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New kid on the block

David Mackley discusses omni-channel and what it means

Omni-channel: a new model for retail?
When we started Intelligent Retail nearly 10 years ago, the term multichannel wasn't used very often in retail; in fact we picked up the domain www.multichannel.co.uk for just £300. Nowadays, the term is widely used across all levels of retail. However, in the last couple of years a new term has been doing the rounds - omni-channel is hitting the streets. But does this phrase tell us something new is on the horizon or is it just the multichannel story in a different cover?

I was at the eCommerce Expo Conference in London last October and Google was doing a presentation from a mobile phone (projected onto a big screen). The main story of the day was the incredible rise of mobile phone commerce. They are seeing the core growth in eCommerce coming from smartphones. For Christmas 2013, the speaker predicted that more than 30 per cent of retail queries will come from smartphones. If this trend continues, mobile will be the dominant device in retail search this year.

This is an ultra-fast growing retail channel. It's slightly different from computer or even tablet-based retailing. For example, Google is increasingly using the user's location in search. It usually knows a users' browsing habits and can mix a user's favourite things with local search results to come up with relevant websites even before a search is made. For example, if Google knows a user likes to look for jewellery shops, and that they are currently in Leeds, Google NOW will auto show results that may be of interest like shops that sell jewellery in Leeds. Voice recognition is also becoming smarter, and this will be more commonly used in the future to make search easier. We know that for smartphones, the larger retailers like John Lewis present a different version of their website tuned for the small screen. Research in web usability indicates this is best practise.

So, in smartphones we have another somewhat different, yet huge retail channel that has only arisen in the last few years. For the independent retailer, this is another retail channel to consider whether or not to invest in.

Multichannel Retail describes the type of retail that crosses more than one channel. Whilst companies like Argos have been retailing across multiple channels for decades, the term has become commonly used to describe retailers that are selling via stores and online channels. Convenience has always been one of the key factors in retail. Now with computers everywhere, including on our smartphones, it can be convenient for the consumer to shop wherever they happen to be. This of course has created new channels by which retailers can reach their customers.

Website, smartphone, mail order, stores and events are all channels that retailers can use to present shopping opportunities for their customers. A multichannel or cross-channel approach describes the way a retailer can target each of these channels and somehow link them together.

Omni-channel Retail looks at this from a slightly different angle. Rather than look from the retailer's perspective and linking these channels together, omni-channel looks at the consumer's perspective. An omni-channel retailer presents their customer with a consistent brand and service level no matter what technology or channel they use. Omni-channel is a customer perspective rather than a retail one. Omni-channel starts with looking at your customers and what they need, then the channels are selected to meet these needs. A good omni-channel retailer starts with understanding the customer's needs and wants as well as their desires and habits. Then the retailer will strive to present the right experience for those customers no matter which channel they shop on.

Why omni-channel?
Well, selling across multiple channels obviously allows retailers to engage with more new customers, if it's done well. Studies also show that when retailers sell via multiple channels, they sell more to each person on average. It seems multichannel encourages customers to part with more of their money, either on larger purchases or just more purchases.

Research by PWC showed that more than half of shoppers will spend more with a retailer when they shop via multiple channels. A study by Deloitte has shown that multi-channel consumers spend on average, 82 per cent more than their single-channel counterparts in clothing, home and electrical sectors. In the electrical sector, 62 per cent of all purchases are multi-channel purchases and on average these multi-channel consumers spend £238 per transaction, compared to the average of £160 spent by a traditional single-channel consumer. Now, the electrical sector lends itself to multi-channel retailing because, unlike clothing, there's no need to try anything on. Also, there's less emphasis on aesthetics. Instead, consumers are more interested in convenience, specification and price.

What's the difference?
Is omni-channel a new approach to retail? Well, I don't think so. There is no difference between omni- and multichannel. It's just jargon. Any good retailer will look at what their customer needs and find a neat way to present products to them at the time they want to buy. Any good retailer will also want to ensure a very good quality of customer service by managing stock levels centrally. So whether we call it omni-channel or multichannel the basic good principle of retailing apply. Provide a good service with good products at a good price that's convenient for the customer, and this applies to all channels. So multichannel retail is about more than price, although it will always be a strong factor. Consumers want choice, the right shopping experience, a trusted brand, good returns policy, good information and resources. Retailers that can offer this, whilst providing a good multichannel retail experience, can do very well in the multichannel age. In fact, studies have shown that businesses which embrace multichannel retail are more likely to be successful.

David Mackley MBA BSc is Managing Director of Intelligent Retail -www.intelligentretail.co.uk - providers of Multichannel EPoS and eCommerce websites for independent retailers. If you have any questions you can contact David on T: +44 (0)845 680 0126 or E: dmackley@intelligentretail.co.uk