The ongoing presence of COVID has turned the world of retail on its head, forcing unexpected changes onto the sector and accelerating growth in areas not everyone was previously prepared to accommodate. Due to the pandemic, the way people shop will change forever, with more reliance on e-commerce shopping than ever before, bringing the need for ominchannel strategies into clear focus.
The Office of National Statistics revealed that online sales as a share of total retail accounted for 28.5% in October and 31.4% in November 2020. Of course, there have been a number of lockdowns imposed across England, Wales, Scotland and Northern Ireland during the past 10 months, but the change in customer buying habits has dramatically changed the way businesses supply their products. Bricks and mortar retail was already experiencing a cultural change before the pandemic, but COVID has accelerated it almost ten-fold.
Omnichannel Inventory and Fulfilment
The key to any successful omnichannel strategy is ensuring your inventory has been optimised, as it allows the retailer to respond quickly to changes in demand. Beyond core lines this will change all the time, so it’s essential that at the customer end you are in a position to anticipate and react without any gaps in the supply line.
Optimised inventory management puts you in a better position to plan and forecast. During and after the pandemic customer behaviour will continue to fluctuate, so by using tools such as RFID and serialised inventory retailers will have clear sight on what they can and cannot provide.
And while digital sales are rising, the importance of managing demand in physical stores remains. The landscape may be changing, but there will also be a need for bricks-and-mortar options, and using stores as fulfilment centres (see Argos below as an example) will offer good value if you are starting to prioritise digital channels.
Stores can be used to deliver products with efficiency and speed, underscoring the main reason why people use online shopping – convenience. This is especially true if the company has integrated both store and web inventory. Items can then be shipped to the store nearest to the customer, rather than a distribution centre that may be miles away, saving valuable time in the process.
Introducing digital channels
An operational rethink is needed by many retailers in order to survive the rapid digitisation that has occurred during the pandemic. The best start point is to identify which channels are best suited for your business. Look beyond simply introducing an e-channel as that alone is unlikely to be enough to retain customers. Mobile shopping continues to expand and fully optimised apps that can adapt to different screen sizes make it easier to engage customers no matter where they are using it.
Social media retailing is another channel that is an area of fast growth, allowing customers to buy products directly through adverts placed on Instagram, Twitter or Facebook. Customers have a close relationship with their devices and positioning yourself on these platforms can help influence customer behaviour.
The more relevant channels you can utilise, the wider your reach and the more connected you remain to your target audience. In return, they place more value in your brand as you provide flexible usage to their changing lifestyle needs.
Putting yourself in-front of the customer and making their experience a seamless one online is vital to the success of using an omnichannel strategy. While the interface design should be easy to use, there are features that can be introduced to develop repeat shopping from customers. Features like saved shopping lists reduce the required clicks needed to finalise the sale, with little thought required by the consumer.
How Argos moved from multi to omnichannel
Argos proved to be ahead of the game as they went through the initial transition from operating as a multichannel business to a modern omnichannel company. With Amazon dominating the market and competing directly against almost every product they supply, remaining a mostly catalogue-based business was no longer a viable option.
Even though Argos were the first UK company to generate over £1 billion in sales via mobile devices, their fulfilment network was not in a strong enough position to deal with the ever increasing demands placed upon its e-commerce infrastructure.
They previously printed over 20 million physical catalogues each year, although this will end for good at the end of January 2021. Before fully digitising the business customers would go into stores and order using only a pen-and-paper system, with no idea of what was available before they reached the counter. In today’s information heavy age, Argos knew this had to change in order to improve the customer experience.
Rather than copying the Amazon model, Argos have used their large network of physical stores to their advantage. These are utilised as a collection of warehouse distribution points, strengthening their ability to get stock to customers quickly and conveniently via home delivery.
Other retailers also use this model but for Argos given the scale of products made available it was a little more complex. Not all stores were the same size, which meant product range also varied, leading to inconsistent availability and delivery times for customers.
The solution was to create a hub-and-spoke fulfilment model, with support from software company LLamasoft, Inc. It factored in admin costs linked to each hub and delivery overheads, along with storage and geography of each store, parking and loading availability, shipping frequency and stock availability. It was a complex task that required a lot of modelling and trialling, but ended with the creation of 173 hub stores supported by 500 fleet vans and 2,500 drivers. As a result, Argos can now facilitate same-date delivery for 20,000 products.
Ultimately, the success of moving to omnichannel will come from good planning and communication and a willingness to adapt to the changing times. There can be no halfway house when it comes to this sort of operational transformation. Demand for online shopping has been on an upward curve ever since its inception and COVID is putting pressure on those who were perhaps tied too heavily to traditional models. As always, the ones who survive this pandemic will be those most willing to listen and adapt to consumer expectations.