Written by Alberto Cordenons
Omni-Channel Retailing: When Online And Offline Blend Harmoniously
Retailing is defined by the Cambridge Dictionary as the “activity of selling goods to the public in store or on the Internet.” However the definition has encountered main changes after the advent of the Dot-Com boom, gaining the upper hand in the purchase experience with Omni-Channel Retailing. Therefore, the aim of this e-paper is to review this definition. To explain Why and How Omni-Channel Retailing is removing the word “or”.
The current situation exhibits the two channels not as distinct elements but more as a unified area without walls, where the perception of offline and online become invisible (Brynjolfsson, Hu & Rahman, 2013). A theoretical study of the most relevant steps of retail development is further analyzed with a focus on Omni-Channel Retailing, considered by a wide range of professionals and researches as the future to enhance sales and brands (Liebmann, 2013). In addition, for the purpose of the analysis, case study on the retailer Decathlon will be conducted.
A Journey From Traditional Offline To Omni-Channel Retailing
Looking at the retail industry in detail, to reach Omni-Channel Retailing, one can see that it has undergone four radical milestones in the last three decades (Rigby, 2011; Verhoef, Kannan & Inman, 2015).
Figure 1: The Evolution Towards Omni-Channel Retailing (Source: Deloitte, 2015)
- 1st MILESTONE - Until the early 1990’s, only two generic types of retailers characterized the retail industry. Some companies operated as a traditional retailer, also called physical brick and mortar store, where the delivery of information and fulfillment of the demand was implemented exclusively offline. While others, defined as catalog retailer, received the order via mail or telephone (Bell, Gallino & Moreno, 2014).
- 2nd MILESTONE - The biggest disruptive change arose with the widespread usage of online and the digitalization around the mid-90s. Companies like Amazon.com started to embrace what they called online shopping or e-commerce. (Rigby, 2011). As a result, several e-tailers rode on the crest of the wave of the demand of extensive online shopping for new categories such as shopping avoiders, necessity users, new technologist and time starved (Ghauri & Cateora, 2014).
Customers realized that online shopping had several advantages. Some of them are the search selection, cheaper and easily comparable price and the convenience of purchasing whenever and wherever they want (Rigby, 2011). But still, no interaction with offline was present as with Omni-channel Retailing.
- 3rd MILESTONE - The decisive step was the move towards multi-channel operations. The objective was to enhance the company’s position creating both an enlarged engagement and a binding relationship with the consumers who can either access their favorite brand online or offline (Verhoef, Kannan & Inman, 2015). With an exponential growth rate in online shopping (Deloitte, 2015) and the necessity to feel and fit products with non-digital attributes like apparel, both traditional retailers and e-tailers realized that solely relying on a single channel was no longer enough (Bell, Gallino & Moreno, 2014). However, although companies have focused their efforts to align brand touch points and increase accessibility, these strategies are characterized by the presence of separated retail channels (Verhoef, Kannan & Inman, 2015). They are frequently managed separately within the firm, unlike in Omni-channel, where they are developed together. Therefore, channels coexist without the possibility for the customers to trigger interaction, nor the possibility for retailer to control integration (Anderson et al. 2010).
- 4th MILESTONE - The retail landscape has reached its last phase called Omni-Channel Retailing alongside the intensive usage of new digital channels, such as mobile phones, tablets and especially social media as a tool of integrating and interconnecting the buying experience. The introduction of Omni-Channel strategies aimed at emphasizing the interplay between countless channels and brand reshapes the retail context in such a way the distinction between different channels became blurred (Verhoef, Kannan & Inman, 2015). Omni-Channel Retailing needs to fully satisfy the customers’ demand through a seamless sales experience that merges the benefits of brick and mortar store with the information-rich experience of online shopping (Rigby, 2011). In this way, retailers can ensure that each time a customer comes in contact with the brand, they will get the same high quality. Therefore, Omni-Channel Retailing creates a unique perception in consumers’ minds worldwide and a coherent image of the companies around their channels.
Given the importance for retailers to be up-to-date on this issue, an in-depth discussion has to be warranted. A theoretical and analytical review of the concept of Omni-Channel Retailing when applied to brand management will be provided in the next paragraph.
Why Is Omni-Channel Retailing A Key Driver To Success?
Much have been written over the past few years on the topic of Omni-Channel Retailing. Beck and Rygl (2015) defined the term as “the set of activities involved in selling merchandise or services through all widespread channels, whereby the customer can trigger full channel interaction and/or the retailer controls full channel integration” (p.175). When adopting Omni-Channel strategies retailers need to be capable to enhance their brands in a myriad of channels. Websites, physical stores, social media, direct mail, catalogs, call centers, mobile devices, televisions, are just some of the countless examples (Rigby, 2011).
Nevertheless, the term Omni-Channel Retailing begins to appear as a cause of today’s consumer behavior. It is not uncommon for consumers to switch across channels and devices such as laptop, mobile devices or tablets when choosing which product they want to buy and especially where to buy it (Liebmann, 2013). As a result, Omni-Channel Retailing best responds to increased customer demand without compromises. On one side they claim the advantages of digitalization such as the almost unlimited selection, price transparency and the complete and personalized recommendations from friends and experts. On the other side, they want to benefit from physical stores features, such as direct interaction with salespersons or touch the product in a engaged shopping experience (Rigby, 2011).
