Empowered Consumers Require Omnichannel Strategies

Stephen DeAngelis

May 31, 2019

We’re all familiar with the adage “knowledge is power.” The quote finds its origins in Sir Francis Bacon’s book Meditationes Sacrae, which was published in 1597. Written in Latin, the actual quote was, “ipsa scientia potestas est,” which means “knowledge itself is power.” Today, consumers are empowered with more knowledge about the products they buy than at any time in history. This has emboldened them in new ways. Steve Osburn (@skosbu), Managing Director at Kurt Salmon — a part of Accenture Strategy specializing in Supply Chain, observes, “E-commerce customers in the U.S. are becoming increasingly demanding. A recent study from Accenture Strategy found that 62 percent of U.S. consumers expect orders, with free shipping, to arrive within three days. Many retailers are struggling to deliver on this expectation.”[1] Sometimes three-day delivery, or even overnight delivery, isn’t fast enough — which is why click-and-collect schemes have joined other retail order fulfillment channels. To meet changing consumer behavior, retailers are finding omnichannel strategies essential.

Changing consumer behavior

If you don’t believe consumer behavior has changed dramatically over the past few years, Bill Su (@DataWithBill), CEO of Humanlytics, suggests you think back a dozen years. “Facebook was still competing with MySpace for traffic,” he writes, “Amazon was primarily known for selling books, and the iPhone was just released. Back in those days, the way we shopped for products was drastically different from the way we shop today. Most of us still trusted brick-and-mortar stores, we didn’t have price comparison services, and we were at the mercy of large corporations for discounts.”[2] What has changed? Su writes, “Now, as a customer, you have sufficient access to smartphones and the internet to go beyond the shelf when evaluating the product.” We know that data helps retailers and manufacturers learn more about us as consumers; but, we often forget that data also allows consumers to learn more about the products being offered to them.

“There is no doubt,” writes Marc Wins, “that digitization is now reshaping consumer behavior and shopping habits.”[3] He asserts consumers are making more sophisticated search queries before and during shopping. They are being influenced by more varied website content, including product images and other visual keys. He insists consumers are also increasingly relying on recommendations from trusted sources such as friends and other influencers. Finally, he agrees consumers are being empowered by knowledge and are giving increased priority to clear facts and good prices. He then asks, “Is your business keeping up with these changes?” He continues, “To thrive in this digitized world, businesses need to understand their customers better than ever. The advent of smartphones and social networking apps, for instance, has transformed how people communicate and search for information. The Amazon effect is revolutionizing eCommerce. Even in health care, digital technology has already started changing how consumers choose service providers. Coping with such changes is a challenge for many businesses.”

Omnichannel strategies can help meet consumer demands

John McAteer, Vice President of Sales, Retail, and Technology at Google, writes, “In retail, there’s no space for standing still. Empowered by mobile, people can get exactly what they want instantly and effortlessly, and they expect retailers to meet their needs faster than ever before.”[4] Consumer “needs” include multiple ways of buying and receiving goods. James Curtis, a Business Development Representative at One Network Enterprises, explains, “Consumers are buying products through many different channels the consumer goods supply chain has become more complex than ever before. … With the movement from pure store-delivery to store-plus-home-delivery, you have many more points of consumption than ever before. The number of orders increase substantially because there are no longer only truck loads. Now companies must have the ability to manage parcels while providing a higher level of service.”[5]

Paul A. Myerson (@Paul_A_Myerson), a supply chain instructor at Monmouth University, insists omnichannel operations are the new retail reality. Drawing from a Bain & Company whitepaper entitled Modern Retail Supply Chains: Backbone for Omnichannel, he points to four basic rules for success Bain & Company analysts suggest companies should adopt to improve their chances of success when adapting to the new and evolving reality of omnichannel retail.[6] Those rules are:

1. Understand your business and customer strategy. “Learn as much as you can about your customers, including how they shop, how they want to receive and return goods, and what they will pay for. Understanding these strategies can help you avoid unnecessary changes and investments that can disrupt your supply chain and harm your bottom line.” Learning about your customers requires data about your customers as well as a way to analyze data for insights. Cognitive solutions, like the Enterra Shopper Marketing and Consumer Insights Intelligence System™, can leverage all types of consumer data to provide high-dimensional consumer, retailer, and marketing insights.

2. Develop capabilities to support your strategy. “Customize services to meet customer needs. For example, do they desire same-day delivery? Buy online and pick up in store? Developing these capabilities involves decisions such as whether to insource or outsource activities including e-commerce fulfillment, transportation, and returns and how to integrate these and other processes with the rest of your supply chain.”

3. Adapt your operating model. “Take a 360 view and involve other functions such as marketing, merchandising, e-commerce, store management, and IT in supply chain decisions. There are plenty of trade-offs in operating decisions such as cost versus service (for example, transportation costs versus same-day delivery), so these decisions should be as collaborative as possible to ensure that there is buy-in and that success is measured properly.” Here, too, cognitive solutions, like the Enterra Supply Chain Intelligence System™ can help stakeholders optimize operations.

4. Invest in technology and analytics. “Improve technology throughout the supply chain to help with all kinds of processes, from forecasting and customer order tracking to reordering quantities and restocking locations. By linking these decisions with your strategy, you can avoid a lot of unnecessary investments because it can be tempting to jump on the latest technology without first doing your due diligence.”

Myerson concludes, “Starting with these four rules should lead you down the right path to make positive changes to people, processes, and technologies in your supply chain.”

Concluding thoughts

Consumers have quickly adapted to the new digital landscape. Su bluntly states, “Customers are becoming more powerful in making their own purchasing decisions.” Enterprises have not been as quick to adapt to this new environment as consumers. As a result, Howard Yu (@HowardHYu), the LEGO professor of management and innovation at the IMD business school in Switzerland, asserts, “No industry is failing faster than retail.”[7] Mastering omnichannel operations is essential to turn that situation around. Wins adds, “Businesses need to have a deep understanding of consumer behavior in order to achieve their goals.” Cognitive computing solutions can help enterprises succeed in this new digital era.

Footnotes
[1] Patrick Burnson, “Accenture Weighs in on E-Commerce Supply Chain Challenges,” Supply Chain Management Review, 21 February 2019.
[2] Bill Su, “The evolution of consumer behavior in the digital age,” Medium, 16 November 2017.
[3] Marc Wins, “5 ways to adapt to changing Consumer Behavior,” Procurement Academy, 11 March 2019.
[4] John McAteer, “Data-driven merchandising: Moving from an art to a science to reach today’s shopper,” Think with Google, March 2019.
[5] James Curtis, “Meeting the Omnichannel Challenge,” The Network Effect, 26 February 2019.
[6] Paul A. Myerson, “Omnichannel Retail: 4 Rules for Success,” Inbound Logistics, 4 March 2019.
[7] Howard Yu, “What Big Consumer Brands Can Do to Compete in a Digital Economy,” Harvard Business Review, 4 December 2018.