From our vantage point, 2014 is shaping up to be the year traditional retailers and their consumer goods partners started to feel serious pressure over the digital to physical gap. For example, Retail Systems Research (RSR) points out "a somewhat stunning lack of synchronization across the supply chain, marketing, operations and customer experience across channels." We’ve seen some very different approaches to “fixing” omni-channel strategy this year:
Mobile First, or Store First – In our view, Mobile First is often only an inch-deep user experience design tactic, and is left to a digital agency to “solve” the omni-channel challenge. This is risky. Unless this approach is actually a Store First strategy, with all digital channels (especially mobile) adapted to enhancing physical in-store shopping experience, you’re missing channel-specific customer experiences and losing higher average order value through cross-sell.
Close Some Stores, Open an Online Marketplace – Really two strategies in one, we have several clients taking this approach. Poorly performing stores have always been subject to closing, albeit with a ton of negative press. When paired with an initiative to introduce or expand online endless aisle reselling of 3rd party merchandise, however, the net result looks appealing to investors and consumers alike. But, again, success will be defined by more than a good digital advertising strategy and updated sites – your onsite product findability can plummet with all those new SKUs.
Re-Organize for Omni-Channel Alignment – We’ve seen two different extremes to this strategy. Neiman Marcus just announced merging the merchandising and planning organization for Neiman Marcus Stores and Neiman Marcus Online into a single team. At the other end of the spectrum this month, we’ve also seen a client eliminate the entire eCommerce organization, aligning all digital functions under in-store Marketing leadership. In either case, bringing physical and digital departments closer together is NOT the only answer to fixing synchronization challenges, and time to market can even slow down as workflow and priorities are re-juggled during the re-org disruption. These retailers likely need to also up their game on internal collaboration and streamlined governance to help the new leadership team hit or exceed seasonal objectives.
Go Direct-to-Consumer, with Cross-Channel Competition – Losing brand visibility (and market share) in their traditional channels, going DTC is a move that would have been unthinkable for consumer goods companies not too long ago. These relative eCommerce newbies want to not only promote a cohesive brand experience but drive actual direct revenue from DTC in web and mobile. Luxury goods and apparel have a head start, and other sectors have begun to experiment with DTC models as well, including through 3rd party flash sale sites. Satisfying competing DTC and traditional distribution channels with differentiated product content is a critical challenge here, and must be overcome to achieve optimal cross-sell and close rates throughout the transition.
Executing well on any of these omni-channel strategies requires agile marketing and a whole new level of flexible, synchronized data and content choreography. To compete and win means delivering customer experiences in a way that ensures product findability, cross-sell and conversion at any touchpoint on the digital to physical spectrum….Content is king in this battle for the always-on consumer.
So what’s your strategy for crossing the omni-channel chasm? In this 4-part series, we examine the digital merchandising challenges and pitfalls in each omni-channel strategy, along with the must-do content synchronization and product findability advances you’ll need for the 2014 holiday season to compete and win.