COVID-19 has put pressure on retailers to evolve into omnichannel businesses to succeed during this pandemic. Although the coronavirus has had a significant impact on industries such as the travel and hospitality markets, eCommerce brands have thrived. Retail sales are soaring, despite global trade wars, a U.S. Presidential election, and a raging pandemic. The National Retail Federation expects retail sales to increase between 3.5-4.1% to more than $3.9 trillion in 2020.
Companies with the right omnichannel strategy in 2020 should set themselves up to hit their 2025 targets and beyond if they play their cards right. To sustain this momentum well into the future, however, retailers’ leadership must include the chief omnichannel officer, so that they can ensure their businesses keep up with their customers’ ever-changing behavior and buying preferences.
In this blog, we’ll discuss the key areas that your company’s leadership must consider as your business transforms into an omnichannel organization and who should be leading this transformation.
Customer Behavior Changes
After the pandemic subsides, consumers will likely become mission-oriented, and their shopping behaviors will change along with it. Before visiting a store, customers will discover products online and will check availability online. The trend that your company must pay attention to is this: transactions that occur in-store after customers have first engaged with your brand online may now exceed your traditional in-store sales.
Your company’s response to this trend should center on Buy Online, Curbside Pickup for items purchased online, and converting your stores into fulfillment centers.
A successful omnichannel strategy is easier said than done. Many omnichannel initiatives fall flat because retailers take a tactical approach that is reminiscent of legacy brick-and-mortar establishments. In today’s mobile-first world, this is a recipe for disaster. There’s often a disconnect between store associates, who are effective at serving customers but lack the skills to support mobile-first consumers, and the tech people designing and building customer touchpoints, who lack empathy for the customer.
Leadership ResponsibilitiesKeeping up with customers’ buying behaviors is just one piece of the puzzle that companies must solve. The other problem that retailers often face involves a lack of well-defined responsibilities across different teams:
- eCommerce heads remain stuck in processes and priorities that are relevant for online shopping when eCommerce was a siloed channel.
- VPs of Retail focus on processes that increase store sales and consider eCommerce as a separate channel; they view eCommerce as competition to their stores.
- CIOs whose role was initially to procure, implement, and maintain backend systems like ERP platforms are now also responsible for evaluating technologies like eCommerce, Mobile POS, OMS, and PIM systems that impact omnichannel initiatives.
- The eCommerce team may be part of the marketing function. So evaluating omnichannel technologies becomes the responsibility of the marketing team or CMO.
With different responsibilities spanning your company’s teams, you need an organizational structure that mitigates the tension between these groups to establish a collaborative culture that works as one team, not in siloes. But who will lead this effort? It’s time to explore the key areas to consider in your brand’s journey of becoming an omnichannel organization and who should be leading this transformation.
Sharing Inventory Across the Enterprise
Inventory has the most significant impact on profit & loss (P&L). Company leadership’s choices and actions taken to manage inventory through the season affects P&L. A sell anywhere and fulfill from anywhere strategy is the only approach that works for today’s consumers, who constantly hop between channels multiple times before making a purchase. Customers are also demanding when it comes to shipping, and your brand must promise to deliver their items in two days or less, no questions asked.
Conventionally, retailers have had hard-allocated inventory between their physical locations and online stores during inventory planning. What businesses should be doing instead is creating flexibility by establishing a centralized inventory that pools between both online and brick-and-mortar stores and is accessible to all channels, fulfillment centers, and locations. By making inventory accessible in this fashion, your business will avoid any out-of-stock situations that will deteriorate your customer experiences and relationships.
Unfortunately, companies don’t always follow these steps. For traditional retailers, inventory allocated to their retail stores is proportional to their sales targets. Due to this strategy, Store Managers sometimes feel entitled to that inventory and are resistant to share with others across the business. For your brand to maximize revenue, however, your leadership must ensure inventory is indeed shared.
At a ground level, both online and offline teams still have conflict. For example, in one of my personal experiences, we were automating pre-order management for a retail brand using a Distributed Order Management (DOM) system. The online team was recommending that the inventory for pre-order items be received in the warehouse when order management should instead be assigning the available inventory items to pre-orders. However, the store teams were not in favor of this automation and wanted to manually allocate partial inventory to both the stores and pre-booked orders.
