Aligning culture and omnichannel retail strategy
By Ia Ko, Senior Consultant
Mike used to shop at a local grocery store every Sunday and would go to the mall every once in a while to buy clothes. Now he does his grocery shopping on his phone during a coffee break at work. He “shopped” over 600 times using his laptop and mobile phone last year. He often shops items on the web and then picks them up in the store. He recently starting shopping on social media directly based on the recommendations and likes of the people he follows. He expects “fun” when shopping and loves personalized suggestions.
Mike represents a growing number of today’s consumers and their evolving behavior. As a traditional brick-and-mortar retailer, how do you respond to this? A number of retail companies are going through what is being described as a crisis of retail. While the overall sales grew from 2015 to 2016 by 3.3% to $5.5 trillion, the biggest growth happened in digital retail (non-store retail). One common challenge the retailers are facing is omnichannel strategy. Omnichannel is about creating a seamless customer shopping experience, no matter how they access your store and is now considered the standard.
Not surprisingly, consumers don’t care about channels; they just want convenient, quick and easy shopping.
For retailers, however, creating an omnichannel experience means a fundamental shift in their mindset and behaviors, and many traditional brick-and-mortar retailers are playing catch-up now. Omnichannel strategy requires transforming how you collect and use consumer data, how you use technology, how you structure the organization, and how you manage inventory, among many other things. In our experience working with several major retailers over the past few years, we see that culture plays a key role in implementing the omnichannel strategy. Here, we summarize our thinking based on our experience and review of the industry and academic insights and trends.
Culture is more important than ever.
Successful omnichannel implementation is often described from the customer data, technology infrastructure and supply chain management perspectives. But having a best-in-class CRM, advanced analytics, and customer-centric supply chain don’t add up to successful omnichannel implementation. Technologies and platforms don’t execute the strategy; people do. In our conversations with our retail clients, culture is often described as a key driver of where they are with omnichannel, and how they are approaching the current retail crisis. A few of those companies are lagging behind with omnichannel implementation, precisely because of their culture “being too comfortable” with continue to do what they were doing. To achieve an omnichannel strategy, there needs to be a culture that fosters the right mindset and behaviors.
Clarify the omnichannel strategy and create alignment.
This sounds basic. You need to clarify the strategic direction and priorities whether your strategy is about omnichannel or not. What is unique about omnichannel is that a lot of traditional retailers are now playing catch-up, and the omnichannel strategy isn’t viewed so much as a winning strategy, but rather an afterthought for survival. How do you make this alignment around omnichannel strategy?
- Create alignment at the top. Creating alignment around omnichannel strategy among the executives and senior leaders seems to be challenging as the competitive landscape widens and a number of key priorities emerge from omnichannel implementation. Lack of alignment at the top drives various nonproductive and ineffective behaviors at all levels, resulting in poor performance.
- Make sure your strategy is real and unique. As the strategy guru Porter has said, your strategy needs to be unique, create focus (not just about what you’re going to do but also what you are NOT going to do), and help create connections among different activities.
A lot of retailers’ strategies include omnichannel as part of their strategy and yet not every retailer is able to create a unique strategy to win. All too often, their strategies sound like they are trying to be more like Amazon. Sure, there are few retailers who are considered “Amazon proof,” but this doesn’t mean that your goal is to “be more like Amazon.”
- Make your strategy visible. When it comes to communicating the omnichannel strategy, we see a wide range of actions – from companies where only the strategy leader can articulate the company strategy to companies where everyone has a 1-pager describing the company strategy and how they personally support the execution. What is clear to us is that the company strategy shouldn’t be a secret to the employees. Not every employee needs to give you a dictionary definition of “omnichannel,” but they should know what the long-term plan is.
- Show how your goals support this strategy, which leads to the next point…
Set omnichannel goals and metrics.
Where your omnichannel strategy “gets real” for employees is in connecting it to day-to-day goals and objectives. If you are continuing with goals and metrics that are seemingly disconnected from the strategy, this reduces the omnichannel strategy to just another marketing campaign banner and you can’t expect to win.
A client at a major retailer mentioned recently that as they were evaluating their supply chain capabilities for omnichannel implementation, they realized that over 80% of the metrics were internally focused and had little to do with omnichannel. Their supply chain had a long history and tendency to over-engineer and over-process, and this had resulted in a large number of internally focused metrics. They began introducing more externally focused omnichannel metrics.
All too often, we see companies who spend a lot of time creating a omnichannel strategy plan and fail to connect it to measurable goals and metrics.
Pilot and scale.
In large-scale changes involving the entire organization, even the best-laid plans get revised and corrected as they are implemented. With omnichannel implementation, companies need to become more comfortable with the idea that you are not going to get it right the first time.
Achieving omnichannel retail will require patience, and companies need to be ready to go through rapid cycles of trial-and-learning. Putting seamless customer experience at the center requires more than new omnichannel platforms and technologies and demands new behaviors. We see that taking a pilot-and-scale approach can work well when creating new omnichannel habits and routines.
Break down the silos and create a customer-centric organization.
It would be extremely difficult to do omnichannel retail well if your employees have different perspectives on customers and work in silos. Customers just want to get the products and services they want in whatever way they want – mobile, web, phone, stores – and switch back and forth across these channels. If they need help, they certainly don’t want to repeat the same question to stores employees, contact center, delivery, etc.
One of the retailers we work with said their previous structure was heavily product-based rather than customer-based. While their goal was about creating a world-class consumer experience, their organization was perfectly set up to get the products into the stores even though the consumers wanted something completely different on their webstore.
We see that re-building your organization to be more customer-centric is often a painful process that involves serious reorganization and changes in key talent positions. However, in almost all cases, rethinking your organization’s boundaries is a necessary step in preparing the organization for omnichannel.
Develop omnichannel capability.
The capabilities needed for retail success have changed considerably over the past few years, given the changes in the industry. Retailers will need people who can adapt to change quickly and innovate. Some organizations grow their omnichannel capability through acquiring other firms. In other cases, organizations focus on acquiring new talent – especially key leaders to manage and sustain the changes at the very top. This also means investing in developing capabilities of existing employees.
For example, contact centers are critical in creating a superior customer experience in omnichannel. Yet, in a number of cases, we see that contact center employees are left with an old-school, traditional stay-with-the-script approach to serving customers. Contact center employees need to be able to access the consumer information (regardless of the channel) and be equipped with knowledge, information, and tools that serve the customers. They also need to be empowered to serve customers rather than expected to follow the script only.
Back to the fundamentals.
In many ways, characteristics of omnichannel retail culture don’t look all that different from those of high performance culture. It boils down to clarifying the future direction, making sure you have the right capabilities, and creating omnichannel systems and processes – all based on a concrete understanding of the evolving customer behaviors and market changes. It is about sticking to your core mission and continuing to leverage your strengths and work on your weaknesses.
For those familiar with the Denison Model, this sounds a lot like a description of the Model and characteristics of high performance culture. We recognize the unique challenges associated with omnichannel retail strategy. But more importantly, we believe that the organizational culture that helps you create the omnichannel experience for your customers has the fundamentals right. If you are part of a retail organization going through the omnichannel and other retail challenges, let us know how we can support you in your transformation journey.
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