What is omnichannel retail?

Omnichannel retail is a unified, frictionless retail experience that enables easy navigation and movement between each channel. This integrated retail experience strategy gives customers the ability to travel seamlessly from channel to channel, empowering them to have their needs addressed more quickly and easily, and on their channel of choice.

The growth in online retail sales over the past two years has been extraordinary and the trend continues upward. Statista forecasts that by 2025 online shopping revenue in the U.S. will exceed 1.3 trillion dollars. Beyond the numbers, however, are massive shifts that have permanently changed the way customers interact with brands.

Customer journeys are no longer linear, they blend online and in-person interactions to present more of a hybrid experience. Today, any single customer interaction might involve numerous touchpoints - often traversing different channels including text, chat, in-app, and in-store - and your customers expect a high-value, consistent experience across every one of these touchpoints and channels.

No matter how, where, and when an interaction occurs, your customers expect meaningful, consistent communication throughout the entire blended experience. Whether they’re researching products online, talking to customer service, or buying your product, your customers want to engage with your brand in a way that meets their own unique needs and preferences. In other words, omnichannel in retail means connecting everything together seamlessly into a singularly exceptional experience for every customer.

To thrive, companies must design and execute powerful omnichannel retail strategies that can adapt to meet their customers’ new expectations for their buying experiences.

What’s the difference between omnichannel retail and multichannel retail?

In today's "Experience Economy," a multichannel retail strategy is table stakes. Customers expect to have many ways to research, communicate, and purchase from your retail business. This usually means a combination of channels including the retail store, mobile apps, social media, the web, and more. It also requires a variety of customer service channels like SMS, web, in-person, chat, in-app, and over-the-phone interactions.

Multichannel retail takes into account all the different places a customer might want to interact with your brand, but unlike omnichannel, it does not present connectivity or movement between those channels. Also, unlike omnichannel retail, a multichannel approach does not connect the data from channel to channel in a meaningful. That means information is often lost when customers switch between channels, causing friction for both the customer and the employees who are trying to support them.

As retailers scurry to catch up to accelerating digital experience trends, they have continued to add more channels and more capability within those channels. What’s missing is the integration between each channel, creating an increasingly frustrating journey for the customer. And that frustration is causing customers to leave their favorite brands in search of a better experience. In fact, according to Forrester's 2021 US Retailers Customer Experience Index Report, only 28% of retail customers experiencing annoyance, disappointment, or frustration plan to purchase more from the brand - meaning 72% will stop making purchases with a retailer if the experience generates any of these emotions.

While multichannel means providing many channels for your customer to engage with, omnichannel retail means there is connectivity between every channel. Data is gathered with every new touchpoint and used to drive increasingly more meaningful, personalized experiences at every turn. A strong omnichannel retail strategy informs customer transactions happening on the front end as well as employee behaviors that happen behind the scenes.

Companies like Target and Walmart have embraced omnichannel retail, creating personalized and connected experiences between every channel, from in-store to in-app, to on-the-web. Walmart invested $1.2 billion in 2021 to deliver what CEO Doug McMillan calls a “seamless shopping experience at scale” between online, mobile, and in-store shopping experiences. Target even credited a double-digit quarter-over-quarter gain in late 2021 directly to its omnichannel retail strategy, which focused on integration between important channels like same-day services, in-store and curbside pickup, and home delivery.

Why is omnichannel retail important?

There are an estimated 7.9 million online retailers worldwide. That’s a lot of competition! Not to mention, juggernauts like Amazon and continuing to take away to pull away business. Retail businesses of all sizes are turning to omnichannel retail strategies to help differentiate themselves from even the most aggressive competition, whilst also helping to address the enormous challenges of an increasingly complex and competitive retail landscape. Those challenges include:

• Disjointed data preventing a holistic view of your customer data
• Inexorable shift to digital driving up fulfillment and service costs
• Inconsistencies in customer perceptions of and experiences with your channels
• Lack of inventory visibility creating poor experiences with buy-online-pay-in-store (BOPIS)

Omnichannel retail strategies provide valuable data for customer interactions that occur at every stage of the buying cycle. But a seamless omnichannel customer experience also informs and optimizes customer service, whether it’s self-service or direct contact with a customer support agent. Without a comprehensive view of every customer interaction, customer service can quickly fall apart, creating another massive opportunity for customers to leave your brand.

