Retailers Need to Move from Omnichannel 1.0 to Omnichannel 2.0 to Stay Relevant

Retailers scrambling to enter the omni-channel world may already be behind their competitors.

While some stores are now just learning to fill orders online and manage their inventories, more-sophisticated retailers are adopting something called Omni-channel 2.0.

“Omni-channel 1.0 is a retailer providing their products and services on their terms at their price points and saying, ‘Come and get it.’ It is very driven on the back-office end and with inventory management,” said Paul Gulbin, who leads the digital services platform for CohnReznick, a New York accounting, tax and advisory firm with offices in Los Angeles. “But what has changed the world of retail forever is the mobile device. Now it is about the customer experience and personalization that are changing things. ... Customers are educated. They are consumers who talk to one another, refer one another to a retailer and are demanding a seamless experience.”

Gulbin spoke recently at the firm’s Century City office to a small group of retailers and manufacturers interested in keeping up on technology.

“We have this omni-channel 2.0 revolution going on, and it is not a fad,” Gulbin observed. “A lot of companies are becoming irrelevant in the marketplace and losing marketplace share. There is a lot of uncertainty.”

The key players in this evolution are the millennial customers, whose mobile phone devices are like a fifth appendage. “There was a survey in the Wall Street Journal that noted that 90 percent of Americans pick up their mobile device the first thing in the morning,” Gulbin said.

Today, millennials’ spending power is estimated to be $600 billion a year. That should reach $1.4 trillion by 2020.

Omni-channel 2.0 is about providing customers with an experience, personalizing that experience, and mining personal data to know about the likes and dislikes of a shopper. “It is not about just knowing someone’s email, which shops they shop in and their gender,” Gulbin said.

It is about having enough information to know that a customer might be traveling to the Dominican Republic soon and you suggest they buy some tropical shirts or lightweight suits for the journey.

One of the tricks is gathering that behavioral data to customize online shopping and making it a personal experience.

According to Gulbin, 89 percent of shoppers are willing to contribute 20 minutes of their time to help a retailer better understand their needs. Another 55 percent of consumers expect retailers to use purchasing and behavioral data to offer relevant promotions. About 60 percent spend more with retailers that use mobile and behavioral data to create relevant experiences.

Technology-savvy retailers would know, for example, that one of their customers is a 32-year-old marketing manager who has been a customer since she was a teenager. She expects a quality product at a reasonable cost and a relevant, personalized brand experience across channels.

They know she isn’t in a physical store very often but uses her mobile phone when inside the store to research and order items that are not in stock. They also would know she is interested in saving money, receiving personalized offers and recommendations but doesn’t like email blasts. Perhaps she likes to receive inspirational content through things such as “how-to” videos.

“There is a lot of information in the public domain that Amazon, Google and eBay take advantage of because they speak digital, and a lot of physical retailers are a little bit scared of that,” Gulbin said.

One retailer that has been at the forefront of creating a relevant omni-channel experience is luxury brand Burberry. “They went on a six-year transformational journey,” Gulbin said.

Burberry has audiovisual content, online personalized customer service, a click to chat or click to call service in real time and customer identity management.

When it comes to an in-store experience, Burberry has iPads in selected stores, live streaming of fashion shows to flagship stores and retail-theater technology that provides an audiovisual experience for customers. “In some stores, you can pick up a Burberry bag that costs $2,000 and it launches a video that shows how it was made and how the buttons were handcrafted. It tells the story about the bag,” Gulbin said. “Conversion increased by 70 percent.”

Online shoppers also want a different experience. One digital company that offers that is Shoes of Prey, an online site that lets customers design their own shoes, which are ordered and delivered in four weeks. When Shoes of Prey set out to market its product, it decided not to market to shoppers who were technically challenged or who wanted a deal. Instead, they concentrated on sensible online shoppers, digital customers and the shopping mom who didn’t have time to venture out to a store.

Last year, Shoes of Prey partnered with Nordstrom to open a store within a store at six locations. Later, the department-store chain invested in the custom-shoe site.

Another important element in conquering the omni-channel world is making sure that customers see your site when doing an Internet search. That happens with good search-engine optimization. The No. 1 way to drive traffic to a site is by searching, which beat out social media by more than 300 percent.

Research shows that 95 percent of users consider sites found through search engines as the leaders in their market. Some 75 percent of online purchases and orders made on websites are found through search engines, and 80 percent of search engine users don’t browse beyond the first two pages. That means being one of the first to pop up on an Internet search is important.

Gulbin admitted it isn’t simple to incorporate all these ideas at the same time. He recommends working on two or three omni-channel updates and trying to incorporate them in 60 to 90 days.

But one of the important things to remember is that good customer service is as relevant online as it is in the store. An unhappy digital shopper can easily spread the bad word about an experience on Yelp. And a happy customer can do the same thing.