What does omnichannel commerce actually mean today?

(Image credit: Target)

Omnichannel retail is perhaps the most overused phrase in the retail industry, but it’s also perhaps the most inescapable. For years, omnichannel retail has been something aspirational that retailers have been striving for. However, today, after two years of pandemic shutdowns and consumer shifts, the reality of omnichannel retail is here.

Those who are able to keep up with the ever faster delivery race and bring a full omnichannel cycle to their shopping experience are the ones who will be on the verge of success.

The delivery race is tightening

True omnichannel retail today means super-fast delivery. Before the pandemic, same-day shipping was an expensive luxury. But today, same-day and next-day delivery is quickly becoming the norm.

Food retailers Albertsons and DoorDash take fast delivery a step further. The two companies have partnered to offer shoppers in more than 20 US cities delivery of groceries in less than 30 minutes. Walgreens is rolling out same-day delivery of more than 25,000 over-the-counter medications, personal care and household items to more than 6,300 stores nationwide under a new partnership with Target-owned Shipt.

BJ’s Wholesale Club is also getting into the same-day delivery game, adding service for all grocery items, including fresh food and household items.

Even the smallest retailers cannot avoid entering the race for delivery, especially in the grocery sector. Regional grocery chain Lunds & Byerlys, like Walgreens, turned to Shipt to expand their delivery reach. The companies’ partnership will allow the retailer to double its delivery capacity and reduce its delivery window to a one-hour window, said Jenny Pearson, director of e-commerce at Lunds & Byerlys.

Walmart, meanwhile, is struggling to move its 24-hour delivery operation. The retailer expanded its InHome delivery service to Florida earlier this year, with 24/7 delivery options for InHome members using the Smart Box and the HomeValet app. The boxes are temperature controlled, secure and can be managed and monitored by customers via the Home Valet mobile app and subscription service.

The race for delivery is reaching even the most rural customers in today’s omnichannel retail reality. Amazon is recruiting small mom-and-pop florists, restaurants and other businesses to help with last-mile delivery in rural America. Getting packages to customers in these areas can be expensive and complicated, but rural shoppers expect faster delivery times for their online purchases, much like their suburban and urban counterparts.

But the race for delivery isn’t just about e-commerce packages being delivered to consumers’ homes. In today’s omnichannel reality, e-commerce fulfillment is happening even in physical stores.

The omnichannel experience finally penetrates brick and mortar

It’s been a long time coming, but omnichannel retail has finally penetrated the physical store. There have been many shutdowns and restarts through 2020, but the pandemic has put retailers in a position where they had no choice but to figure out how to integrate online ordering and fulfillment into their physical spaces. .

Target in particular really cracked this code. The retailer was ahead of its time when CEO Brian Cornell made the decision to start doubling stores as e-commerce fulfillment centers — which was unpopular at first, he told NRF 2022 : Retail’s Big Show. But the decision paid off and was a big part of Target’s success which saw it weather the worst of the pandemic.

Target has used the pandemic as an opportunity to launch and expand its Drive Up and in-store pickup online shopping services, and the retailer plans to invest up to $5 billion this year, in part to continue improving its digital shopping features and its realization. services. Among the enhancements is the addition of Merchandise Returns and Starbucks Orders to Drive Up services. And the retailer is even testing nail painting robots in some of its stores.

Walmart is also bringing more online fulfillment to its stores. The retailer saw its digital orders increase 170% last year, and it will add more in-store fulfillment centers to increase pickup and delivery capacity by 35% this year. Centers use automated robots that retrieve certain items from shelves to speed order assembly, while produce and other fresh produce is still hand-picked by personal shoppers – a seamless combination of technology and human touch in the stores.

Speaking of which, Walmart has also moved its Time Well Spent shopping experience into its second phase. The format combines an easy-to-navigate store layout with technical features such as enhanced lighting and displays, QR codes and digital screens.

“We will continue to test, learn and make changes based on what our customers tell us,” Walmart executive Alvis Washington said of the format. “In doing so, we will adjust quickly and deliver an even better and more engaging experience in 2022 and beyond. After all, when customers choose to shop in-store with us, we want them to feel impressed and inspired – and let their time be well used.”

Designer Brands, DSW’s parent company, and Macy’s are among other major retailers that are bringing online fulfillment to their stores to accommodate today’s true omnichannel environment. And now is the time to strike that omnichannel balance: more than 90% of consumers surveyed by McKinsey expect delivery within two to three days, according to a recent study.

The retailers that meet this demand are the ones that will keep pace with the new reality of omnichannel retail, according to NRF President and CEO Matthew Shay.

“Companies that have become much more sophisticated in how they combine these experiences for consumers, how they use stores to achieve fulfillment, how they use stores to create engagement opportunities, how they use online to drive foot traffic and vice versa…sophisticated operators who move seamlessly between online and using the store, I think they have a lot of opportunity,” Shay told CNBC.

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