Why Retailers Are Struggling to Get Omnichannel Right

Omnichannel capabilities are now essential for retail success. Customers expect retailers to meet them on their terms and via their favorite platforms.

While most retail transactions still take place in physical stores, the buying process often begins online – and is strongly influenced by digital. In fact, more than half of all retail sales are impacted by digital interactions, and 63% of decision makers are looking to improve the complete view of the customer across all channels.

Omnichannel requires retailers to deliver a seamless experience throughout the customer journey, whether the consumer is shopping in the store, on a desktop at home, or on a mobile device. As a result, they must build digital infrastructures and supply chains that can quickly complete transactions.

The impact of omnichannel can be felt directly on retailers’ bottom lines. Omnichannel shoppers spend 4% more in brick-and-mortar locations and 10% more online than their single-channel counterparts.

While understanding the importance of omnichannel, retailers continue to struggle with the five essential omnichannel plays:

1. Buy online, pick up in store (BOPIS)
2. Endless aisle
3. Ship to store
4. Ship from store
5. Buy online, return in store (BORIS)

Part one of this series on omnichannel will focus on the first two of these key plays.

Buy Online, Pick up in Store

Buy online, pick up in store, often referred to as “click-and-collect,” allows consumers to shop online and immediately acquire the product from a nearby store. This not only provides convenience for customers, but it can also reduce their final costs. In a JDA report, roughly half of surveyed consumers used BOPIS, and their top reasons for doing so were to avoid home delivery charges (40%) and to get merchandise sooner (33%).

Beyond convenience, BOPIS has also proven to be a boon to retail sales. On Thanksgiving and Black Friday last year, 27% of shoppers used buy online, pick up in store capabilities. Of these shoppers, 64% made additional purchases while picking up their items in store.

The greatest challenge retailers run into with BOPIS is aligning online and in-store operations. Difficult to use features and improperly trained staff can derail any potential benefits of these omnichannel capabilities. In JDA’s survey, almost one quarter of shoppers said store staff took too long or were unable to find their orders in the system. Another 16% reported there was no dedicated staff in the store to help fulfill their BOPIS transaction.

In order to leverage BOPIS to its full potential, retailers must make both the buying and pick up experiences seamless and intuitive. The most successful retailers have learned that customers expect real-time communication on the status of their orders, no matter how they are purchased.

Retailers could take a page from the quick service restaurant (QSR) industry’s use of mobile ordering to improve their BOPIS processes. When launching its own mobile order-ahead feature, Shake Shack enlisted on-demand, real-world testing resources to understand how the new mobile features would impact its in-store operations, especially with an influx of sales. Shake Shack enlisted Applause to send 150 real-world testers to one of its most popular spots in New York City to stress-test the mobile order-ahead capabilities and weed out bugs in the application as well as any operational issues.

Shake Shack gleaned several key insights from testers:

1. The signage it was using to direct the mobile app users was unclear
2. Staff needed to be better trained on how to handle mobile orders
3. Some guests felt uncomfortable skipping the line to receive their food.

Shake Shack took the feedback from the testers, implemented changes, and successfully launched a new revenue stream with the mobile order-ahead app.

“We needed to figure out if we could handle times of craziness. Applause quickly helped us jam over 100 people into one location to figure that out,” said Zach Koff, COO of Shake Shack. “We were able to turn the app on for a location literally the day after training because of what we learned working with Applause.”

Endless Aisle

In the omnichannel era, customers have little patience for out-of-stock items. About 67% of consumers who leave a store empty-handed say they couldn’t find the product they needed. Endless aisle solves this problem by using in-store kiosks and app-enabled devices to allow customers to select from a wider selection of inventory for shipment to their homes. This helps retailers re-capture lost sales and offer a larger product assortment without the cost of holding the inventory in the store.

Endless aisle experiences can also be supported with mobile apps, either in the hands of consumers or on tablets used by associates. Consumers are embracing endless aisle: more than 60% of global shoppers are willing to use self-service kiosks and half will seek out associates with tablets.

The most effective applications offer personalized recommendations. This is true for endless aisle as well. However, it’s an area where many retailers are coming up short. Retailers should test with targeted demographics to ensure they first understand the needs and preferences of specific customer groups. Then, they will be better prepared to offer up personalized recommendations in endless aisle based on what the customer is searching for.

As a true customer-facing omnichannel offering, there is a lot of scrutiny on the performance of endless aisle from both the digital and physical aspects. Digital products must function properly and show all available products that are relevant to the customer, and in-store kiosks must have adequate signage and staffing to help consumers in need of assistance. That said, the digital experience of endless aisle should be designed so that instructions are kept to a minimum and the experience is intuitive and easy to complete throughout.

In part two of this blog series on omnichannel experiences, we will cover the remaining essential omnichannel plays: ship to store, ship from store, and buy online, return in store.