Omnichannel Retail: Structure for Success

You may remember the scene in the movie "The Minority Report" when Tom Cruise's character enters a Gap store and is greeted by a hologram of a store associate who welcomes him back to the store and asks how his last purchase — assorted tank tops — worked out for him. When this movie was released in 2002, this personalized in-store experience seemed far into the future, but it's now almost upon us.

While the Gap hologram example may not be anyone's idea of a "great shopping experience," this futuristic store associate's understanding of an individual shopper is something consumers want. Retailers understand the need to provide personalized experiences in-store the same way they do online and in other channels. How? The key is for retailers to use all the data they have, from every interaction with consumers, to present a compelling, tailored experience whenever and however the shopper chooses to interact with the brand. In short, be a true omnichannel retailer.

The Store's Role in Omnichannel Retailing
Omnichannel is such a new term that it hasn't technically been defined, but most retailers understand that it's an evolution of multichannel retailing focused on a more seamless approach to the customer experience across all channels. Retailers chasing after this seamless experience are experimenting with unique combinations of all these channels, with a strong emphasis on the digital ones. To truly be omnichannel, however, retailers must include the in-store experience. After all, this is where a majority of shopping still takes place — and with good reason.

Consumers often go shopping to do more than just buy things; they go to be in an environment that they love, to physically see and touch products they're interested in, and to have fun. Therefore, while online shopping and showrooming are very real threats to brick-and-mortar sales, the brand experience shoppers get when they're in a physical store has its own unique strengths that retailers have to take advantage of in order to make the total shopping experience better.

Leveraging the particular strength of one channel while transitioning to a new one is something mail order companies like L.L.Bean already know. Over the past 20 years, e-commerce has transformed their businesses with a massive shift in sales from the catalog to online, yet the successful ones still do a considerable amount of catalog mailing. Why?

These companies have learned that the biggest boost to online sales comes from sending out a new catalog. They've gone "all-in" on the shift to e-commerce, but they haven't given up the advantages of having a physical catalog in the hands of their customers. Catalogers like L.L.Bean haven't just survived this shift, they've thrived. In this same vein, omnichannel retailers will come to realize that the brand experience and marketing halo created by an exceptionally great in-store experience will grow sales across all touchpoints.

Breaking Down Silos
It's not enough, however, to keep business as usual in-store. Consumers have become spoiled by retailers that offer a great deal of personalization online, and will soon expect the same from their brick-and-mortar counterparts.

However, due to the detrimental practice of operating retail businesses in silos based on shopping channels, this desired level of omnichannel personalization remains a challenge for most. What a consumer is doing in-store is very important to how the same consumer should be marketed to online, and vice versa. This may seem obvious, but it's too rarely done.

Retailers may say they don't behave this way, but they do. You need only look at how they measure success for any given campaign. Within most retail organizations, CRM teams measure their direct marketing campaigns based on in-store sales, while email teams look only at last-click website sales. This approach is shortsighted. If an email can inspire a customer to visit her nearest store location to make a purchase, than surely that's success. After all, a sale is a sale. While it may be easiest to measure with the data closest to that team (in-store transactions for CRM teams, website for email teams), it's not good enough in today's omnichannel environment. True omnichannel retailers must become channel agnostic and measure return on investment across all channels.

The 21st Century Storefront
With recent advancements in technology, retailers are now able to enhance the in-store experience by using insights gleaned from online shopping habits, user-generated product reviews, social activity and more. Having a holistic view of each individual customer — not subsections of shoppers — enables retailers to tailor the in-store experience to a shopper's style, price preference and even size.

Imagine a sales associate, headed to the stockroom to get an item for a consumer, returning with two or three additional items based on that shopper's omnichannel profile. Envision a shopper in a dressing room interacting with an iPad to review dynamically suggested accessories that go with the dress she's currently trying on. Or a shopper receiving an offer specifically tailored to her shopping behavior printed on her receipt (e.g., "75 percent off the matching belt for your dress, if purchased online in the next 60 minutes."). The possibilities are limitless, and only those retailers that start down this path now will discover which ones are most successful for them.

Likewise, information from the customer's in-store experience must become part of her full profile to ensure that all other interactions she has with the brand (e.g., emails, website visits, etc.) are relevant. Rather than competing with digital channels, retailers that incorporate brick-and-mortar stores within their omnichannel marketing efforts can paint the clearest picture of their customers and thus deliver the personalized shopping experience that consumers have come to expect, whenever and however they want.

While omnichannel retailing is a fairly new concept, one of America's oldest pastimes — in-store shopping — is key to completing the omnichannel puzzle. The challenge that retailers face today is how to use their store(s) to their advantage. By adding the personalization tactics of online to the in-store experience, retailers can create an omnichannel experience that's so personalized and relevant to their customers that it keeps them coming back.

Graeme Grant is the president and COO of CQuotient, a customer analytics software company for retailers. Graeme can be reached at graeme.grant@cquotient.com.