Watching through the eyes of history one can witness retail evolve from a rudimentary trade between two cavemen to the multi-trillion global industry that it is today. However, while it is true the basics continue to be the same (how to procure a “good” that someone else has in exchange for compensation) the way we go about it has changed radically. Let us take a quick look at history and see how the evolution of the interaction has evolved over time: In the beginning a “good” would be traded for another “good” directly from the person who could provide it. The first evolution of commerce appeared in the form of merchants who would consolidate “goods” from multiple suppliers and then trade on behalf of the collective. The deal would still be made in person and compensation would be in the form of equivalent goods. The second evolution happened around 1500 BC with the invention of money, which was easier to carry and collect than physical goods and allowed for a system of pricing against a common element rather than against diverse set of goods. People were now enabled to accumulate wealth in a form that allowed for postponing the consumption or acquisition of the goods. This new capability prompted the creation of retailers, which were the next evolution of merchants that would consolidate goods and offer them to people for money.
Defining multiple retail channels
Retailing was simple at its infancy, people would visit a merchant, identify a “good” they liked and pay for it with money. The first retail channel: the physical store was established. History continued its course and people started to realize that they did not necessarily had to go to the store to acquire the goods if they could start a way to send their buy request to the merchant and the merchant could deliver the goods to a destination of their choice. This process could be made more efficient if the merchant sent word/pictures/drawings and eventually photos of the merchandise in stock for the potential buyer to decide on what to acquire. The second channel: the catalog and “mail” order was established. Fast forward a few hundred years with the invention of the telephone and people no longer needed to write down their order, but could actually place a voice call to make an order. The third channel: the call center was established. A few decades later, another breakthrough in communication – the internet – made its debut and it was now possible to place orders using a computer. The fourth channel: the World Wide Web was established. Just a few years later, phones became small, portable and smart and it was now possible to place an order using a phone application. The fifth channel: the Mobile Phone was established. Every new retail channel created new possibilities in retail and allowed new players to change the market dynamics and challenge the status quo.Coming back from our trip in retail history, we now have 5 fairly unique & well identified channels or methods of acquiring a “good” from a retailer (Reference Figure 1).
Combined, these channels create a much more complex retail environment today than what existed in the time of our ancestors, when all the commerce took place face-2-face within the confines of a store or selling space.
Understanding the challenges of an Omni channel strategy
Today’s retailers realize that in order to compete effectively in the market place, it is not enough to have a well-defined strategy for a single retail channel, but rather they need to have an Omni-channel strategy that provides consumers a consistent experience no matter which channel they use to interact with the retailer. Given the diverse nature and different levels of maturity for each channel, this is actually much more difficult than it sounds.
While every consumer will have a different experience, eventually people will achieve the same outcome of buying the fan, but the level of personalization, customer service and messaging will be different. This situation is compounded as the modern consumer does not limit him/herself to only one channel. There is a very big likelihood that he/she will start the interaction on one channel, put the transaction on hold and resume the transaction later through a different channel. The alignment of goals and strategy becomes extremely important in such situations. The retailer can no longer afford to outsource a channel without making sure the consumer experience is consistent with the brand and core messaging that the company stands for. Further, the customer expects to be recognized as an individual across any of the channel(s) they interact through and expect the same level of service that they are used to.
Business Intelligence: The enablement engine for a successful Omni-Channel Strategy
Without a doubt, an Omni-channel strategy has many challenges that require collaboration of many parties, internal and external to the organization. However, the most effective way to enable Omni-channel is through a solid Business intelligence strategy (Figure 3)
Through the proper use of Business Intelligence an organization can achieve six core objectives central to the Omni-channel strategy:
1) Single view of inventory: Business Intelligence allows the integration and more importantly provides visibility of the inventory available across all channels. This is probably the most critical feature of an Omni-channel strategy as the last thing a company can afford is to be sold out of a particular item on-line, while having plenty of inventory at its brick & mortar stores (or vice versa). If the product is available, the consumer has a right to know regardless of the channel they are using to interact with the retailer at that particular moment.
2) 360 view of customer: Through Business Intelligence, organizations can fully understand how their customers interact with them through multiple channels. While the use of a single customer ID, provided by loyalty card or other marketing programs facilitates this analysis, it is not always required. BI can pull multiple data sources together, internal and external to the organization, to identify a customer using other methods (e.g. cookies on the website, masked credit card numbers, transaction patterns, etc).
3) Alignment of HR and compensation metrics: Business Intelligence provides a platform for visibility and alignment across the HR & compensation metrics from the multiple units of the organization that support, maintain and operate each retail channel. By having a consistent HR and compensation strategy, organizations incentivize a consistent behavior towards the organization goals.
4) Message unification: BI allows for the continuous measuring of the response to the company sales messages, establishing a common framework and understanding to standardize and unify the successful messages across channels and measure their relative performance over time.
5) Channel transparency: BI enables the channel transparency experience by measuring customer satisfaction in a way that can be measured separately and consistently for each channel, thus forcing the experience to be equally good across interactions, regardless of the origin of the same.
6) Immersive experience: Perhaps, the most critical element of an Omni-channel strategy is providing an immersive and superior customer experience. BI can assist the organization on this goal by making each channel owner accountable to the defined organizational metrics and provide alerts mechanisms when the experience for a customer is less than desirable across any channel.
BI truly provides an opportunity to get to know the customer and their preferences for interaction with the retailer to create a profile that can facilitate the personalization and customization of the consumer experience through any channel.
Omni-channel as a strategy is here to stay, if anything we will see more channels added in the next few years (e.g. a smart watch, or a dedicated virtual assistant that will do our shopping while we sleep). Successful retailers will need to adapt and provide a consistent, personable, channel transparent experience to the consumers. Business Intelligence will literally become the star of the organization providing an enablement engine across each and every interaction or touch point.
About the Author:
Noe Gutierrez is a Sr. Director at Cognizant Technology Solutions. He leads the Retail, Transportation and Hospitality teams within the EIM practice, a 13,000+ strong practice focused on helping Fortune 1000 companies to effectively leverage their data assets. Noe maintains a personal blog on: http://noegutierrez.blogspot.com/ and he can be reached at firstname.lastname@example.org