By Nikki Baird, managing partner, RSR Research
The most striking results in our recent "Omni-Channel Retail 2014: Double Trouble" benchmark report come from technology enabler adoption. While it's not the same retailers necessarily who take our surveys year over year, nonetheless they reflect some important trends in the aggregate. For technology enablers, the most significant comes from progress in adopting important omnichannel technology enablers (Figure 1).
In almost every area from call center to enterprise cross-channel analytics, retailers report an uptick in adoption. There are two exceptions: enterprise-wide inventory visibility and a modern e-commerce platform.
For enterprise-wide inventory visibility, the reason for this relative lack of progress relates to retailers' new look at supply chain in a greater omnichannel context. Historically, retailers have focused on visibility not to improve execution, but to improve planning. But omnichannel buying patterns have upended that priority, forcing retailers to look more closely at execution, not with an eye toward eliminating supply chain mistakes, but in enabling flexibility to capture cross-channel customer demand, and meet it with any available inventory, no matter where it's located.
For e-commerce platforms, the lack of progress stems in some ways from uncertainty. Retailers want a single customer interaction platform, as we'll explore below, but the vendors collectively have not provided the kind of ideal future solution they want to invest in. So retailers are waiting for vendors to catch up to what the market needs; and yes, they are primarily looking to e-commerce vendors to meet those needs.
By performance, Retail Winners drive most of the enterprise-wide technology enablers, beating out their peers in adoption of:
· Distributed order management
· Call center
· Enterprise-wide marketing platforms
· Enterprise content management
· Enterprise-wide inventory visibility
· Enterprise-wide customer visibility
· Enterprise-wide cross-channel analytics
· Enterprise-wide customer insights
Laggards almost tied Winners in their adoption of enterprise-wide inventory visibility. But their definition, as we learned in our benchmark on Supply Chain Execution, is not broad enough, leaving significant holes in their visibility—to suppliers, to stores, as well as at a level of granularity that doesn't hide a lot of variability. Laggards are also ahead in their adoption of a modern POS systems, which, as we'll see below, may be a mistake of rushing in too soon. While everyone seems to be waiting to see what e-commerce vendors will do, laggards appear to have put a stake in the ground around POS—whether it approaches a single customer interaction platform or not.
Of Money and Mouths
When comparing value to current use of various types of omnichannel technology enablers, it becomes clear that while retailers have made progress, they still have a long way to go.
Retailers report that enterprise-wide customer and inventory visibility are the two most valuable enablers, but even with customer visibility, adoption lags significantly (Figure 2, below). However, the biggest gaps between value and use fall on a single customer interaction platform that crosses platforms and enterprise-wide cross-channel analytics.
The issue of cross-channel analytics is a distressing one. How can retailers measure the success of their omnichannel progress if they have no analytics capable of capturing those metrics? However, to be fair, cross-channel analytics is extremely difficult to achieve, particularly when retailers' biggest black hole of data relates to their biggest generator of transactions: the store. Until retailers can effectively "see" when consumers shop online and then buy in the store, or vice versa, cross-channel analytics will remain a challenge.
On the other hand, if retailers can't solve this problem, they will forever be wondering where they need to invest next in order to meet customer needs. Without operational measures of success that cross channels, retailers' omnichannel strategies are blind shots in the dark.
Getting Off the Merry-Go-Round
With the omnichannel analytics challenge as backdrop, retailers' next investment priorities make a kind of sense. Between budgeted and plans with no budget, retailers report a focus on a modern POS system, enterprise-wide customer insights, clienteling, and a single customer interaction that crosses channels—all technology investments that are designed in some way to address the in-store portion of cross-channel analytics (Figure 3).
While many of these investments are more aspirational than actual—a single customer interaction platform particularly stands out in this regard—nonetheless, retailers report the demand is there. They need one view of the customer, and they need to understand the relationship between customer and channels, and the biggest hole in that understanding resides in the store.
The Promised Land
We have referred more than once now to retailers' expectations for who will actually deliver a single customer interaction platform, hopefully more easily enabling retailers to achieve their desired single view of the customer.
This question has created a lot of angst in the past, both for retailers and for solution providers. And while Figure 4, below, indicates a certain amount of convergence around the idea that one solution provider will ultimately provide one single selling platform for all channels, the question is by no means settled.
In fact, even as retailers' conviction that there will be one platform for selling has grown over time, and their confidence that there will still be a few stand-alone requirements in each channel has faded, some retailers have lost faith in the idea that a selling platform can encompass both digital and store. And the retailers who have most given up on the store are, ironically, Retail Winners: 20 percent believe that only digital channels will converge to a shared platform versus 0 percent of laggards.
Digging deeper, when we look specifically at POS, we find that retailers' expectations for both e-commerce vendors and POS vendors as POS provider have grown—but confidence is highest for e-commerce vendors (Figure 5, below).
There will always be limitations that constrain the applicability of e-commerce as store systems—the need for speed and integration with a host of peripherals in the checkout lane for grocery, in particular—but for the first time in our benchmark, this year over half of respondents report that they expect a future POS system to come not from their store systems provider, but from their e-commerce platform.