Good channel, bad channel

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The good news for retailers is that going over to an omni-channel approach can boost sales by up to 20 per cent. MaloryDavies.jpg

The bad news is that getting it wrong can expose the business to serious risks.

In fact, over a third of retailers that claim to be omni-channel have seen an increase in customer complaints, according to a study, “The Omni-channel Dilemma”, by LCP Consulting.

It argues that retailers that focus only on the front end of the process and fail to back it up with the necessary back-end systems risk damaging their reputations with customers.

Adopting an omni-channel approach is not trivial. Systems and facilities have to be restructured to serve both in-store and online customers – or any combination of the two. For example, a customers may browse products at home, compare them in the store, order on a mobile phone – and then decide to collect from another store.

In fact, the report suggests that omni-channel is not always the most appropriate strategy. For some businesses, it says, a multi-channel approach can deliver results without the disruption associated with omni-channel transformation.

LCP divides retailers into four “archetypes”. Omni-channel pioneers are transforming front and back end operations. Omni-channel followers  are retrospectively fixing their back-end systems to keep up with omni leaders, but at the risk of not establishing the core systems for long-term success.

The third group is optimised multi-channel or pure-play retailers. This, LCP suggests, is an effective strategy for some organisations.  The group most at risk is described as “challenged multi-channel retailers” that are bending existing bricks and mortar infrastructure to the new environment. These are in danger of terminal decline, it says.

All this highlights the changing nature of customer relationships. The growth of multi- and omni-channel has changed the way retailers interact with their customers and consequently what is seen as good customer service.

Different points in the supply chain now have direct contact with the customer. The challenge of extending customer-responsiveness back along the supply chain should not be under-estimated.

Malory Davies FCILT

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