Mixing it up with Omni-Channel Retailing

92 years after its first store opened, the once celebrated British entertainment retailer HMV, fell into administration. It is not the first, nor will likely be the last of many retailers facing difficulty in a time where internet sales dominate.

Having acquired a new owner, Hilco, a veteran of turning sinking franchises around, HMV is set to embark on a new quest to compete with the brands that have briskly taken its market share over the last few years. In September, it announced the reopening of its flagship store on Oxford Street in London, and in October it launched a free music app. The app is essentially an iTunes competitor that “seamlessly integrates purchases into the user’s existing iTunes or Windows Media library on their PC or Mac”. HMV has also launched a revamped YouTube channel and taken some considerable effort to polish its website.

Sound familiar? That’s because it is. HMV’s embracing of all digital platforms, and the hope of seamlessly integrating them with the traditional brick and mortar model is the latest strategy to re-establish the failing high-street as a competitor for ecommerce. It is an omni-channel approach, and reflects the demands of the consumer, just as much as the changing market landscape. Among other British brands seeking to revitalize their image, Topshop, Burberry and Marks and Spencer have also been making concerted efforts to stay relevant and keep up with the times. Across the pond in the US, Target, Wallmart and Macys are implementing similar strategies.

What does omni-channel retailing entail?

Omni-channel retailing provides a complete and coherent shopping experience across all channels that a brand uses to sell and advertise. This means taking a multi-faceted approach, including having an up-to-date website, reliable free apps and a competent social media presence. The aim is to use these platforms effectively to entice customers to engage with the brand, hopefully leading to more sales and store visits. A typical store visit may pan out as follows:

“We are unfortunately out of stock on those trainers you wanted. Not a problem though, my tablet carrying colleague over here is more than happy to order you a pair, and have it delivered to your address—free of charge of course. Before you go, be sure to download our free app using our in store Wi-Fi, to take advantage of the latest offers. Also if you take a picture of your new kicks, tag us on Instagram and tweet the pic @[enter brand name here] with #awesome, you’ll enter a competition to get free vouchers for your next visit….” Get the picture?

One creative example is Burberry. The luxury fashion label has literally transformed its flagship store in London to a replica of its website. They have gone so far as to take the comfort of internet shopping in your living room to the high-street: you can pay for  your purchase while sitting on one of the store’s sofas. Other interesting additions include changing room mirrors that display images of how the chipped items you are trying on were made, and how they would be worn on the catwalk.

What does this mean for the future of the supply chain?

In this merging of two realms, the key concept is consistency from one channel to another, with a lack thereof being detrimental. Thus high service levels are paramount. Due to the growth of the internet, consumers simply expect more, faster, cheaper and with minimal fuss. To illustrate, perhaps at some point or another you have been irritated when the online price for a product for the same retail company is cheaper than the in-store price. You then decide to forgo buying it in-store and buy it cheaper from an online competitor, unless of course you need it urgently. Whether you acknowledge this or not, if you also then try out the item, or browse a shop’s wares only to buy it online cheaper, you are “showrooming.” This is the exact practice omni-channel retailing is attempting to combat, through integrating all forms of digital media and attempting to offer a complete end-to-end experience.

On the other hand, perhaps the only way for some retailers to survive would be to become showrooms.  A competitive fluctuating pricing strategy would be put into place to keep up with online competitors, and same day delivery from the warehouse attached to the show room would become an industry standard.  Essential to such a process would be a flexible supply chain and logistics system that shifts inventory to where the demand is greatest. Maybe in some cases, stock would go almost directly from the distribution centre to the consumer.

There is however the very real possibility that retailers will either be swallowed up by large online retailers, like Amazon; or enter into partnerships with them, sharing warehouse space and a logistics network in exchange for a large, consistent customer base and help with ecommerce expansion and expertise.

The question still remains: will an omni-channel approach save traditional bricks and mortar retail, or is it all hype, and a waste of time? Is the Internet takeover inevitable? Only time will tell.