The way forward for omni-channel retail
Retailers have embraced omni-channel retailing as the new way to sell and engage with customers. But it looks like the industry is in for more disruptions and 2015 will be the watershed year when everything will take a step forward to a whole new level.
Take this forecast from IDC Retail Insights: “By 2016, the top 150 retailers will improve ROI on hyper-personal loyalty based on unified customer engagement.”
The analyst firm sees that it isn’t enough that retailers have multiple channels to bring products and services to customers; it sees the need for integration, for matching offers and fulfillment, for greater visibility and collaboration, and above all for better understanding customers’ buying habits and addressing them more accurately. The term 360-degree view of the customer has crept into the lexicon.
“Understand that customer buying habits, cadences and personas require increased targeting sophistication and accuracy,” it said. “Take a holistic view of the omni-channel campaign and customer relationship management to enhance engagement and encourage loyalty.”
Needless to say, this kind of customer focus requires more sophisticated analytics capabilities, not just for customer and behavioral targeting but for “granular forecasting and replenishment” on the supply side.
IDC said omni-channel retailing will be empowered through the company-wide integration of structured and unstructured data sources.
“The more up-to-the-minute data is the more competitive retail advantage can be gained,” it said.
IDC also forecasts that by 2015, CIOs will start investing in omni-channel integration technologies as a top priority to support growth in the omni-channel shopper sales premium.
“Our indications in the market is that the omni-channel shopper will spend 30 percent more with the retail brand than the single-channel shopper,” Robert Parker, Group Vice President, IDC.
“And if you listen to retail CEOs who talk about moving into more omni-channel focus, it is interesting to hear several of them not talk about the convergence of mobile, web and in-store, but rather the convergence of operations in just simple things like getting inventory right, getting visibility to the inventory to where it is and what is available,” he said.
As retailers go through this integration process, Parker stressed that retailers will also have the opportunity to modernize its IT.
Mobile payments going mainstream
Because of the rapidly changing omni-channel consumer expectations, IDC sees that a “mobile first” approach to customer-facing digital interactions is needed.
Nowadays, shopping journeys can begin on mobile and end in-store. Thus, the need for new conversion and sales KPI data gathering capabilities.
“To support optimized journeys and m-commerce-based impulse buying, IT must plan to integrate payments, alongside loyalty and promotions on mobile and other POS,” it said.
Miya Knights, Senior Research Analyst, IDC, suggests that retailers need to evaluate mobile strategic investments now.
“I believe that mobile is definitely the next frontier in terms of omni-channel execution and retailers that are already exploring greater mobile engagement through loyalty and promotions both offline, online, in-store or wherever the customer may be will naturally see payment as an extension of investments they already made,” she said.
“We are seeing companies like Amazon, Walmart and other online and omni-channel retailers change prices of the same item multiple times a day and 10-20 percent of product categories every day,” said Greg Girard, Program Director, IDC.
Product intelligence, he said, is creating an ingestible product and behavioral data to create market-aware assortment, pricing and localization decisions.
“And operated at scale, product intelligence will support high-speed algorithmic pricing for 15 million plus products daily this year. Done right, product intelligence will drive a 300 plus basis point margin improvement and 20 percent gain in conversion rates while improving price perceptions,” he added.
IDC predicts that by end 2016 product intelligence will inform 80 percent of the top 10 e-commerce retailers’ pricing decisions and drive mainstream adoption of high-velocity pricing.
On-demand, socially networked delivery services
Think of Uber as a world unto its own - an ecosystem powered by algorithmic efficiency in a very mobile and social kind of way. Retail is also transitioning into the same Uber-like world where every customer need can be matched to a specific service.
IDC sees in its looking glass that by 2018, on-demand socially networked delivery services (including Uber, EBay Now, Shutl, Deliv, Postmates, Instacart, Amazon, USPS and Alibaba) will perform 90 percent of all intra-day direct to consumer deliveries.
As it is now, the omni-channel shopper has a menu of options of how purchases can be delivered fast. Same-day delivery, one-hour and three-hour deliveries, pick-up in the store are only some and the options are getting more varied and more sophisticated.
IDC sees more of the seamless integration of delivery to the shopping cart and order management application. It sees fulfilment flexibility, operational efficiency and optimized profitability.
“There will be no acceptable excuses for not having fulfilment flexibility predicated on the good item, inventory and third party fulfillment integration data,” it said.
Its guidance in this area includes: partnering with same day delivery providers to maximize customer fulfilment flexibility and minimize cost; and optimising profitability with distributed order orchestration and personalized and contextualized fulfilment offers.
These forecasts were discussed in IDC FutureScape: Worldwide Retail 2015 Predictions webinar.