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Is Your Omnichannel Transformation Turning into a Game of Jenga?

Omnichannel TransformationBy  Gurbani Ahluwalia of Jesta I.S.

“Retail technology is like an iceberg: Everyone pays attention to the portion that’s visible, but it’s what’s below the surface that’s mission critical.” -Susan Reda, STORES Magazine

The Erratic Shopping Journey

Consumers today are more fickle than ever. They jump from channel to channel, trust social media for product reviews, buy online, pickup/return in store, run branded mobile apps – the list goes on for what the industry calls “omnichannel retailing”. In order to make this journey smooth for shoppers, the engine running the back-end needs to be just as flexible.

The store has become the hub of omnichannel operations, and many retailers find themselves playing catch-up. Some run unconsolidated key data points, business rules and functionalities that live in diverse applications. If you’re using outdated systems that weren’t designed to manage shoppers’ interactions and transactions throughout the shopping journey, then your ability to manage new processes, increase revenue and deliver a coherent brand experience is severely constrained.

Retail technology today is expected to be as versatile and function-rich as a smartphone, so one that’s only good for making calls isn’t an option anymore. Transitioning from legacy technology to a platform that supports the omnichannel journey is a major step that will transform the way you do business. The challenge lies in how this can be achieved.

The Band-Aid Model: Building Technical Debt

Many retailers today run back-end legacy software with point solutions that provide interim fixes but act as choke points to the free-flow of data between applications. It’s not uncommon for companies to introduce consumer-facing technologies to “modernize” their outdated systems in an attempt to keep up with fast-paced shoppers. This type of patchwork – aka the Band-Aid approach – is a hasty shortcut to jumping on the omnichannel bandwagon.

The problem with this approach is that it creates a technical debt, offering tangible returns in the short term but causing massive losses in the long run. It’s like adding high performance tires to an old clunker and expecting it to morph into a racecar. More often than not, this results in added complexity and silos in an already disjointed environment. It not only calls for high maintenance, customization and labor costs, but also offers little in delivering a consistent experience. This technical loan demands payback – only at a much higher interest rate.

Moving to A Unified Retail Platform

As we’ve all experienced, pulling off a Band-Aid slowly is more painful than removing it at once. This also holds true for software. An integrated platform allows important information to move freely across POS, CRM, clienteling, inventory management, web, and order management, among others. This is crucial as there’s tremendous value in system consolidation, notably higher margins and increased revenue. Beyond that, innovative retailers are also considering unified platforms to support:

  • Real-time access to inventory information across the business (warehouses, stores, suppliers, etc.)
  • A single snapshot of the customer, including buying history
  • Distributed order management
  • A frictionless and personalized shopping experience

The goal is to run a platform that can manage and converge all touch points, while delivering more value at a reduced cost. After all, a new system is only useful if it allows organizations to respond to consumers and adapt to new business opportunities. Given the benefits of unified commerce, it’s no surprise that this strategy is gaining traction among retailers.

Rip and Replace as a Legitimate IT Strategy

At this point you may be thinking this is all well and good, but implementing software is a major undertaking. In fact, retailers cite “replacing legacy systems” as a top challenge to overcome in successfully moving to a unified commerce situation, according to “Unified Commerce Game Plan”, a report from RIS News. However, gone are the days of dramatic IT fiascos, where overages were the norm and payback didn’t turn up. Today, it’s easier for CIOs to be more cost and time effective by taking advantage of integrated, modular platforms and cloud-based infrastructure.

From Legacy Stack to Cloud-Based Platforms

Retailers understand that they must invest in technologies that are flexible enough to help them overcome a siloed environment, unnecessary and overlapping IT expenses, as well as data duplication problems. That’s why they’re considering cloud-based platforms. According to the RIS-IHL 2016 Store Systems Study, Brave New World of Unified Commerce, twenty-six percent of all retail software spending in 2016 will be dedicated to cloud-based technology. In this context, the ideal foundation for an omnichannel transformation relies on cloud computing. The benefits are multiple, such as scalable infrastructure, web accessibility and reduced hardware requirements.

Putting It All Together

The message being sent by today’s shoppers is loud and clear. They expect retailers to provide a consistent and unified path to purchase – from browsing, to shopping and beyond – regardless of the channel of origin or whom they engage with. In return, retailers are rethinking their technology strategies to better serve connected shoppers, transitioning from disparate retail technologies to unified commerce platforms without creating additional silos. As a result, they’re adopting integrated cloud-based platforms that can support more flexible, back-office operations to meet the needs of their business – and customers.

How does your current system handle in-store returns of online purchases? Does it provide the brand experience your customers expect? What obstacles are you facing in your omnichannel transformation?

This article was first published on Jesta I.S.