Wherever a customer interacts with your brand—on Facebook, via chatbot, over the phone, or in person with an associate—they’re expecting the same service. These interactions are all part of one continuous (and increasingly personalized) experience.
Not long ago, some major retailers effectively treated their website and brick-and-mortar stores as separate businesses. This led to atrocious experiences where online customers couldn’t even return orders in-person. It was terrible then, and it would not be tolerated now. But some brands and retailers still see a cannibalistic relationship between online and offline channels.
Tech innovations and consumer behavior have steadily driven physical and digital shopping experiences together, combining the best of both worlds to maximize consumers’ control, convenience, and choice over how and where they interact with you. Now when businesses separate online and offline channels, it prevents some of their customers from having their ideal experience.
And that’s where omnichannel retail comes in. Omnichannel retail (sometimes called omnichannel commerce) delivers the continuous, personal, cohesive experience consumers expect, regardless of the channels they use to interact with you. It enables digital and physical channels to work together, rather than creating siloed experiences at each individual touchpoint.
Over the last few years, this once revolutionary idea has become the default approach to retail. But for most businesses, it’s still somewhat aspirational. It’s an old buzzword that’s finally beginning to take tangible shape. Even the best tools and brands have yet to create fully omnichannel experiences, but the industry is constantly working toward it.
While most retailers were at least exploring the changing relationship between physical and digital channels already, COVID-19 rapidly accelerated the widespread evolution to omnichannel retail. Retailers of all sizes adopted new digital tools and innovative fulfillment methods, like buy online pick up in store (BOPIS), curbside pickup, and buy online ship-to-store (BOSS).
If you’re in retail, delivering a better omnichannel experience than your competitors can be a huge differentiator. And that starts with understanding what drives this approach, what makes it different from other models, and how you can pull it off. Then as new technologies and consumer preferences emerge, you’ll see exactly how they fit into what you’re already doing—or why they’re not worth adopting.
In this guide, we’ll explore:
- Components of omnichannel retail
- The difference between omnichannel and multichannel retail
- The relationship between ecommerce and brick-and-mortar stores
Let’s start with what makes a retail experience “omnichannel.”
Depending on who you ask, you might get several very different explanations of what omnichannel retail means in practice. Ultimately, facilitating omnichannel commerce takes continuity, choice, and technology.
Consumers don’t want to “start over” with you as they move between channels. All of their interactions with you are part of a single, cohesive experience, regardless of which channels they use. Continuity is one of the most difficult components of omnichannel retail to implement, but it’s also one of the key differentiators between this model and multichannel retail.
When a customer places an order online, they should be able to ask questions about that order over the phone, via chat, or any other channel. If they save something in their cart, any emails, ads, or marketing you serve them should relate to the products in the cart. You might send them a coupon for an expensive item via direct mail or email. Or advertise a video or explainer page that addresses their most likely concern about the product.
It’s easy to treat all of these channels as disparate systems, all working with independent goals and promotions. But when you’re shopping for a specific product, or you’ve just purchased one, this can lead to discordant messages that come across as tone-deaf and out-of-touch, or just don’t make sense.
One of the goals of omnichannel retail is to use what you learn from a customer interaction in one channel and apply it to the others, so that the next time that customer interacts with you—whichever channel they use—you build on that previous interaction. This requires an intimate familiarity with your customer journey, visibility into which stage each customer is at, and recognition of how each touchpoint can help customers along in their journey.
Consumers naturally develop preferences for the channels and shopping experiences that are most familiar, convenient, and pleasing to them. Some will eagerly download your app for a smoother digital shopping experience and access to more advanced capabilities. Others are content to use your website, where they don’t have to download anything and they can access it from any browser. And of course, some will always prefer to physically browse your shelves.
But for most consumers, these experiences aren’t mutually exclusive. And the most convenient shopping method depends on the circumstance. If you have kids in the car and you’re on a tight schedule, curbside pickup makes the most sense, even if you’d prefer to hand-pick items and compare your options inside. And if an item is out-of-stock at one store but available elsewhere, buy online ship-to-store (BOSS) lets you take advantage of store perks and get what you need (sometimes) without paying for shipping.
Facilitating an omnichannel experience gives your customers greater choice and lets them have control over where and how they browse, shop, buy, and receive their items.
Cookie-cutter shopping experiences serve some people well. But for everyone else, you’ll wind up fighting against their preferences—which aren’t static, and often depend on the situation in which they’re trying to shop.
Technology is one of the biggest barriers to creating an omnichannel retail experience. On a fundamental level, you need the digital infrastructure to facilitate alternative fulfillment methods like curbside pickup, BOPIS, and BOSS. Online orders need to trigger order fulfillment processes in a specific brick-and-mortar store, and customers need easy access to an app or another communication channel to notify associates when they’ve arrived for curbside pickup.
But technology plays other key roles in omnichannel retail. An “endless aisle” system lets your customers access a much wider range of products than you can display or carry in store, often through dropshipping. Whether they browse the endless aisle through a dedicated kiosk or with an associate’s help at a desk, this tech merges the physical and digital shopping experiences to help customers find what they want.
