Retail channel obliteration

February 5 2018

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retail channel obliteration

In retail, you often hear the word “channel” when describing how products are delivered to the customer. But actually, a channel is a bit more involved. A retail channel is the end-to-end set of locations, processes, and technologies products pass through from the point of manufacture to the end-customer.  

I recall a conversation with a Forrester analyst in 2004 on the topic of “retail channel integration.” Essentially, the gist of the discussion was centered on the integration of the online (eCommerce) channel with the store channel. I listened for a while and finally said: “I think you have it wrong.”  This is obviously not what an analyst ever wants to hear.  

“What do you mean!?  He retorted. “This is the most important topic in retail today. How is this wrong?” We were on a conference call so I couldn’t see his face. But I imagined it was a bit contorted as he relayed his thoughts. I replied “there can’t continue to be multiple channels. There needs to be a single way that we get products through the supply chain. There needs to be one version of customer information in our company. The customer will then choose the best way for them to get the product, whether in the store, or shipped to their home. It isn’t about integrating two disparate channels. It is about elimination. In fact, I would call it channel obliteration.”  

The analyst thought for a moment and said, “I like that term, ‘Channel Obliteration.’  Can I use it in my article?” I quickly replied “No.  I have the trademark.” The last statement was a bit of a stretch, though we did file the trademark application the next day.

Today, we hear people continue to talk about the importance of omnichannel in retail and I again hark back to that conversation years ago. Omnichannel typically looks at the fulfillment methods used to get the product to the customer. It focuses on providing a seamless shopping experience for the customer. Finally, omnichannel stresses the need for  “integration between the channels on the backend.”

How is that different from what I would term Channel Obliteration?  For one, I believe the continued discussion of channels adds a layer of confusion. This sounds as though we want to continue to operate with separate channels, but paint a thin veneer of “customer experience” over the chaos lying below.

My definition of Channel Obliteration is built on two core concepts. These concepts are centralized, fungible inventory and a single version of the customer.  While these may be implied, most descriptions of omnichannel never really call out these important points.  

Let’s discuss each concept. Centralized, fungible inventory is achieved in a virtual manner. It would be totally impractical to build a single data store that would support stores, call centers, distribution centers, and e-commerce. Each of these entities operates in a different location, at different times, with different information needs.  

Using modern technology, a retailer can create a virtual view of inventory by integrating all the various applications and events that are present in a typical retail supply chain. Leveraging this network as inventory status changes at any point in the supply chain it is readily visible to all other nodes in the supply chain. Armed with this capability, retailers will have the ability to fulfill customer demand in a manner that transcends traditional retail channels and provides the ultimate level of flexibility and convenience to the customer.  

This network of applications could include store inventory, store POS, warehouse management systems, in-transit inventory (such as provided through EDI), order management systems, inventory planning, and trade purchase order management systems. This provides a virtual view of everything dictating the flow of inventory throughout the organization. In other words, this is the proverbial “glass pipeline” of inventory.  

As with inventory, we need a single view of our customer. Also, this view will likely have to be virtualized in much the same manner as inventory. Most retailers have a multitude of ways to collect customer information. Some of these methods include at store POS, company website, subscription to private brand publications, fan clubs, private-brand credit cards, marketing/promotions, loyalty cards, mobile-app downloads, and customer phone support. Most of these methods were developed separately and contain fragments of information about the customer.  

Unlike inventory, there is often not a single unified identifier (such as an item or model #) that can be used to aggregate this information. This is where the magic of an analytics-based customer data integration (CDI) strategy comes into play. The central engine of a CDI solution can rationalize the various pieces of the customer information and determine what is a new customer versus a modification to an existing customer. This allows the creation of a set of common APIs used by all applications that create, read, update, and delete customer data. These APIs ensure that, regardless of the system, the most up-to-date customer information is always available.  

Given the current emergence of the European Union’s General Data Protection Regulation (GDPR), this capability is almost mandatory for retailers.  

With a consolidated view of the customer and a consolidated view of location-specific inventory, retailers can offer a multitude of experiences to their customers. For example, a customer shopping in a store can’t find the product they want. An associate can reserve the product at a neighboring store or have it shipped to the customer’s home from the most expeditious and cost-effective location. Buy online and pick-up in store (BOPUS), buy online return in store (BORIS) scenarios are easily implemented with these consolidated views. By having accurate, up-to-date information, mobile self-service apps can be made available to customers.  

Finally, in-store sales associates can use the power of this information to provide personalized services for customers in a manner not previously possible. For example, by having access to customer order and search histories, an in-store associate can provide many of the same recommendations and suggestions that the customer receives in the online world. But in-store it is done with a personal touch.  

The concept of Channel Obliteration is not a new one. As I mentioned, we first discussed it in 2004. What is new is the ability to create and leverage APIs to build an application network that spans the vast landscape of solutions that exist in retail today.

With this network, retailers will finally have the ability to meet and satisfy customer needs on the customer’s terms.  In doing this, we eliminate (or obliterate) the notion of retail channels.  

For more about how an application network helps retailers redefine customer experience, watch my webinar with MuleSoft now available on-demand.  


 


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