The Omni-Channel Dilemma

Focus or fail

By John Bajorek

In all ways or places. It’s the dictionary meaning of the omni in omnichannel, the latest coinage in the game I’ve come to call business jargon bingo. The hybrid word attempts to capture the new pervasive power brands have to stoke the buy impulse.

It’s a suitable, if pompous concept, considering omni normally comes before superlatives denoting a higher power. This is, perhaps, the first clue we might want to be wary. That kind of hubris applied to the earthly worlds of commerce seems a bit much. Omni paired with channel envisions a retail marketplace where consumers buy anything, at anytime, anywhere and on any device. In theory, it sounds like every CMO’s utopia; in practice, it’s a potential disaster in execution and runaway costs. A surefire way to get things wrong is to do all things at once. And in no place does this truth play out more than the actual physical store.

As the digital revolution remakes almost everything about the shopping environment, there’s the chance to do too much; the risk we might overwhelm the consumer at the crucial moment of truth. At the same time, the retail store – where the sale actually takes place – no longer has a monopoly on this profit-center status. Once only considered cost centers, the tools of mobile and digital are quickly morphing into profit centers rivaling stores. This makes it crucial to determine where an investment in a store-based digital tool might result in increased sales, awareness, loyalty or expense reduction. Unlike the digital world, stores remain capital-intensive environments. These are real spaces, with real costs and chain-store retail today often means a single decision equates to millions in expenditures if executed throughout the entire store footprint.

Despite this potential for wasted spending, countless reports and studies merely tout the ubiquitous power of mobile. Few, if any, bother to ask consumers what they really think about these new digital tools inside the store environment, from the so-dubbed “endless aisle” options of in-store kiosks to the push nature of “location-based” tactics, which send notifications and coupons to shoppers’ mobile devices when they enter shopping districts or retail brand stores. Yes, the twin revolutions of mobile and digital fundamentally alter what’s possible, but what do consumers actually want?

To find an answer, we asked 2,300 different consumers, representing all ages and demographics. We started with a broad list of what was possible – all those digital omnichannel tactics, from customer ID to mobile-based couponing and mobile wallet to interactive vending machines. We wanted to find the line between creepy and comfortable acceptance, as well as the demographic baselines that stand to influence retail design and experience in 2013. For starters, consider that 69% of Millennials made shopping purchases on mobiles devices, compared to only 37% of Boomers in 2012. Even more significant, 70% of Hispanics did, a penetration level that’s double-digits ahead of other demographic groups, including African-Americans at 58%, and Caucasians at 50%.

Next, we filtered these digital tools into three technology categories. The first is support tools, and might be called “help me choose” technologies. It includes such tools as product locator, product narrowing, decision support, peer ratings and reviews and product configuration. Second is access-and-convenience technologies – the what, when and where you want it tool, which includes concepts like endless aisle; buy online/pickup in-store; and interactive vending machines. Finally, there are mobile technologies. These enable personalized shopping, and include such tactics as mobilebased coupons, geofencing, location-based services, mobile checkout, mobile wallet and customer identification.

Despite this broad range of tools, clear consumer preferences emerged. By a large margin, consumers desired digital technologies, but only when they understood the function and details of these tools. The five tools ranked in the top three for appeal – Buy Online/Pickup in Store, 86%, Customer ID, 85%, Endless Aisle Technology, 83% – were also in the top five for awareness. Yet, appeal and awareness don’t always equate with usage. Consider that only 18% of consumers have used endless aisle technologies. Moreover, the highest-ranking digital tool for usage is interactive vending machines, at 57%, even though it still ranks only 4th in appeal. The results point to two clear takeaways for retail brands.

1. Just because you can do something, doesn’t mean you should.

Even though digital and mobile tactics now represents the greatest opportunity for growth for many retail brands, it’s critical to prioritize. Most importantly, retail brand leaders would benefit from a clear road map estimating how long it might take to turn a new digital execution from a cost center to a profit center. This can only be mapped if a brand has a deep understanding of the usage, appeal and awareness of the various digital tools among its consumer base. It’s crucial to test and learn. Track awareness, usage and appeal to determine the best mix. Focus on the tools that deliver profits, instead of building new costs into the buying process.

2. Create a culture that fosters technological skepticism.

Don’t just embrace technology for technology’s sake. What’s the need being satisfied? Appeal reflects a need is being met, and high usage doesn’t always equal high appeal. Consumers told us tools were appealing only when they made life and shopping simpler. In focus groups, the words heard again and again from consumers were simple and uncomplicated. Don’t just chase shiny objects. Always consider the shopping experience and the shopper first.

Please visit wdpartners.com/research for more information.

John Bajorek
John Bajorek
Executive Vice President, Strategic Growth & Innovation
WD Partners
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