‘A website is not enough for bricks-and-mortar retailers to call themselves multichannel’

Omnichannel – the seamless integration of digital and physical customer touchpoints – has become the new normal for nearly all retailers since the pandemic seismically shifted the way consumers shop.

It has forced the industry to accelerate tech innovation to create that smooth blend between online and in-store.

The trend was underway well before 2020 as ecommerce activity surged. Our recent research has revealed that omni-shopping is the most common preference amongst UK fashion consumers, accounting for 73% of shoppers and 80% of overall market spend. But it’s become more significant and we’ve now passed a tipping point. 

It’s no longer enough for store-based retailers to have a website and be ‘multichannel’. They need to think of themselves as ‘digital first’ retailers who might also have stores. 

What’s the difference you may say? The point is a change in mindset. Whereas retailers used to say ‘the website is my biggest store’, which merely reinforced the idea that it was all about pushing stock out to shops and having the warehouse to sell online, the digital-first retailers think differently. 

Boohoo and Asos, for example, don’t think that way. That’s not how they source their product. It’s not how they view their market. It’s not how they view their customers. 

Digital-first is not simply about accelerating the growth of online entities – it also considers additional operational implications, including the optimal make-up of physical real estate to support business strategy and meet consumer demand. 

However, digital-first retailers think about their digital channels as the primary route, even if it’s less than 50% of their business, and their stores – if they have them – are in service of digital.

It’s no surprise then that digital transformation sits at the top of the agenda for every retail business. According to IDC, direct digital transformation investments will account for 55% of all information and communications technology investments by the end of 2024.

This is a redirection of capital away from bricks and mortar for many traditional retailers and department stores. John Lewis closed 16 stores during the pandemic and announced plans to spend £1bn over five years on digital growth. In the US, Walmart spent almost three-quarters of its capital expenditure on ecommerce and supply chain technologies in 2020/2021.

Much of this spend will focus on unravelling 30-plus years of complex legacy technology, while simultaneously investing in automation, analytics, and AI.

“When it comes to IT investments that might cost millions and take three years, many CEOs ask ‘can we do it cheaper?’”

Even retailers with strong digital capabilities, who have scaled at speed and profited during the pandemic as a result of front-end investments, are finding that their first-generation IT is no longer fit for purpose or their back-office systems need streamlining.  

Retail is the most short-term-focused sector. There’s no other industry where you wake up every morning with a committed revenue for the day of zero. 

So, when it comes to IT investments that might cost millions and take three years, many CEOs ask ‘can we do it cheaper?’ Or ‘can we stick it together one more time even though it’s 30 years old’?

Building manual workarounds means throwing bodies at the problem again and again. At some point, the lack of systems capability hinders growth, inhibits good use of data and is a blocker to becoming a true digital-first retailer. 

Unpicking complex legacy structures and implementing platforms that support a seamless online experience can be expensive, and time-consuming, but it doesn’t have to be terminal. 

Historically retailers would have faced the prospect of an all-encompassing systems rebuild over three or four years and a £100m-or-more price tag – with a low chance of success. 

Today’s smarter architects break down these hugely complex legacy applications and plot replacement paths that closely align technology investments with their business value proposition. 

This requires – hard to find – capabilities and flexibility but will, ultimately, lead to a better technology stack in the short term and for the future.

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