In this scenario, someone must resolve the conflict. A CEO can be the one who can resolve this issue and establish a customer-centric approach rather than a channel-siloed strategy. The customer-centric model isn’t dependent on which channel a customer is coming from, so it’s the ideal solution to promise the inventory to the pre-booked orders because they’re paid in advance. It’s a win for everyone.
Bringing Online and Store Teams Under One Roof
Businesses aren’t restricted to selling their products just one way these days. Companies can sell from their physical retail stores, their eCommerce sites, or online marketplaces such as Amazon; the world is their oyster. Within each business, brands have separate teams for merchandising, assortment planning, product pricing, and promotion strategy. With so many groups to account for, companies often have products priced differently across their retail locations, eCommerce sites, and Amazon pages.
Today, customers check prices on multiple channels before they make any purchasing decisions. When they see a difference in pricing across these channels, they lose trust in the brand. So by centralizing planning and procurement roles, your company can not only realize operational efficiencies but also create a common view of product information (pricing, offers, digital assets, etc.) across these buying channels. To achieve this, the P&L of both stores and eCommerce has to be owned by one person. And to begin with, the CEO can own the P&L of stores and eCommerce to ensure uniformity.
Implementing An Omnichannel Technology Foundation
Much like how customers’ buying habits are always changing, your company’s leadership must employ similar fluidity. To truly leave behind legacy retail mindsets and technologies, your CEO must embrace everything that omnichannel initiatives have to offer, which means they must become more ingrained into your brand’s omnichannel strategies.
With technologies built years and years ago when there wasn’t a need to connect in-store and eCommerce technologies, some businesses have resorted to piece-meal solutions to address any gaps with their current omnichannel environment. This approach falls flat, and coupled with CEOs who have limited knowledge of technology, businesses are stuck in a rut with no light at the end of the tunnel. To compensate for this lack of tech-related know-how, CEOs rely on a CIO or other team members.
By not having ownership of their brands’ technology foundation, CEOs cause internal conflict, as there’s opacity regarding who is responsible for evaluating solutions for omnichannel initiatives. For example, in some organizations, eCommerce comes under marketing, so marketing says they’re responsible for choosing any new platforms. Conventionally, CIOs and tech teams have been making technology decisions, so they think it’s their responsibility to select technology for omnichannel initiatives.
In some organizations, CIOs don't want to take the risk of replacing legacy systems with new platforms designed specifically for omnichannel initiatives. For example, to implement omnichannel services, retailers need to migrate to a cloud-native, mobile-based point of sale (POS) system that enables real-time inventory synchronization across multiple stores and online eCommerce sites. However, some CIOs still get stuck with legacy and non-cloud-native POS solutions. As a result, they never achieve a real-time inventory view across all their stores, and so offering omnichannel services like Buy Online Pick Up in Store still has flaws if legacy equipment remains in place.
So letting individual teams make technology decisions as they did in the past will not work in today’s fast-paced retail climate. Omnichannel implementation is not a technology project, it's a business transformation project, so your CEO’s participation in any technology evaluation is a key factor in your brand’s future success.
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CEOs must become agents of change to ensure their companies maximize their growth. By following these recommendations, executives will be in a position to spearhead their companies’ omnichannel initiatives. If your CEO cannot take on these responsibilities, your business should ensure the CEO at least appoints the Chief Omnichannel Officer, a person who is responsible for your brand’s omnichannel transformation and who has similar authority to your CEO.
A Chief Omnichannel Officer can take on your company’s omnichannel responsibilities. This executive should drive change from a senior level and commit to omnichannel initiatives throughout the organization. They should have all teams involved in your omnichannel objectives reporting to them, ensuring the entire business is being held accountable for achieving these goals. Given all of these groups under their leadership, your Chief Omnichannel Officer must be an effective communicator so everyone is on the same page.
Whether it’s your CEO, a Chief Omnichannel Officer, or a similar executive, your brand’s omnichannel success hinges on top-down leadership to set the tone and lead your strategy from ideation to fruition. If you’re looking for ways to optimize your omnichannel initiatives, contact HotWax Commerce today.