Consistency and interconnection in Omni-Channel Retailing leads customers to care about the trustworthiness of the brand and never doubt through which channel the retailer is selling.
Figure 2: Omni-Channel Retailing Interconnect a Myriad of Channels (Source: Deloitte, 2015)
To emphasize the importance of Omni-Channel, a 2015 eMarketer report about the retail industry, shows that sales exceeded $22 trillion in 2015, (5.6% increase from 2014) of which the retail e-commerce sales account for 7.4%. In addition, an estimate by 2019 shows how the retail e-commerce will account for 12.8% of retail purchases (eMarketer, 2015). Also the 2016 IAB report about mobile commerce has investigated the ongoing Omni-Channel trend. It exhibits that 75% of mobile Internet users have used their smartphone/tables as a mean of purchase in the past 6 months. On top of that, mobile purchases and payments account for 31% of total monthly purchases (IAB, 2016).
Furthermore, succeeding in the Omni-Channel Retailing world is more complex than expected. Customers’ awareness not only evolves with the company-generated marketing effort. It is also influenced by online communities, blog discussions, products reviews and friends’ word-of-mouth from Facebook and Twitter (Gensler et al., 2013). Therefore, to achieve remarkable results in Omni-Channel Retailing, companies need to guarantee persuasive and consistent information about the brand and its product to reduce any obstacles in the buying experience (Bell, Gallino & Moreno, 2014). This can be accomplished through enhanced data and details which decrease uncertainty, as well as options that permit retailers to deliver their product in the most convenient and profitable way (Bell, Gallino & Moreno, 2014).
There are several ways companies can implement Omni-Channel Retailing. One possibility is having mobile devices such as tablets in the store, where customers can seek information and order their products (e.g., Apple Stores). Another, through in-store Wi-Fi networks, is addressing communication and tracking consumers’ behavior. The following case study will illustrate how Decathlon succeeded in implementing Omni-Channel Retailing.
2 Decathlon’s Effective Omni-Channel Retailing Strategies
Nominated for the 2016 Omni-Channel Award, Decathlon, the “network of innovative retail chain and brands providing enjoyment for all sports people” (Decathlon, n.d.) best represent how Omni-Channel Retailing leads to success in the retail industry (E-Commerce summit, n.d). In the last years Decathlon has implemented several strategies that takes the company further down the route of being a seamless Omni-Channel Retailer. However, for the purpose of the analysis the “Click and Collect” and “The Decathlon eXperience” will be taken as most valuable examples (Bell, Gallino & Moreno, 2014; Asia Media Group, n.d.)
- Defined by Bell, Gallino and Moreno (2014) as “BOPS - buy online, pick up in store,” (p.48) the “Click and Collect” is a relevant example of Omni-Channel Retailing. Hence, Decathlon implemented it as a bridge between the strengths of its online and offline store. The aim of this Omni-channel strategy is to enable the consumer to purchase the desired product from the online shop and then collect it at a physical store or in one of the parcel lockers around the city (Beck & Rygl, 2015; Clements, 2016). To this extent, firstly, consumers can get detailed information about the brand, price or availability and buy from every place they want to. Second, they can have immediate accessibility avoid waiting for the product delivery, which is one of the online shopping weaknesses. Conversely, besides increasing customers’ loyalty, retailers can sell additional products others than the one that drove the initial visit and build stronger relationships with the customers. Thus, Omni-Channel Retailing strengthens both brand recognition and consumers satisfaction, wowing the consumer with a completely interactive shopping experience.
- Nevertheless, Decathlon did not stop here. It improved its Omni-Channel Retailing to what could be seen as the shop of the future. Decathlon entered Singapore solely with its online shop for 2 years (Loras, 2016). Then, they decided to expand into a physical space, with the so-called “The Decathlon eXperience,” (Asia City Media Group, n.d.), bearing in mind the importance of the offline. Decathlon removed cashiers and therefore cashes transactions, a breakthrough innovation in Omni-Channel Retailing. This provides consumers with two options. If certain about their purchase, they can complete the payment online via computers arranged for them inside the store, immediately bringing the product home or arranging for home delivery. If unsure, they can make their purchase at home from the online shop based on their in-store experience (Loras, 2016). In conclusion, along with the presence of salespersons to provide any type of information, this innovative purchasing process represents exactly how brand awareness and loyalty can be increased through Omni-Channel Retailing.
Figure 3: Omni-Channel Retailing in the Decathlon Singapore Shop (Asia City Media Group, n.d)
Benefits Of Omni-Channel Retailing In A Nutshell
- Omni-Channel Retailing represents the present and the future. To satisfy both todays customers and digital natives in the future, online and offline need to be complementary and interchangeable;
- The widespread usage of mobiles, tablets and social media, alongside the innovation flood, requires companies to fulfill consumer demand with the same quality throughout multiple channels - which is achievable through Omni-Channel Retailing;
- Omni-Channel Retailing cannot be seen only as a lifeline but a competitive advantage. It needs to engage customers interest, cultivate word of mouth and develop an accurate and coordinated thinking;
- Decathlon Omni-Channel strategies are tangible solutions every retailer should observe and implement.
