Ready or not, retailers were shoved into the omnichannel world thanks to pandemic lockdowns beginning early in 2020. This created a new retail landscape — on both the consumer and supplier side. On the supplier side, Saloumeh (Sally) Sabet, global lead of Consumer Goods Go to Market for Pitcher, explains, “Historically, the consumer goods suppliers with the most sales presence in the field used to be the ones leading the retail execution space. Recent global shifts and the changing habits of fickle consumers and customers mean the market is continuously evolving. As a result, we’re starting to move away from visit-only strategies to contact strategies where reps utilize a hybrid selling model, combining face-to-face visits with remote/digital contact.” On the consumer side, Lisa Schwarz, Senior Director of Global Product Marketing for the Oracle NetSuite Global Business Unit, observes, “As shoppers return to brick and mortar registers, the online retail battleground will continue to capture consumer spend.” I want to concentrate on the consumer side of things.
Finding the right balance between in-store and online sales will be one of the principal challenges facing retailers in the months and years ahead. Journalist Edward Steele notes, “The acceleration in the shift toward more online shopping … has been well documented. But it is just that, an acceleration of an existing trend due to e-retailers’ ability to trade during lockdown. Physical retailers now need to think about what is going to fuel the e-commerce trend in the future, and how to overcome the threat. Although convenience and choice are and will be e-commerce’s core strengths, increasingly online specialists are muscling in on physical retail’s historic advantage — the ability to deliver an immersive and more satisfying shopping experience. This is what physical retailers need to worry about most.”
The Omnichannel Imperative
Dani Cushion (@dmcushion), Chief Marketing Officer at Cardlytics, insists “omni shoppers” are better customers. She explains, “The industry buzz around omni isn’t just hype. By evaluating where sales are happening based on actual purchase data, we see that omni customers — those who shop with a brand both online and in-store — spend significantly more. In the retail vertical alone, omni customers spend 82% more than customers who shop only in-store or only online. Converting customers from shopping in a single channel to omni can be a leading driver of loyalty and make a material difference to the bottom line.” Based on data like that, and the fact that e-commerce is a growing trend, it’s surprising that some investors have pressured retailers to sell-off their online business. Retail and fashion journalist Suzanne Kapner (@SuzanneKapner) reports, “Macy’s and Kohl’s Corp. have recently come under pressure from different investors to split off their e-commerce businesses. The activist push follows a decision by the owner of Saks Fifth Avenue in early 2021 to do just that.”
In the case of Saks Fifth Avenue, the split-off of its e-commerce business is a bit of a chimera. Kapner explains, “Saks said the split won’t be noticeable to customers. They will be able to make returns and exchanges and use their Saks credit cards either at the stores or online. While the Saks stores and Saks.com operate as two separate legal entities, their relationship is governed by a master licensing agreement that is similar to franchise agreements used by hotels and restaurant chains. The digital entity handles all product purchasing and sets the pricing for both companies. They also share common ownership: Canadian holding company HBC is the sole owner of the stores and the majority owner of Saks.com.” Marc Metrick (@Marc_Metrick), Chief Executive Officer of Saks’s e-commerce business, told the Wall Street Journal that separating physical and online operations provided better corporate focus. “Metrick said the split has made it easier for him to recruit digitally focused employees. ‘Having a digital pure-play, you can attract a different type of talent to the organization,’ he said. The stores, by contrast, have been able to focus on hiring stylists, sales associates and people who have skills in visual merchandising. ‘That’s the beauty of the split,’ he said. ‘We’re not trying to cast this wide net.'”
Arguing that splitting off in-store and online retailing is a bad idea, former Chairman and CEO of Best Buy Hubert Joly (@HubertJoly_) told the newspaper “splitting off e-commerce will make retailers less agile and less able to reinvent themselves as the industry is changing significantly. A bifurcated company will ‘be more rigid and that’s going to make it harder to innovate and it will slow them down,’ he said.” Macy’s executives also believe that splitting in-store and online businesses is a bad idea. “In every scenario we considered,” stated Macy’s CEO Jeff Gennette on the company’s fourth quarter earnings call, “we found that the combination of our profitable digital platform with our national footprints will deliver greater value to shareholders than a separation of our digital and physical assets.”
Journalist Ben Unglesbee (@Ben_Unglesbee) concludes, “Why investors value digital pure plays isn’t always clear. In many cases, the e-commerce natives that receive generous valuations struggle to turn a profit or even show a path toward profitability. Whatever the reasons, investors are often willing to pay a premium for digital retailers, making a spinoff a way to bring in cash for legacy retail companies and their shareholders.” In the long run, retailers without an omnichannel operation are likely to suffer in comparison to their omnichannel competitors. Schwarz explains, “Ecommerce is no longer a stand-alone channel. Rather, it’s a core business component that enables businesses to move from siloed online, in-store, and mobile shopping channels to an integrated commerce solution that seamlessly connects ecommerce and in-store point of sale (POS) to order management, inventory, financials, and customer service.”
Although talking about in-store and online sales is easy, mastering omnichannel operations is hard. Journalist Sean Ashcroft insists, “The supply chain landscape is changing at a greater pace than at any other time in history, and nowhere more than retail. Not only is digital transformation changing the fabric of supply but the way consumers are behaving has also shifted. … Layered on top of all this, of course, are the supply chain disruptions that still dog much of the world. It’s a tough world out there for retailers, and particularly when it comes to managing inventory.” When that inventory must be integrated across stores and online, the challenge is immense. Nevertheless, it represents the future of retail. Miguel Duarte, a consumer health leader with EY, told Ashcroft, “Retailers must be ready to provide all manner of information — quantity, price, other products of interest — that improves the omnichannel journey in a personalized way, and also provides the possibility to buy anything, anytime, anywhere.” That’s hard to do if in-store and online sales are split off.
 Sally Sabet, “Why We’re Moving Toward Multichannel Retail Execution,” Consumer Goods Technology, 24 March 2022.
 Lisa Schwarz, “How to Keep Pace with Consumer Spend On and Offline,” Business 2 Community, 17 July 2021.
 Edward Steele, “Letting customers have their cake and eat it: the challenge for physical retail,” The Drum, 20 August 2021.
 Dani Cushion, “Rethinking Omni: Breaking Down Sales Channel Silos,” Advertising Week 360, August 2020.
 Suzanne Kapner, “Should Retailers Split E-Commerce From Stores? A High-Level Debate,” The Wall Street Journal, 29 December 2021.
 Ben Unglesbee, “Macy’s rejects e-commerce spinoff as it looks to build on digital growth,” Retail Dive, 22 February 2022.
 Sean Ashcroft, “Omnichannel is inventory management challenge for retail,” Supply Chain Digital, 7 February 2022.