The End of Omnichannel as We Know It

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Does a customer really care who handles their purchases, customer service questions, or returns so long as it’s fast and convenient? Are retailers still most comfortable with incremental improvements and with following the well-known dictum, “Retail is detail?”

Omnichannel has always implied technology decisions retailers must make in the spirit of serving customers in a unified way. Yet leaders like Walmart and Amazon demonstrate that it’s not necessary to technically manage the process yourself; returning purchases bought online from either to convenient locations like FedEx or Kohl’s is just one example.
Certain retail segments like department stores are seeing their e-commerce businesses spun out at huge valuations. Much has been written about the reasons and many retail experts express horror at what looks like a regressive step in the pursuit of a unified customer experience.

"Some predict competition for customers between stores and e-commerce under the same banner. Others see stores simply becoming distribution centers optimized to support digital sales and returns."

What ultimately happens will vary based on retail segment. However, given labor trends, some flavor of this path is inevitable industry wide. On one hand, the retail store worker is an endangered species, while the best tech workers prefer fast paced, innovation-focused jobs, unhindered by the realities of physical retail.

If you have a background in traditional store operations, it’s difficult to appreciate the cultural and work life differences of a digital native organization.

A software engineering team focused on customer experience is concerned with brick and mortar to the extent it helps customers find, buy, and obtain their purchases most efficiently. Nothing in that statement suggests stores must be owned and operated by the same entity as the digital team. It’s a research exercise that yields potential technical requirements, not a required business model.

The omnichannel problem facing retail for the past 20 years has always been characterized as operational silos preventing a seamless customer journey across channels. To resolve it meant an inside-out view of unifying data and technology silos.

The harsh reality is that consumers are caring less about brands, banners, and traditional loyalty, as they are the overall experience. Outcomes can now be better served by a closely knit network of more specialized businesses, each with unique expertise.

Thus, the very definition of omnichannel excellence is changing before our eyes, driven by several factors.

First are forever-changed shopping behaviors driven by the pandemic, which has consumers buying more online while also expecting more from the experience. Sophisticated digital operations are a necessity, not an option. They need funding and focus given the rapid pace of innovation and competition.

Regarding innovation, industry clouds from AWS, Google, Microsoft, and others are driving growth in these technology businesses. The reason: they bring best practices, lower costs, and agility to industries struggling under the weight of decades of legacy IT acting as a boat anchor on digital transformation.

"Retail is arguably the readiest to adopt these solutions, which simplify former integration problems across physical and digital experiences, and external third parties. All can be loosely coupled transparently to the end consumer. Consumers reward the brands and banners that best orchestrate these processes with their wallets."

Cloud also offers easy access to the latest analytic methods like AI and external data to power differentiated experiences across any touchpoint – be it digital or physical. Improved demand planning and inventory management decisions amid ongoing supply chain disruption are primary benefactors.

Greater intra-industry partnering, technology integration strategy, and cloud investment will define omnichannel success in 2022 more so than intertwining store and e-commerce operations under a single banner.

-Gib Bassett is director of Solutions Marketing and Industry GTM at Alteryx. Email him at [email protected]