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Omni-Channel vs Multi-Channel – what is the best for your organisation?

Are you a retail company without a strong mobile presence? Do you have difficulties keeping up with the pace of your customers? Then it may be time to reconsider your current retail strategy. An increasing number of retailers have redefined their retail strategies and are now focusing on increasing their mobile presence on their customers’ devices. 
There are two common ways to manage your company’s retail strategy: Multi-Channel Retailing and Omni-Channel Retailing.

Multi-Channel Retailing makes use of a number of individual retail channels, aiming to reach as many customers as possible. For example, customers are able to order and purchase their favourite jeans on the online store, and expect delivery at home. Or, they could go into a store and shop the traditional way. These are two unrelated transactions where the customer’s business within the physical shop is separate to their online account.

 

Omni-Channel retailing on the other hand, focuses on the use of multiple connected channels, where the whole buying process is tailored to every customer individually. The customer has a variety of possibilities they can choose from to achieve their preferred retail experience. For instance, the customer can buy products using any of the channels; determine how they receive advertisement or advice; and choose the payment and delivery type.

As the channels overlap within the Omni-Channel strategy, all devices and local stores can access the individual customer’s database, which captures all relevant information regarding their preferences so that each channel delivers tailored content.

The larger international retailers focus on Omni-Channel strategies, whereas smaller companies have been striving on the Multi-Channel strategy due to their limited resources. Regardless of the size of a company, retailers are now moving towards the Omni-Channel Retailing, even if the transition towards Omni-Channel is a challenge that requires a lot of effort and financial resources. Customers expect the retailers to meet their demands to make the shopping experience as easy as possible and therefore, the retailers have put the main focus on the device most frequently used by the customers: the smartphone.

Choosing which channel strategy is dependent on different factors:

 

  • The aim of the retail strategy: What the retailer wants to achieve?
  • Customer preferences: How does the customer prefer their shopping experience?
  • Market: Which strategies do the competitors follow?
  • Capabilities of the Company
    • Supply Chain Management: Which channels already exist?
    • Marketing: Does the company want to attract customers within a target group, or is the company willing to attract every customer individually, depending on their preferences?
    • Data Management: Is it possible to capture, organise, and analyse customer data throughout all channels within one database that is accessible by all channels?
    • Technology: Which technology is needed within the new retail strategy?
    • Finance: Does the company have enough financial resources to implement the new retail strategy?

 

Depending on the company and their customers, the answers to these questions may vary. Each company has to decide on the strategy that best suits their customers’ preferences, and therefore the business should be aware of the shopping behaviour of the customers as they are essential to the organisation. The organisation’s management team must decide on an approach that works best for their initial and overall business strategy.

 

Examples of big multinational retailers that have successfully implemented an Omni-Channel retail strategy are Starbucks, British fashion retailer Mark & Spencer, and Albert Heijn. 
Starbucks customers are now able to check and reload their Starbucks balance card via their smartphones, on their PC’s, or while they are in the store and will be guaranteed an updated balance across all devices in real time. Moreover, customers are able to pay with their real balance card or with their phone in-store. All this technology is combined within a smartphone and will make the usual customer loyalty card and credit cards redundant making the customer’s life easier.


Mark & Spencer offers a ‘virtual rail’ in its biggest store in Amsterdam. Customers can see the latest trends on a screen and choose their favorite outfits from 50 samples and make their own combinations. Additionally, M&S launched a new website offering different delivery and payment options to optimise the customer experience. A new platform shows the customer the in-stock levels of the items, so they can order the desired product and collect it the next day from their local store. Marks & Spencer also makes special use of its mobile application. The app allows in-store customers who are unable to find a clothing item in their size, to simply scan the barcode of the product, and if it is available elsewhere, have it delivered to their local store, or to their homes, guaranteeing the most flexible customer experience. Furthermore, the app offers features like a store locator, and synchronises the virtual shopping basket that a customer has created on the website with their basket in the mobile app.

Food retailer Albert Heijn has implemented different strategies within its new Omni-Channel approach like AH pick-up points; where customers can pick up orders that were made online on   AH.nl or  bol.com, or from the online delivery service in the Randstad, in the West of the Netherlands. The Albert Heijn application “Appie” offers different features like creating a shopping list via voice input; countless recipes and also checks if the ingredients for the recipes are available in the store. It also connects to the AH loyalty system and captures the user’s buying preferences so that the customer receives customised product promotions and discounts. Customers are also able to send their current shopping list to a store via the app and schedule a pick-up time and location. This saves the customer time and makes the shopping experience as convenient as possible.

 

But how do the companies manage their retail strategy successfully?

 

Key success factors of each Omni-Channel strategy are:

  1. Convenience – Inventory visibility across all channels
  2. Consistency – Product, Price and Service consistency across all channels for all customers
  3. Relevance – Personalised advertisements and offers, meeting the customer’s preferences
  4. Empowerment – Retailers need to empower their customers to make the best purchasing decision and to bind them as a loyal customer to their company.
  5. Agility – The technology and analysis of customer behavior needs to be agile and fast across all channels to react on preference changes

 

Choosing the right strategy, depends on the factors mentioned above, but one has definitely to point out that whichever strategy is chosen the trend moves towards Omni-Channel Retailing. According to the American Consumer Satisfaction Index (ACSI), retailers are under pressure to keep up with the market changes to improve customer satisfaction. Customer satisfaction is the most important driver of a business. Omni-Channel Retailing increases marketing effectiveness, sales figures, and therefore, profit margins. Additionally, companies profit from an increased stock turnover, which decreases the overall cost of inventory. All big retailers aim at an increased market share in a highly competitive market and therefore need to stay up-to-date with the latest retail trends, and adjust their retail strategies in relation to the market changes and customer preferences. Customers are the winning party in this game, as retailers become more consumer focused and the shopping process becomes more customised and personalised.

 

Whichever strategy you choose, MOBGEN will build and implement the right app for you to support your company in pursuing the retail strategy that suits your customers best. MOBGEN builds and tests its apps from a consumer perspective in order to guarantee the best customer experience. Please don’t hesitate to contact us. If you need further information, we’ll be happy to help!