The omni-channel stampede: part 1

The omni-channel stampede: part 1

Rushing headlong into omni-channel

Market pace is forcing retailers to charge headlong into omni-channel – that’s one of the key findings of our recent survey of 100 UK retailers around their omni-channel strategy.

A combination of competitive pressure, increasing customer demand, and a rapidly evolving marketplace are forcing retailers to race blindly into omni-channel initiatives. Customer convenience in particular is a key driver in the race to omni-channel, demonstrated for example by Amazon’s recent launch of same-day delivery in London, as retailers look to offer shoppers increased choice and convenience in order to stay ahead of the competition.

On average, retailers already offer three to four omni-channel services, with more in the pipeline within the next three months, as demonstrated in figure 1 below.


Figure 1
Figure 1

Making money

Despite John Lewis’ recent decision to start charging £2 for click and collect orders under £30, the majority - 69% - of retailers are swallowing the cost of click and collect, with just 16% charging for it and only 15% considering implementing a fee. Of those who do charge, only a handful (15%) are making a profit, whilst the majority are breaking even or even making a loss.

With all of the omni-channel activity going on, we took a look at investment. Across the board, retailers are spending an average of £300k per year on their omni-channel initiatives. Only 9% are passing the £1m mark, with the majority committing between £100k and £500k.

But where is this money being spent? Technology came out top, with 60% of retailers identifying it as a priority investment area. In terms of tech investment, warehouse management, order management and CRM came out on top. But when retailers’ top three investment priorities are taken into account, in-store technology and eCommerce platforms also rate highly.

Aside from technology, other items that our retailers identified as priority omni-channel investment areas included staff training (46%), advertising (45%) and social media (43%) – see figure 2 below. Service differentiation is one area in which retailers can really stand out, so it makes sense that staff training – whether it’s helping staff to engage more effectively with customers to up- and cross-sell, or training in the use of in-store digital - is high on retailers’ lists.

Figure 2
Figure 2

How do retailers decide which services to offer?

Given the large sums being invested into omni-channel, how do retailers decide which services to roll out? Sixty-seven per cent claim the decision is strategic at least in part, with a further 64% admitting customer demand is key and 37% citing competitor activity as a key factor in the decision-making process. And only 38% of respondents based decisions on the potential return on investment.

The big spenders – those investing £1m – 2m in omni-channel – highlighted customer demand as a key factor in decision-making. Whereas those with the most conservative budgets seem to be the most fastidious when it comes to deciding how to spend: strategy and potential ROI come at the top of the list for these retailers.

Read more

But how are retailers actually performing when it comes to omni-channel? Read part 2 – Stumbling, pushing and colliding – to find out how retailers think they’re doing, as well as the key barriers to omni-channel success.

And if you’d like to find out more about how eCommera can help in planning and developing your omni-channel strategy, download our omni-channel consulting brochure.

 
Survey methodology
We interviewed 100 leading UK retailers to find out how they were planning, measuring and tracking the success of their omni-channel programmes. The interviews, conducted by independent research firm Coleman Parkes, took place during September and October 2015. Respondents had a minimum of 20 stores, a minimum revenue of £50m/annum and all hold roles key to omni-channel within their organisations.