John Lewis is perhaps the most high-profile example of late, axing a third of its stores over the past year, having previously doubled their number in a 10 year period from 2007 (when I was in that bookshop). The venerable retailer is now investing in click-and-collect via Waitrose stores and local collection points.

Kingfisher Group, owner of B&Q, is planning to increase store count, but to reduce their average size, bringing down cost and inventory in what the CEO has described as becoming “simpler and leaner”. Online sales penetration has gone from 7% in 2019 to 18% in 2020, with click-and-collect seeing 226% growth at group level.

Ikea continues to experiment with small-format city stores, to reach urban customers with services such as kitchen planning and to inspire online purchases. And back in grocery, we know that some supermarkets are investing in urban fulfilment centres to make sure that expansion of online orders and delivery is profitable long-term.

Putting aside the pain of digital transformation projects and store changes that retailers have been through over the past few years, I fundamentally believe that if you make it as easy as possible for a customer to self-serve across delivery, BOPIS and stores, they will do so. Provided they like what you offer, of course. And that’s an obvious but important point to make, given that a brand such as Debenhams made all the right noises about omnichannel, even adding Doddle points in stores in 2018 to let customers collect orders from other retailers, but whose product was no longer relevant.

If we go back to the bookshop, and how it has survived pretty well over the past few years despite the success of Amazon Prime, it’s clear that customers want the best of all possible worlds.

Incidentally, I tried to order an e-gift card via Waterstones over the weekend but found that orders for these are only processed during the hours of 9am–5.30pm, Monday to Friday, which was no good for a weekend birthday. Foyles was equally frustrating over Christmas, when I managed to order a book despite the laggy website and lack of customer reviews. I did, however, redeem a gift card that had been bought for me in-store. JR Hartley’s Fly Fishing, if you must know.

How retailers go about balancing their store and digital mix, and ironing out UX issues, will be unique to their sector and their brand, but understanding how customers shop today is the key, and 2021 is going to be a fascinating year for customer insight.