Similarly, some retailers are experimenting with augmented reality mirrors (or smart mirrors) that let customers “try on” clothes, makeup, and other items without physically touching them.
To your customers, merging or switching between digital and physical shopping experiences is simply part of the process. The terms “showrooming” and “webrooming” both refer to natural ways consumers combine the best of both worlds.
With showrooming, consumers visit a brick-and-mortar store to see and experience products in-person, perhaps looking at furniture or checking out electronics. When they find something they want to buy, they leave, and look for the best deal they can find online.
Webrooming is the inverse: the process starts online, where customers can research products and read reviews, then leads to a purchase in-store, where they can confirm it’s what they want and get it the same day they buy.
Showrooming in particular has drawn the ire of brands in the past, at least partially blaming it for the supposed “death of brick-and-mortar.” But if retailers continue to invest in creating top quality shopping experiences on both online and offline channels, consumers will continue relying on your stores as a critical part of their process—and that means they’ll continue being exposed to the impulse buying opportunities in your store layout.
Most brands and retailers actually deliver a multichannel retail experience. They allow customers to engage and even purchase through multiple channels, but these channels work independently. The experience isn’t continuous. It’s not seamless. Instead of receiving a single overarching cross-channel message, each channel essentially competes for the customer’s attention, with channel managers focusing on their own goals and initiatives.
And while a multichannel approach tends to drive consumers toward particular channels and pathways, an omnichannel approach lets customers choose the pathways that work best for them, whether that’s delivery, curbside pickup, BOPIS, or in-person shopping. In omnichannel retail, a sale is a sale, wherever it comes from, and however the customer wants it. Instead of focusing on how each channel can generate revenue on its own, omnichannel retail focuses on the value each channel can bring to the shopping experience.
In the early days of ecommerce, it was hard to imagine that this niche experience would ever replace traditional brick-and-mortar shopping. But for years, some retail experts have been warning that we’re in the “retail apocalypse,” where someday soon, shopping will no longer take place in physical stores. As major retailers closed stores in response to COVID and ecommerce continued to thrive, these alarmist articles gained new life.
But brick-and-mortar isn’t dying. It’s evolving. These aren’t “the final days” of offline stores. And your ecommerce sales aren’t simply cannibalizing in-person sales. The relationship between ecommerce and brick-and-mortar is changing, and omnichannel retail is at the heart of that change.
When you have a thriving, first-class ecommerce business and a well-established chain of brick-and-mortar stores, it opens the door to more fulfillment options. This is obvious, but what’s less obvious is how critical brick-and-mortar locations are in nearly every possible transaction. Commerce requires a point-of-purchase, an inventory source, and a fulfillment location.
Brick-and-mortar stores play a role in 7/9 of the possible combinations. If your store isn’t the point of purchase, it’s still likely that it will be the most practical inventory source or order fulfillment location.
And keep in mind: many retailers have begun facilitating delivery through their brick-and-mortar stores. So there are even more opportunities for physical locations to play a role in getting products into customers’ hands.
Even if ecommerce overtakes brick-and-mortar sales and becomes the dominant point of purchase, you can’t remove physical stores from the equation without negatively impacting the customer experience. It may take longer or cost more to source inventory. And you may not be able to offer the most convenient order fulfillment for customers who need an item right away.
That lower-quality experience will hand sales to competitors who embrace an omnichannel approach to retail. All of a sudden your regular customers have to choose a different store that’s on their way home from work or near their other errands.
Online and offline stores don’t simply cannibalize sales from each other, as some business leaders assume. They have a symbiotic relationship where they can each benefit from the other.
Using predictive analytics, retailers can see this relationship more clearly than ever. A large pocket of ecommerce customers could represent an excellent new location for a brick-and-mortar store. It may even be an untapped trade area, where competitors haven’t recognized the opportunity and you can be the first to provide an omnichannel experience in your category.
As you consider the changing ways your customers shop and buy, that should have an impact on your location strategy. Retailers have to evaluate sites not just as potential points-of-purchase, but as inventory sources and fulfillment centers for localized ecommerce activity.
For omnichannel retail to work, your brand has to be firing on all cylinders. You need to see how each channel contributes to the customer journey and use them the ways your customers do. Social media is often where consumers discover new products. As they click through ads and content, do you have a plan for following up with people who click through but don’t convert? How can your other channels and efforts build off this touchpoint?
But omnichannel retail goes far beyond marketing. This is about how people shop, and how your online and offline channels help them do so. Not every person is going to use your app for drive-up service or order from an endless aisle in-store. But making these omnichannel solutions available helps you provide better experiences for more customers. And rather than decreasing the value of one channel (like brick-and-mortar), they increase the value of your overall shopping experience.
Brick-and-mortar stores are the linchpins of omnichannel retail. Modern retailers have to reevaluate the role of their stores and find the best places to serve the growing population of cross-channel customers.
At Tango, we’ve been exploring the future of omnichannel retail and examining the role of brick-and-mortar stores in this new era of post-pandemic shopping. Location has always been important, but choosing a site today must account for a wider range of use cases.
To help you keep up with the changes in retail, we’ve pulled together a suite of resources including interviews with industry leaders, webinars, articles, and more. We call it Location Is Everything.