2014-24-July-Pittsburgh-Bicycle-Challenge.jpgThe term “channel” in a retail context has as many meanings as the disparate paths between merchant and consumer. As the variety of channels continues to grow -- online, offline, mobile, kiosk, call center, website, store -- retailers are challenged with meeting the expectations of consumers who pick and choose channels as their needs demand. Retailers want to provide these consumers with a consistent and seamless experience -- many explicitly claiming strategies to enable an "omnichannel experience" -- but converting the intention into crisp execution has significant challenges.

Challenges

The operating model for most retailers is not configured for omnichannel. Organizational boundaries exist that structurally constrain the ability to operate seamlessly across these channels. The "e-commerce team" is often a separate entity from the mainline "store ops" crew.

Merchandising, planning, forecasting, supply chain, fulfillment and marketing -- the traditional back office functions -- are infrequently aligned to support the channels in delivering a consistent customer experience. Many times these back office capabilities are channel-specific, with each channel having dedicated fulfillment capabilities and processes. They are often optimized for the unique needs of a channel (e.g., getting the right product in the right amounts to the right store versus aligning the specific needs and wants of an individual customer with the capabilities that would achieve those customer expectations).

There’s nothing inherently wrong with channel optimization. In fact optimizing key supply-chain metrics, such as inventory turns, for stores may mean millions of dollars in financial value to a retailer. But in some ways, an efficient retail store supply chain can detract from a seamless omnichannel experience.

Retailers’ systems and data -- especially customer data -- are often segregated by channel. Order management systems, inventory and product catalogs, merchandising platforms, even promotion and loyalty applications are usually distinct systems that don’t cross channels. These information technology (IT) capabilities often reflect substantial legacy investments that are difficult to extend to the omnichannel world, thus creating the need for separate solutions. Many retailers try to address this by bridging platforms together with "data feeds" and extract-transform-load (ETL) interfaces. This is workable but not ideal, and is difficult to scale.

Sometimes with customer information you encounter regulatory, statutory and privacy/ permission obstacles in enabling a full omnichannel experience. For example, a convenience retailer or grocery that manages both customer loyalty data and healthcare data, due to its onsite pharmacy or clinic, may be constrained from leveraging patient insights in promoting certain products or offerings (“I see you've got hypertension -- how about these low-sodium snacks?”). A no-no and also a little creepy.

Expectations

Customers are oblivious to the obstacles that retailers face in enabling an omnichannel experience. Even when educated on these issues, it frankly doesn't matter. As a consumer, a retailer is an entity with which I may choose to have a relationship. I expect them to know who I am, know what I like and cater to me in a way that delights me. The logo on the website and the logo hanging over the front entrance sure look the same. Seems simple.