It feels as though omnichannel has been a hot topic amongst retailers for a long time; ask a CEO what their number one ambition is, and chances are they will say a connected, consistent customer experience across all channels.
However, are we any closer to achieving omnichannel than when we started using the term some 18-24 months ago?
For some retailers, the answer is yes – they are able to serve the needs of each customer in an agile manner. These are mainly tier 1 retailers, the likes of Nordstrom and Bloomingdales, which have a robust omnichannel strategy.
This isn’t to say that retailers without an omnichannel strategy are burying their head in the sand; the majority are either building a roadmap, or beginning to implement it. However, they may need to reconfigure their business model or processes to enable true channel integration. They may be budgeting for the technology investment necessary to put supporting operational systems in place. They may even lack the resources and direction to know what to do first, in order to ensure omnichannel success.
For retailers that fall into the final category, I would advise them to tackle inventory management as a priority. Having one view of the entire stock across all channels is an important element in achieving omnichannel success, because it enables businesses to create a single stock pool. This is not necessarily a sole physical location – inventory can be physically held at different points – but a network-wide ability to allocate stock on a first come, first served basis.
A single stock pool improves the omnichannel customer experience in a number of ways. Firstly, by allocating based on central demand, it ensures that inventory is always directed towards the channel in which it is selling best. Therefore, customers who want to buy an item in-store, for example, aren’t being told it’s out of stock when there’s plenty left in the online allocation. This has the added benefits of reducing overstock and speeding up replenishment, therefore leading to a greater number of goods being sold at full price.
Moving to a single stock pool also reduces the need for safety stock, to account for errors in forecasting. If retailers are allocating stock by channel, each silo must have its own safety stock. Move this into a single stock pool for the entire business and only one safety stock pile is needed, which is likely to amount to fewer items than managing each channel separately.
It’s too detailed a topic to fully explore single stock pools in the space of a blog post, but I would certainly recommend that retailers evaluating their omnichannel roadmap look very closely at their inventory capabilities.
From there, they can put the technology solutions in place to use network-wide visibility to its greatest effect; allocating, distributing, ordering and replenishing stock in a manner that gets the right product to the right customer every time, however and wherever they shop.