Given the importance of Omni-Channel Retailing not only as a way to increase sales but also to enhance brand position, awareness and loyalty, your organization has the extraordinary opportunity become the leader of tomorrow.
This analysis only adopts the concept of Omni-Channel Retailing from a large retailers point of view. However, is this concept also suitable for smaller retailers? Can smaller companies with a tight budget achieve remarkable results?
References
Anderson, E., Fong, N., Simester, D. & Tucker, C. (2010). How Sales Taxes Affect Customer and Firm Behavior: The Role of Search on the Internet, Journal Of Marketing Research (JMR), [e-journal] vol. 47, 2, pp. 229-239, Available through: LUSEM Library website http://www.lusem.lu.se/library [Accessed 16 November 2017]
Asia City Media Group (n.d.). The Decathlon eXperience, Available Online: http://sg.asia-city.com/shopping/singapore-shop/decathlon-experience [Accessed 18 November 2017]
Beck, N. & Rygl, D. (2015). Categorization of Multiple Channel Retailing in Multi-, Cross-, and Omni‐Channel Retailing for Retailers and Retailing', Journal Of Retailing And Consumer Services, [e-journal] vol. 27, pp. 170-178, Available through: LUSEM Library website http://www.lusem.lu.se/library [Accessed 10 November 2017]
Bell, D., Gallino, S. & Moreno, A. (2014). How to Win in an Omnichannel World, Mit Sloan Management Review, vol. 56, 1, pp. 45-+
Brynjolfsson, E., Hu, Y. & Rahman, M. (2013). Competing in the Age of Omnichannel Retailing, Mit Sloan Management Review, vol. 54, 4, pp. 23-29
Cambridge University Press. (2008). Cambridge Online Dictionary, Available Online: http://dictionary.cambridge.org/us/dictionary/english/retailing
Clements, A., (2016). Decathlon Gives Click and Collect a Sporting Chance with InPost Lockers, Available Online: http://edelivery.net/2016/08/decathlon-click-and-collect-inpost-lockers/ [Accessed 18 November 2017]
Decathlon (n.d.). Available Online: http://corporate.decathlon.com/en/who-are-we/about-us/ [Accessed 18 November 2017]
Deloitte (2015). Omni-channel retail. A Deloitte Point of View, Available Online: https://www2.deloitte.com/content/dam/Deloitte/se/Documents/technology/Omni-channel-2015.pdf [Accessed 13 November 2017]
E-Commercesummit (n.d.) Available Online: http://e-commercesummit.com/the-omnichannel-award-2016 [Accessed 19 November 2017]
eMarketer (2015). Worldwide Retail Commerce Sales: eMarketers Updates Estimates and Forecast Through 2019, Available Online: http://www.emarketer.com/public_media/docs/eMarketer_eTailWest2016_Worldwide_ECommerce_Report.pdf [Accessed 19 November 2017]
Ghauri, P. N. & Cateora, P. R. (2014). International Marketing. New York: McGraw-Hill Higher Education
Gensler, S., Völckner, F., Liu-Thompkins, Y. & Wiertz, C. (2013). Managing Brands in the Social Media Environment, Journal Of Interactive Marketing, [e-journal] vol. 27, Social Media and Marketing, pp. 242-256, Available through: LUSEM Library website http://www.lusem.lu.se/library [Accessed 22 November 2017]
IAB (2016). A Global Perspective of Mobile Commerce, Available Online: http://www.iab.com/wp-content/uploads/2016/09/2016-IAB-Global-Mobile-Commerce-Report-FINAL-092216.pdf [Accessed 19 November 2017]
Liebmann, W. (2013). Chains Must Grasp Omnichannel Opportunity Fast, or Lose, Chain Drug Review, vol. 35, 13, p. 30 Available through: LUSEM Library website http://www.lusem.lu.se/library [Accessed 13 November 2017]
Loras, S., (2016). The Face of Omnichannel in APAC: Spotlight on Decathlon’s Clarence Chew, Available Online: https://www.clickz.com/the-face-of-omnichannel-in-apac-spotlight-on-decathlons-clarence-chew/92572/ [Accessed 19 November 2017]
Rigby, D. (2011). The Future of Shopping', Harvard Business Review, [e-journal] vol. 89, 12, pp. 64-75, Available through: LUSEM Library website http://www.lusem.lu.se/library [Accessed 12 November 2017]
Verhoef, P., Kannan, P. & Inman, J. (2015). From Multi-Channel Retailing to Omni-Channel Retailing. Introduction to the Special Issue on Multi-Channel Retailing', Journal Of Retailing, [e-journal] vol. 91, 2, p. 174-181, Available through: LUSEM Library website http://www.lusem.lu.se/library [Accessed 13 November 2017]