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The omnichannel business model is no longer a choice


Unprecedented global catastrophe has pushed the business dynamics off the rails. Most of the large economies went under different forms of lockdowns, and people also rightly took the necessary precautions. A side effect has been a significant slowdown in the macro and microeconomic activities. Now the lockdowns are lifting, and markets are starting to open slowly, with cautious optimism. Retail has been one of the most impacted sectors in an overall slowdown. Retailers around the world are making adjustments to the altered situation, and general sense is that we are still away from business as usual.

The omnichannel business model is no longer a choice

People changed their shopping patterns in days. Essential items like grocery, medicine even clean water and sanitary supplies saw increased spending as people tried to hoard these items initially. Over time other categories like office supplies saw a bit of bounce back as global workforce started working from home. During the lockdown, brick and mortar stores saw negligible footfall, and online shopping became the primary channel of shopping. So much traffic suddenly shifted to online channels, that their supplier and distribution networks came under pressure. It has been much hustle and on the feet thinking to make it all work. Not perfect, but everyone is adapting at a fast pace.

The retail sector overall has led the way in innovation,
adaptability and execution. Right from the manufacturing, distribution, planning, and on the ground execution all started adapting quickly to the new normal. There are still many adjustments to be made in the short and long term. To understand it better, we reached out to the top industry leaders to get their perspective on the current situation. This report is our attempt to bring out the common thread of interests and how we all collectively plan to overcome.

Omnichannel Business Model: A Necessity

Of the organisations surveyed, ones which have less than 10 percent business online, an overwhelming majority, 83 percent of them are planning to move more business on online channels. Most of them are looking to build their presence online, with around 10 percent looking to collaborate with online marketplaces.

However, it is not straightforward. The biggest challenge to going online is technology. Most of the retail organisations have operations and systems which do not integrate into the Omnichannel approach. Older the organisation, older the systems and tougher to integrate with multi-channel. It requires a significant investment in systems, people and supply chains themselves to orient them towards the “new” way of working

New fashion startups who were born on the cloud and took online first approach are more suited to ride the e-commerce wave. Another challenge is the marketing reorientation to the new business model. Traditional marketing methods would need to be scrapped and replaced with digital marketing. Customer loyalty programs, for example, need to adapt to online digital channels till now they were more popular in the physical store setups.

Technology And Marketing Are The Biggest Hurdle To Move Online

40 percent of the brands/ organizations see technology as the major challenge in moving business online. Although there is a definite realisation that moving online is now necessary. Legacy technology at most of the sizeable retail enterprises remains a hindrance. To support online channels, the inventory visibility
is one of the foremost channel. Online channels are particularly required to maintain the product availability up to date in near real time to avoid hassles for customers. That is just one example, the entire S&OP process needs a overhaul. This is easier said than done. Then there is a matter of people training, which is closely related with change in technology.

What are the challenges of moving more business online?

In the short to medium term, the idea to get online with a small footprint. Assortment mix needs to be sorted out and planned. Supply chains have to be nimble and ready to react. But to sustain the online business models there has to be a broader strategy. The shift to online also requires new marketing strategies including promotions, communication and customer loyalty programs. This is the second biggest hurdle. In our survey marketing and technology are mentioned as top hurdles with 40 percent respondents voting for each.

Festive Forecasts See Negative Adjustments

60 percent expecting festive seasons go down 25 percent or more compared to last year. More than half the retail organisations have seen their forecasts for festive seasons go down 25 percent or more compared to last year. Given that Festival season sales account for a significant portion of sales book each year. A downturn in the festival season sales would mean a longer road to recovery.

Next 2-3 months will be crucial in determining the consumer mood towards festival season spend. A below-average sales during the festival season would directly indicate a negative customer sentiment, which means a long road to recovery. The economy overall will need to improve before customers become confident again and start to loosen their purse strings.

If we look at apparel retail forecasts, we find more pronounced negative adjustments, with more than 62 percent of respondents expecting a reduction of 25 percent or more. On the other hand, non-apparel retailers while still looking at a below-average season, a higher percentage, 57 percent of respondents are optimistic about no change or a slight increase in the festive season sales. A more significant 14 percent of non-apparel respondents are hopeful of a more than average returns from the festive season.






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