How do you build an omnichannel retail strategy?

An omnichannel retail strategy is the culmination of a retail brand’s customer experience design and orchestration plan. Executed successfully, it will transform a set of separate engagement channels into one, unified CX model.

While the concept is simple, building an omnichannel retail experience that lasts takes a CX-centric, customer-first approach combining ease-of-use, convenience, and personalization. And it always starts with the right strategy:

1. Map your current state

Consider how you can gather the right insights from both employees and customers and map out your current customer journey to create a visual representation of the path—and channels—your customers take when they engage with your brand. Remember, this step is about establishing a foundation on which you can build phased improvement.

2. Define your North Star

Defining your "North Star" omnichannel retail direction and your important business outcomes will guide the business outcomes you want to achieve for your omnichannel retail strategy, and in turn, improve business drivers like employee engagement, customer loyalty, brand perception, and revenue.

3. Identify opportunities for improvement

Once you’ve defined your North Star, it’s time to uncover the challenges that currently stand in the way of success. Sometimes those obstacles are obvious, but often, it's less apparent as to when or why unhappy customers are leaving. That's why it's important to do some digging to find out the real problems in your current CX.

4. Develop a CX transformation roadmap

Once you’ve uncovered what your customers and your employees have to say and have identified the gaps between the current and desired state of your CX, it’s time to create a roadmap to help you achieve a strong, sustainable omnichannel retail experience.

5. Orchestrate the new experience strategy

Orchestration means utilizing people, processes, and technology to enable the foundational components of CX, and it’s critical to the success of your omnichannel retail strategy. Just like the name implies, orchestration means pulling all the pieces together to execute your roadmap and build a seamless, frictionless omnichannel retail customer experience.

6. Measure your success

The final step in CX transformation should be to set aside both the time and resources to make sure your modernized omnichannel strategy is meeting your initial objectives. Surveys, interviews, polls, VoC, and VoE programs can help collect feedback and data and give you a rounded perspective of your success.

What are the benefits of omnichannel retailing?

A smart omnichannel retail approach will help you connect to your customers in much deeper, more meaningful ways while driving employee engagement through the roof. It’s clear that the rules of the game have changed forever, but that shouldn’t scare you. An omnichannel retail strategy will help you embrace the opportunity within that change, and drive significantly improved business outcomes such as:

• Creating seamless, integrated, and personalized customer experiences no matter what channel you’re meeting them in.
• Building loyalty that in turn drives more repeat business.
• Boosting employee engagement so your team is working with passion and purpose.
• Improving important customer service metrics to avoid losing customers to a competitor.
• Helping move digital customers through the buyer funnel, from researching and browsing to buying and advocating.

Behind the scenes, an omnichannel approach will connect your systems, data, and processes so that your business runs more efficiently and effectively, enabling:

• Improved, streamlined data operations and insights application
• Agent experience optimization
• System simplification and agility
• Task and resource efficiencies that drive down costs and drive up revenue

Most importantly, a strong omnichannel retail strategy helps your business become the competition to beat.

What are the best omnichannel retailers doing?

There are many retail leaders discovering ways to present an engaging omnichannel experience that wows their customers. Companies like Apple, REI, Kroger, Starbucks, and Chipotle are paving the way in omnichannel experience delivery, adopting innovative strategies that differentiate their brand, drive business, and keep customers coming back time and time again. Let’s take a closer look at what some of today's CX leaders are doing: