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  • Writer's pictureBain & Company

Winning the Omni-Channel Retail Race The True Value of Omni-Channel Retail

Key Highlights:

  • There were around 3,500 shop closings announced in Q1 2015 in the US alone, holding around 0.1% of the country’s stock

  • Traditional retailers' supply chain costs are roughly 3x lower than pure play e-commerce companies considering the fulfillment capabilities

  • 82% of the ordering/fulfillment/receiving decisions involve stores and 70% create store visits

  • A customer, who shops both in-store and digitally, shops ~3x more frequently, generating 3x more sales and over 2.5x more margin dollars, compared to a store-only customer

Demand for an omni-channel retail model, in which a customer’s experience is unified across all channels, is rising rapidly. DecisionPoint conducted a study to determine the economic value added to companies which have made great strides toward the omni-channel model. The results showed that omni-channel innovatorsadded 2.9 percentage points of economic value compared to the -.65 percentage points conceded by risk averse retailers. Embracing the omni-channel model is clearly the more profitable choice.

As a result of its profitability, omni-channel retailing is becoming standard in the retail industry. Companies who have operated via one channel (such as brick and mortar stores) or multiple yet disconnected channels (such as physical stores and a separate, unintegrated online store) will be forced reckon with omni-channel or risk losing revenue/profitability. After all, omni-channel’s objective is to enhance revenue growth and profitability amid high market saturation and rising internet penetration, therefore enhancing economic profit. This research report draws up the blueprint for delivering omni-channel’s promise of ‘one’ customer experience. Some points it highlights are:

  • Executives must be advocates and leaders of this new strategy

  • Technology must support robust data analytics

  • Inventory must be moved efficiently and its tracking centralized

  • Customers must be offered greater fulfillment options and a seamless experience across channels

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