Omni-channel - we're in the middle of a retail revolution!
Written by Phil Streatfield
It’s no more than 15 years since the original move towards multi-channel really picked up in retail – and then the internet bubble burst. Since that time, the growth of the internet and mobile technology, coupled with increasingly technology savvy shoppers, has created increasingly segmented sales channels and, in turn, an ever more fragmented supply chain.
The need to deliver a seamless, efficient and integrated customer experience across all available shopping channels has prompted the development and rapid growth of an Omni-channel retail business operating model.
According to Halfords’ former CEO, David Wild: “I start from the premise that digital technology is fundamentally changing retail. What winning retailers must therefore do, is recognise this and that it will touch every aspect of their business.”
LCP Consulting recognised this seismic shift and commissioned independent research, involving a sample of Senior Retail Executives from both the UK and the USA, to explore the implications. There were a number of key findings which underline how Omni is redefining retailing.
The journey starts with the customer and the challenge of building brand loyalty. Retailers recognised the need to respond to customers who are already trying to transact with them in an Omni-channel way. Many highlighted the need to understand the huge amounts of customer data now available, as well as to manage the customer interface through CRM capabilities supported by tightly integrated IT systems. US businesses seemed further ahead than their UK counterparts in utilising data this way.
Next, on-line and stores need to be integrated, rather than run as separate channels. This is an important difference to current practice and will mean changing roles and skills requirements within retail leadership teams, as well as re-purposing stores and the roles of front line colleagues.
“Building your understanding from a customer perspective: that was critical to us”, claims Dino Rocos, Operations Director, John Lewis Partnership. “Also you’ve got to be prepared to set aside the silos that inevitably exist within most organisations. Changes to supply chain have to be part of a more holistic business change: buying, retail, supply chain systems. All of us are on the same page chasing a single customer experience. In an Omni channel world you can’t do it in isolation.”
The research also found that delivering this change is complex and challenging. It will require major alterations to IT and Supply Chain infrastructure involving significant investment. Of those already on the Omni route, up to half of those surveyed are already investing as much as 3% of gross turnover, with nearly a quarter (particularly in the US) spending 3% or more. A major driver for investment is the need to change just to be able to compete.
Graham Barnes, Supply Director at Argos Ltd stated: “I’m sure people are calculating the return on investment, but key question is: can you afford not to take the Omni route?”
Finally, respondents highlighted the need to fundamentally change how their companies run. A new, flexible, business operating model is seen by many as a significant enabler for success. It is needed to deliver increased sales, enhanced margins and improved availability of stock. The nature of this change takes time and CEO attention and drive. Typically the change will take up to three years to land successfully.
The clear message from Retail Executives on both sides of the Atlantic is: if you don't have an Omni-channel plan in detail now, you're late and in danger.... it's a burning platform and it needs fixing!
The survey has revealed key aspects for success in the Omni-channel world. It has also highlighted the imperative for change. In our experience, regardless of cost, Omni-channel is becoming the ‘need to have’ model for the retail industry. It has almost reached a tipping point of change or fail.
Elon Musk's Boring Co. planning wider tunnels for freight
Elon Musk’s drilling outfit The Boring Company could be shifting its focus towards subterranean freight and logistics solutions, according to reports.
A Boring Co. pitch deck seen and shared by Bloomberg depicts plans to construct wider tunnels designed to accommodate shipping containers.
Founded by Tesla CEO Musk in 2016, the company initially stated its mission was to offer safer, faster point-to-point transport for people, particularly in cities plagued by traffic congestion. It also planned longer tunnels to ferry passengers between popular destinations across the US.
The Boring Co. completed its first commercial project earlier this year in April. The 1.7m tunnel system is designed to move professionals between convention centres in Las Vegas using Tesla EVs. It says the Las Vegas Convention Centre Loop can cut travel time between venues from 45 minutes to just two.
Boring Co.'s new freight tunnels
The Boring Co.'s new tunnel designs would allow freight to be transported on purpose built platforms, labelled as “battery-powered freight carriers”. The document shows that, though the containers could technically fit within its current 12-foot tunnels, wider tunnels would be more efficient. Designs for a new tunnel, 21 feet in diameter, show that they can comfortably accommodate two containers side-by-side, with a one-foot gap between them.
The Boring Co.’s new drilling machine, dubbed Prufrock, can tunnel at a rate of one mile per week, which is six times faster than its previous machine, and is designed to ‘porpoise’ - mimicking the marine animal by ‘diving’ below ground and reemerging once the tunnel is complete.
Tesla’s supply chain woes
Tesla is facing its own supply chain and logistic issues. The EV manufacturer has raised the price of its vehicles, with CEO Musk confirming the incremental hike was a result of “major supply chain pressure”. Musk replied to a disgruntled Twitter user, confused as to why prices were rising while features were being removed from the cars, saying the “raw materials especially” were a big issue.
Car manufacturing continues to be one of the industries hit hardest by a global shortage in semiconductor chips. While China’s chip manufacturing levels hit an all-time high in May, and the US is proposing a 25% tax credit for chip manufacturers, demand still outstrips supply. Automakers including Volkswagen and Audi have again said they expect reduced vehicle output in the next quarter due to a lack of semiconductors, with more factory downtime likely.
Top Image credit: The Boring Company / @boringcompany