Antiquated IT Outmanoeuvres Omnichannel for Retailers
Outdated IT structures create the most challenges for retailers on their way to Omnichannel. This was clearly indicated based on surveying retailers in the Omnichannel Status Report 2016 compiled by Arvato in cooperation with Salesforce and the WHU – Otto Beisheim School of Management. In particular, corporate structures which are still vertically oriented need to be integrated accordingly with the widely spread, separated sales channels.
„Retailers are aware that their customers expect consistent offers across all channels from retail stores to Smartphones,” according to Marcus Karten, Vice President of Global Business Development & Solution Design of Arvato SCM Solutions – Consumer Products. „Hence, Omnichannel is no longer a “nice-to-have,” rather a “must-have.” It is essential that all employees have access to the same system in order to reach customers across all channels. Currently, many retailers are still operating with out-of-date IT structures, not even networked, and also only partially compatible with one another. Such fragmented systems rarely permit returning an item which was purchased online in a retail store, as it is simply a matter of different, independent databases.
The majority surveyed are faced with the challenge of updating their IT for Omnichannel. Not only is this time-consuming, but also often extremely costly. Essentially, retailers will gain ground by investing in performance-oriented databases, Webshops and analytics tools providing personalised customer contact.
Retailers Linking Channels
Most surveyed have already begun linking their channels. Several retailers offer cross-channel promotions and their customers can pick-up merchandise purchased online in a retail store („Click & Collect“). Furthermore, the merchandise offered for sale and their prices are consistently the same. However still uncommon are retail stores offering products which can be purchased online as per the principle of “endless aisle.” And, only a few retailers accept returns of items across all channels.
The survey participants are especially hoping for increased turnover to offset stagnating sales in retail stores though it is debatable if Omnichannel customers can truely boost turnover in the short-term. Some of those surveyed support this theory, yet sceptics claim that Omnichannel users are, in any case, often loyal customers unlikely to significantly increase sales. Even if the sceptics turned out to be correct, modern structures and procedures would ensure that a customer’s expectations are fulfilled, and their own brands empowered, leading to rising sales in the mid-term. Marcus Karten concludes the report’s results as „Retailers are convinced that it pays off to embark on the path to Omnichannel despite all its challenges. Omnichannel organisations clearly have a competitive advantage compared to players with separated channels, due to combining the flexibility of E-Commerce with personal contact in a retail store.”
Mandatory Active Change Management
Alongside a modern IT and cross-channel sales strategy, vertical thinking which is still so prevalent in many corporations needs to be abandoned. This involves revising internal incentive schemes. Until recently, they have often only dealt with the turnover within individual sales channels. The retailers have recognized that these structures are antiquated; however amending them takes time. “When discussing Omnichannel, most focus only on the technical side: How should the Web Shop look? What features does our App need to have? We have noticed from our participants’ responses that significant changes in organisational structures are a prerequisite. Many retailers are indeed aware of this, yet they drag their feet when it comes to change management,“ remarked Marcus Karten.
For the Omnichannel Report 2016, 20 managing directors from retail corporations from the fashion, beauty and FMCG industries took part in an online survey; 14 experienced retailers were interviewed by experts.
The report can be downloaded free of charge at www.scm.arvato.com/omnichannel-report
Arvato SCM Solutions:
Arvato SCM Solutions is an innovative and international leading service provider in the field of supply chain management and e-commerce. Partners come together with industry specialists in the fields of Telecommunication, Hightech & Entertainment, Automotive|Bank|Insurance, Healthcare, Consumer Products and Publisher. More than 14,000 employees work together to provide practical and relevant solutions and services worldwide. Using the latest digital technology, Arvato develops, operates and optimizes complex global supply chains and e-commerce platforms, as the strategic growth partner for its customers. Arvato SCM combines the know-how of its employees with the right technology and appropriate business processes to measurably increase the productivity and performance of its partners.
As leading European full-service e-commerce, omnichannel and retail logistics service provider; Arvato SCM Solutions has worked in the Consumer Products segment with world renowned fashion, beauty and FMCG brands for over 15 years. Arvato’s brand-specific service portfolio covers retail logistics, omnichannel and the entire e-commerce process chain: development of online shops, frontend management, online marketing, B2B & B2C logistics and shipping including returns management as well as payments and accounting, customer service and e-commerce consulting.
With 57 distribution hubs in Europe, Russia, Asia and the US, Arvato SCM Solutions provides the necessary scalability, flexibility and experience to give their customers the decisive competitive edge.
Arvato is a wholly-owned subsidiary of Bertelsmann.
About Salesforce Commerce Cloud:
The Salesforce Commerce Cloud empowers retailers to unify customer experiences across all points of commerce, including web, social, mobile and store. From shopping to fulfillment to customer service, the Commerce Cloud delivers 1-to-1 shopping experiences that consistently delight customers, driving increased engagement, loyalty and conversion. With embedded predictive intelligence and a robust partner ecosystem, the Commerce Cloud delivers customer satisfaction and growth from planning to launch and beyond.
About WHU – Otto Beisheim School of Management:
WHU – Otto Beisheim School of Management is an internationally oriented and mainly privately financed Business School based in Vallendar and Düsseldorf. Founded in 1984, WHU is now one of the most renowned German Business Schools with an exceptional national and international reputation. WHU stands for “Excellence in Management Education” and pursues this goal in its three core areas of activity: academic programs, research, and transfer in the field of general management. This excellent standard has been certified by accreditations from AACSB, EQUIS and FIBAA as well as through leading positions in national and international rankings.