The road to becoming truly omnichannel is long and hard. And retailers who have rounded the bend of their first tactical milestones are looking up only to see a massive strategic challenge looming ahead: profitability.

Under pressure to quickly build customer engagement models that support shopping and shipping choices, retailers are advancing new initiatives without fully understanding their costs. It might get them slightly further down the road for now, but long-term omnichannel success depends on calculating these new costs to serve and evaluating the operational, supply chain and IT investments – and trade-offs – that will make these initiatives profitable. It requires transforming the retail enterprise.

The key to such operational transformation is a well-oiled supply chain, but the first steps are to enable new inventory, fulfilment and digital interaction capabilities. Few retailers are even close to completing this journey, but those who can differentiate between quicksand and a solid path will eventually be able to drive growth and profitability via the supply chain – not just save the sale.

OMNICHANNEL 101: SAVE THE SALE

When e-commerce was in its infancy, retailers responded quickly by building the capability to sell to consumers online. They added new e-commerce channels as separate lines of business – a legacy of the catalogue fulfilment model – complete with separate SKUs, separate buyers, even entirely separate marketing plans and supply chains.

But, as a result, many retailers now have two distinct businesses under one roof – different organisations, cultures, processes, KPIs and vocabularies. One legacy of building these separate wheels of commerce so quickly has been misalignment, with one channel pulling against the other in a competition to capture and get credit for the sale. Customers have been taken on a wobbly ride.

The objective of omnichannel endeavours has since evolved beyond rescuing top-line sales to include brand strength, enterprise profitability and future growth. Fully embracing omnichannel and the business success it has hinted at for years means integrating the retail and online functions to provide a seamless customer engagement across multiple consumer touchpoints: one brand, one set of products and one customer experience across channels, all highly tailored to each individual consumer.

From organisational structures and operating models to information systems and decision-making processes, no aspect of the retail organisation will be unaffected.

For more informattion, download the full report opposite or contact Judy Blackburn judy.blackburn@kurtsalmon.com