These days, deploying omnichannel technology is only half the battle. It’s what brands do with that technology that really matters.
That’s the big-picture takeaway from L2’s Omnichannel 2018 report, which identifies 112 brands and retailers as leaders (9 percent), laggards (55 percent), store-first (14 percent) or e-commerce-focused (22 percent). Quadrants such as store-first (J. C. Penney, L. L. Bean, Target) or e-commerce-focused (Bloomingdale’s, Nike, The North Face) aren’t disparaging, per se, but rather speak to the retailer’s primary strategy.
Lululemon Athletica stands out as a notable example of a company innovating with technology but still falling short of leader status. One of the many laggards, the activewear retailer landed the “Best Retail RFID Implementation” award at the RFID Journal Live 2017 conference last year. The designation calls out a retailer whose deployment best leverages RFID to transform store operations or optimize the supply chain. In particular, the award recognized how Lululemon uses RFID to make significant strides with inventory accuracy, all as part of offering a seamless customer experience.
And yet that’s still not enough to stand out as an omnichannel leader, according to L2 senior associate Evan Bakker, who said that Lululemon’s overall brand performance shows that it’s “still iterating.” While it’s good that the yoga-centric retailer is using RFID to tighten up merchandise planning and availability and can better trace the flow of goods so that associates can locate products and customers can know what’s available, Lululemon hasn’t yet taken the step of fully translating that omnichannel investment to its website. Pointing one channel to another is a key hallmark of true omnichannel performance, he said. “It’s one thing to have the technology and to innovate but a completely different thing to distribute that tech throughout the organization and impact the entire customer journey,” Bakker added.
For example, though the Lulu site displays the number of size/color SKUs in stock at a nearby store, there is for the moment no way to purchase online and pick up at the store, or even reserve the product for in-store try-on.
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A closer look at the companies that receive L2’s “omnichannel leaders” designation reveals a compelling truth. More than half of the 10 leaders are big-box or department stores: Argos, Bed Bath & Beyond, Best Buy, Kohl’s, Macy’s, Neiman Marcus, Nordstrom, Staples. That’s because they were “forced” early on to pivot as consumer behavior evolved, and to reconcile their massive store footprints and investments, Bakker explained.
Leaders like Macy’s execute their omnichannel investments across the entire path to purchase. For example, the department store company offers “robust” features such as product search from the store locator page and filtering search results by in-store pick-up availability.
E-commerce checkout often is where the seamless omnichannel experience falters. It can be memorably cumbersome, requiring too many clicks or smartphone taps, too many boxes to fill out—and hitting the backspace to revisit a previous page can sometimes require the shopper to start from scratch. Most brands—even the omnichannel leaders—don’t execute well at checkout, Bakker noted.
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“When it’s time to pay, do brands give you the ability to switch from shipping to store pickup or vice versa?” he said. Though it’s easy to assume that shoppers would know precisely what they want by that point in the process, customers are changing their minds at every stage of the conversion funnel. And because hopping from one online retail platform to another is so easy, brands that don’t offer the option of updating fulfillment options at checkout are missing an important opportunity. A fumble at checkout could mean losing customers right at the end line.
For the 2018 report, L2 considered for the first time how brands leverage digital marketing and social media platforms to “elicit omnichannel behaviors” such as driving traffic to physical stores, according Bakker. Even a “laggard” such as Urban Outfitters is performing well in digital, creating a standalone Instagram account for its Los Angeles flagship (@Space15twenty), which often doubles as an event space that draws experience-hungry Millennial crowds. As of press time, the store has hosted a dance party and a live performance in just the past week, and currently is promoting a collage workshop taking place on Feb. 17 -18 for arts-and-crafts-minded shoppers.
“We did see brands categorized as laggards still doing great things by calling out stores in email or on social,” Bakker said. “Some will showcase a thoughtful strategy in email with a store-specific campaign.” Reinventing brick and mortar as a destination and experience center, as Urban Outfitters’ L.A. flagship has done, can help to reverse the tide of dwindling foot traffic while repositioning stores as an important asset in the overarching retail strategy.
Overall, fashion companies are overrepresented among the laggards, which includes brands ranging from adidas and Ann Taylor, to Gap and Gucci, to Steve Madden, Tommy Hilfiger, Under Armour and Zara. The good news, however, is that while virtually all apparel brands received laggard classification in last year’s report, L2 has observed measurable improvement in omnichannel capabilities for a number of fashion retailers. Louis Vuitton, for instance, advanced to e-commerce-focused, though it’s using its website to highlight its iconic stores with high-quality photos as well as store-specific offerings.
One of the simplest but most important moves apparel brands have made between L2’s 2017 and 2018 reports is offering the shipping options that customers now expect, such as next-day and second-day delivery.
For years, fashion brands held off on tech investments, relying instead on scarcity and exclusivity to appeal to customers. “Now that the entire landscape accepts omnichannel as reality—as well as selling on Amazon—the apparel category is at a crossroads,” Bakker explained. That’s leading some brands to double down on being the quintessentially hard-to-find product, only available in a SoHo boutique, for example. For everyone else, it’s adapt or die.
Along those lines, Bakker said that while this pervasive notion of a retail apocalypse is valid, it’s also far overblown. “Stores are still going to be essential destinations, especially for the brands that remain the most competitive,” he said, adding that the industry will experience a “separating of the wheat from chaff.”