Anytime, anyplace, anywhere! What does the new ‘martini consumer’ mean for retail operating models? It means that businesses need to be prepared for an ever shifting process of adaption.
In the retail industry it can be all too easy to overcomplicate things, both in terms of the terminology we use, and the way we look at, and analyse, certain markets. The current retail landscape is no exception. With so many routes to market and customers that are more savvy and demanding than ever before, it’s tempting to talk in terms of ‘single channel’, ‘multi-channel’ and ‘omni-channel’ approaches. The jargon is seductive. But, I would argue, it only serves to add complexity to what is, at heart, a simple issue. After all, the fundamentals of retail still apply: offer a great product, and buy that product for less than you sell it for.
What do customers expect? Same pricing for all channels, same day delivery and free returns!
What has changed, however, is the customer. It’s no longer enough to offer your services and expect customers to respond accordingly. You must understand exactly who that customer is, how they work and how and when they choose to interact with your product or service. And with so much convenient technology to hand, customer expectation is high. Customers expect to be able to view the latest stock on their mobiles and tablets, they expect to enjoy the same pricing structures in-store and online, they expect same-day delivery if required, and they expect the convenience of free returns. The new retail environment is a consumerist nirvana where customers can get what they want anytime, anyplace, anywhere. And this new breed of ‘martini consumer’ is here to stay.
So how should the retail environment adapt? Well, the likes of Nespresso and John Lewis, as well as pureplayers such as Amazon, have all developed long-term, highly customer-centric approaches, and achieved some impressive results. But the reality is, most retailers simply aren’t ready for this new environment.
Is there such a thing as the perfect multi-channel business model?
Historically, businesses have resisted the importance of fully integrating their offering. A business may have operated through a physical store, online, through a mail order catalogue, a TV shopping channel and a phone order service – but these things often existed as siloed businesses, operating independently of one another, each with their own reporting structures and revenue goals. The fact is, this model is no longer fit for purpose. Businesses need to move towards a more joined up, connected approach if they want to stay competitive. Today’s customer wants a universal experience, whether they’re interacting with a brand on social media, in a foreign airport or on Oxford Street.
What is needed more than an omnichannel is all-channel: a seamlessly integrated offering and a rewarding brand experience
‘Omni-channel’ is a term that’s used a lot, but I would argue that this too has become redundant. What’s needed is perhaps better described as an ‘all-channel’ approach – a seamlessly integrated offering where there is no ‘channel’, only a rewarding brand experience. Whatever terminology we choose to define it, businesses need to be prepared for an ever-shifting process of adaptation. We only need to look at how tablets have revolutionised the way we use the internet to realise that the marketplace is constantly evolving. In 5 or 7 years, who knows what the picture will be? We’re looking at a journey with no final destination.
Obviously it stands to reason that the bigger the business, the more challenging this process of evolution will be. In the case of John Lewis, the overhaul of their business model began over 20 years ago. When they launched their first online service in the late ‘90s, or their ‘click and collect’ offering in 2005 they were seen as the flag-bearers for a new way of doing things. But 11 years on, and many businesses are still playing catch-up.
To be successful, retailers must deliver a seamless service
‘Click and collect’ is a classic example of how many businesses are failing to adapt to the new dynamic landscape. In theory, the rise in online retail should be a massive boost for parcel delivery firms, yet many have struggled to respond to the surge in volumes and the specific demands of customers, often failing to hit their 60-minute delivery slots. The increasing trend of free returns is another example. Many customers value the experience of browsing and buying on the high street, whilst others value physical stores for the convenience of collecting and returning items, demonstrating that the store of the future will need to fulfil multiple purposes. To be successful, retailers need to adapt their business model to meet this changing customer demand, and deliver a seamless service.
One of the biggest challenges for any business is the corporate silo. There’s no point responding to the growth in e-commerce by concentrating all your efforts on the right IT delivery architecture, only to rebuild it a few years later. In today’s world, e-commerce is often a big part (and growing) of any retail business, but it needs to be an integral part of that business, not a separate entity. It’s the business that can bring all these disciplines under one umbrella successfully that will ultimately win the battle for market share.
The question has to be ‘how is our business performing and growing’?
Even the way we quantify the success of a business has to change if we’re to adopt a truly integrated approach. Thinking in channel-specific terms will only lead to the prioritising of one discipline over another, and that’s not something that’s likely to spell success. The question ‘how much of our profit is coming from online?’ is irrelevant. Rather, the question needs to be ‘how is our business performing and growing’?
This is the heart of the omni-business paradox. How can we effectively define and analyse all the new routes to market and the opportunities they present, whilst adopting a truly channel-agnostic approach? Perhaps there’s no simple answer to that question, but we can start by remembering some retail fundamentals. Irrespective of channel, companies are still in the business of giving the customer what they want, when they want it, at the price they want – and if they can do this whilst turning a profit then the business model is sound. There is now a real opportunity to improve the end-to-end customer experience, but businesses can’t afford to be afraid. They must adapt to thrive.