From the Principal's Office

We are witnessing a paradigm shift in how retail treats its many channels of distribution. For those of you paying attention, you will be able to say that you truly saw history being made.

Bob Amster – Principal, RTG

A paradigm shift in the management of multi-channel retailing

By Bob Amster in collaboration with Robert Lawson

We had recently completed a project to assess the ecommerce function of a retail chain from an IT perspective. As we are apt to do in many of our projects, one of our recommendations was not directly related to the subject at hand, but we submitted it anyway because we think it good for the client. We recommended an eventual re-structuring of the selling functions under the auspices of one organization, which we dubbed a chief customer experience officer, or chief channel officer. The idea is to bring all channels under one entity, eliminate the silos and work cohesively and complimentarily to sell product and to keep customers happy (not too novel an objective for a retailer). This is what the industry has come to call 'omni channel.' (Omni is the Latin word for all.) Less than two weeks later, and by pure coincidence, Wal-Mart announced that it was consolidating all channels under one entity, that two of the top ecommerce executives were leaving, and the retailer's focus and objective was to sell more of the products it sells, regardless of the channels through which it sells them. I must add that Wal-Mart did not consult with us prior to making their decision.

In 1888, Richard Sears sent out the first of what was to become the Sears catalog. That was the beginning of the printed catalog channel. (The bricks-and-mortar retail channel had started approximately 3,000 years earlier, and the Roman Emperor Trajan built the world's first multi-level market in the AD 2nd century.) When Sears & Roebuck and others began opening stores as well as mailing catalogs, we saw the first multi-channel retailing operations. (Multi is the Latin word for many.) They operated independently of one another. Then the Internet appeared and, watching Amazon and eBay successfully sell 'stuff' via the World Wide Web, retailers decided that this was a good channel through which to hawk their products. Because retailers wanted to enact this new channel quickly, they established it as a separate – and sometimes autonomous – entity. To complicate matters a little more, technology came up with smart phones, mobility developers sprouted and created yet a new channel: mcommerce. We were still watching 'multi channel' expand.

Well, every good idea evolves and retailers and consumers both realized that multi channel was not necessarily cross channel, and that there were shortcomings in the retailers' ability to present one retail face and ease of trade to the customer. That was the beginning of the push for 'cross-channel integration.' We've been stuck there for a while now. One of the issues that have almost paralyzed the industry is the P&L and structure under which each channel vies for credit for sales, especially if they have commissioned sales associates, at the expense of the other and how the retailer inadvertently punishes them for adhering to cross-channel policies such as buy-anywhere/return-anywhere. For the benefit of the associates and, more importantly, for the improvement of the customer experience the paradigm had to shift.

Enter the omni-channel paradigm (see figure, below): one entity, with one P&L, presenting one face to the customer, selling as much product as possible independently of the channel, dissolving the silos, and keeping the customer experience a pleasant one by virtue of its seamlessness. And you are lucky enough to be witnessing history, as the concept takes hold and evolves in front of you or, even more fun, because of you.

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Other Retailers
A number of other retailers have expressed an interest in the implementation of 'tablets' in their stores, and we are talking to them.

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