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Omnichannel: Is it the saviour of traditional retailing?

Long described in some quarters as an over-bloated industry buzzword, McKinsey and Co and The Harvard Business Review have recently come out in favour of omnichannel as the customer experience and payments strategy merchant chains should adopt to combat relentless “Amazonification.”

Customer footfall in retail locations has been in decline for over a decade – and the situation shows no sign of improving. In the UK, retail footfall on key days such as Boxing Day declined by 10 percent in 2019 compared to a year earlier – on top of ten years of persistent declines. The situation is so dire that Retail Gazette reported one in ten UK retail outlets stood empty in April 2020. In the US, the situation is little better, with now accounting for 26 percent of all US retail sales online.

Despite all this gloom, experts are adamant that adopting an omnichannel strategy yields results for traditional retailers. Much like “omnichannel payments”, though, omnichannel retailing has been an industry buzzword for more than five years; but there are now signs that this approach is bearing fruit.


The McKinsey/HBR study surveyed 46,000 customers over one year and found that only seven percent used online channels exclusively for shopping; equally, only 20 percent of customers restricted their shopping to physical stores. The remaining three-quarters (73 percent) used a blend of online and physical experiences to inform their purchases and buy goods and services.

To the victors, the spoils

A complaint often heard about omnichannel retailing is that it’s hard to define and even harder to put into practice. One widely-used definition is the integration of data from a wide range of “touch points” to reach and engage consumers. In theory, omnichannel employs information from as many different touch points as possible to better serve customers’ current and emerging interests. This data can come from shopping histories, responses to physical branding and advertising, web browsing history, and online shopping experiences – as well as home-based voice assistants such as Google Home and Amazon Alexa. 

According to research from IDC Retail Insights, the prize for getting omnichannel right includes a 5-10 percent increase in customer profitability and 30 percent more lifetime value from customers engaged in an omnichannel experience. The McKinsey/HBR study confirms these findings, noting that customers who engage with a brand using four or more channels (online, physical, mobile and advertising, for instance) spend nine percent more than others when they visit a retail location – and those who research and compare prices online before shopping in store spend up to 13 percent more than other customers.

Doing Omnichannel right

Dynamic Yield, Inc., a firm that claims to offer personalised marketing experiences, argues that it’s essential to capture and process as much data from customers as possible – noting that today’s consumer will often adopt a multi-device path to purchase.

By combining data from these devices into one channel, Dynamic Yield argue, a complete picture of a customer’s shopping habits can be created – and the tailoring of offers, discounts and product combinations that help to generate increased sales through omnichannel can begin. 


Despite many years of promotion from management consultants and third party vendors, omnichannel seems as far away as ever for most retailers. 

It sounds increasingly like a Big Data play, with consultants and vendors expecting retailers to gather and process data from a wide range of channels. Quite apart from the cost of setting up such systems, there’s no mention of the effect of data protection legislation on such use of customer data. Whilst there’s no data protection currently in force in the US, a range of bills before Congress are designed to limit what firms can do with consumer data – as well as the EU’s wide-ranging GDPR bill on this side of the Atlantic. Unless synthetic data sets are developed to accurately predict customer behaviour, omnichannel seems destined to remain a nice idea that’s too expensive and complex to put into practice for all but the largest retailers.

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