When the business case just doesn’t stack up for omni-channel retail

“You must spend money to make money.”– Plautus

Many retailers are going to waste money and some will even fail at omni-channel implementation.

Why? Because they will presume that omni-channel commences with the customer experience. This is their first and often largest mistake.

All the hype and buzz around terms such as ‘one view of the customer’ are poetic and quite pithy, and they are true to a point when referring to the back end implementation and retailer perspective; however, not necessarily to the customer experience.

Let me elaborate. We are seeing a plethora of companies from advertising companies to design agencies talk about building brand and customer navigation systems, social media, through to in-store experience to create the omni-channel outcome, some with great skills in their core disciplines and certainly part of the pie. These programs, however, often miss the essential initial “heavy digging” required, and that is the often significant investment in the business information systems required in all areas from fulfilment and logistical interpretation through to intimate customer data capture that will make or break on this investment.

Building true omni-channel systems architecture is not akin to simply adding a room to the house, rather it is about rewiring the entire house and this is the crucial point in the scoping work we assist clients with.

And this takes us to the point where the business case simply doesn’t stack up.

Our major department stores are currently investing millions of dollars in building the integrated systems architecture required, correctly in approach in my view, and yet online currently only accounts for 1% of sales. The short-term business case would not meet the internal capital rate of return if viewed in isolation. However, online sales are and will continue to grow and those that have invested in the right systems and processes initially will be far better prepared.

The challenge here is how do retailers without deep pockets compete on a payback that could take between 18 months to three or more years?

Omni-channel is retail’s version of Caesar crossing the Rubicon and there is no turning back. No investment in this area will signal the beginning of the end. Bear in mind that there are many case studies that show omni-channel customers spend an average of four times more than when they shop a single channel.

So while the business case at one level doesn’t stack up in many cases on a short-term scale, the opportunity is in knowing the priorities and approaches to building a “fit’ omni-channel retail operation – starting with systems architecture first and then to strategy and human capital alignment.

Happy fit retailing.

Brian Walker is founder and CEO of retail consulting company, Retail Doctor Group. Brian specialises in the development and implementation of retail and franchise strategies. Brian can be contacted on 02 9460 2882 or brian@retaildoctor.com.au.