Retail’s Omnichannel omnichallengeCanadian retailers share their perspectives in a joint survey* by Deloitte and Tulip Retail

* Based on 162 Canadian retail leaders who responded to a survey in early 2015.

Newsflash: A storefront is still critical On the consumers’ path to purchase, the decision

to shop traditionally or digitally must be their own.

While the digital age is upon us, respondents to our

survey confirm the in-store experience remains an

integral part of their business revenue. About 70%

say that more than 50% of their sales come from

their physical store.

Let’s get physical To accommodate the consumers’ changing path

to purchase, retailers are reassessing their physical

network to enhance their store footprint, appeal

to local trade areas and improve their distribution

channels. Still, 30% of respondents wish their

organization would go further in improving their supply

chain to enable a ship-from-store option for customers.

Retailers are also investing more in customers...

The loyal treatment Canadian retailers are focusing on driving customer

traffic to their stores and building long-term

relationships for sustainable growth in all channels.

70% of survey respondents have loyalty programs,

and 40% of those plan to spend more on these

programs over the next 12 months.

But there’s more to becoming

Omnichannel...

Omnichannel’s bumpy road aheadRetailers have been taking steps – or, at least,

thinking about taking them – to adapt to the changing

business reality. Like any journey into uncharted

territory, the path isn’t clear. Some retailers are also

struggling with a lack of alignment between their

strategy and the structures and processes they need

to make Omnichannel happen.

And it starts at the top...

The first challenge: who’s in charge here? 33% of survey respondents say Operations makes their Omnichannel decisions

19% say it’s IT

14% say Marketing

13% say Strategy

12% say Digital/eCommerce

Retailers need to pay close attention to how

their Omnichannel structure is affecting their

customers’ experience...

Clear ownership matters Omnichannel decisions are made by different

departments in different companies. It’s important

that a solid governance structure and stakeholders

from across the organization are identified and

accountable. A lack of clear ownership can lead to

cross-functional confusion, which splinters effort

and slows progress.

With leadership in place, what comes next?

Easy things first: measuring sales While determining store performance by absolute sales is

still the preferred scale by far, more retailers are beginning

to review each channel’s sales, and how they align to the

Omnichannel strategy, as the best indicator of overall health.

Here’s how they measure up:• 35% use absolute sales• 20% total channel sales, including mobile and eCommerce • 16% sales per square foot• 14% conversion rate

• 14% average basket size

But the cash register won’t keep ringing unless other

issues are addressed...

If you snooze, you lose Our survey identified many challenges to improving

Omnichannel capabilities. The top five are:

1. Budgetary constraints

2. Supply chain operations

3. Required IT investments

4. Resourcing limitations

5. Lack of marketing effectiveness

And then there are the people on the front lines...

Retailers expect more of sales associates More than 90%* of customers leave without converting

when they can’t find the right person to help them.

Retailers know the floor staff have to do more – way more –

than sell a product. Of the survey respondents:

• 62% say the role of the associate is to build long-term

customer relationships

• 61% say they should give advice and recommendations

• 54% say they should provide personalized services

But they need to give more support to their associates...* TimeTrade, Retail reality check

Power to the frontline people Less than 40% of retailers who completed the

survey have provided their sales associates with

the mobile technology to enable them to

effectively execute the in-store retail strategy.

Their customers increasingly have more

technology at their fingertips than their own

sales associates do...

$$

Pricing power to the people Thanks to digitization, consumers can easily compare

prices and products. This makes competitive pricing

a top threat for retailers. Close to 50% of those

surveyed, in fact, say they now compete with

Internet-only retailers through price-matching.

And that problem is only going to grow as global

online retailers accelerate the competition...

The Canadian advantage How will Canadian retailers counter the threat of

global online-only retailers to their operations? By

playing to their strengths. Here’s how our survey

respondents say they’ll work to keep Canadian

consumers spending at home:

Strategy 1 COMPETITIVE PRICING: Respondents see this as

a key driver for winning, though caution is advised,

since this strategy is only sustainable in the short

term. Retailers must consider their target market and

define a value proposition. To preserve margins they

need to deliver greater value and should consider

offering private-label products that allow for lower

price points.

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Strategy 2 KNOWLEDGEABLE IN-STORE SALES STAFF:

Over 60% believe the role of sales associates

is to build long-term customer relationships and

provide advice. Technology that augments an

associate’s training and acts as a sales floor reference

with product, customer and store information, can

go a long way to realizing this goal.

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5

Strategy 3 DEFINE A BRAND EXPERIENCE: 53% believe

that building a more recognizable brand

will enable them to stay competitive with

online-only retailers. 2

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5

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Strategy 4 INVEST IN THE STORE OF THE FUTURE:

51% are deploying in-store initiatives to

drive in-store sales, while 47% are planning

ship-from-store distribution.2

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5

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Strategy 5 LEVERAGE ANALYTICS AND CUSTOMER

RELATIONSHIP MANAGEMENT: Close to

30% of retailers are investing in analytics to

build customer loyalty, and 22% would like to

use analytics to improve business decisions.

Greater investment should be considered as other

industries realize significant returns from this

data-centric approach to decision-making. Retail

stands to benefit in the same way.

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5

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3

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Bringing it home Retailers need to work harder to provide their

customers with an integrated experience – a

combination of physical stores, eCommerce,

multiple effortless options for delivery and returns.

They can aim to differentiate themselves by using

digital and consumer analytics to build the in-store

and brand experience and to personalize service.

And the key ingredient for optimal

Omnichannel is...?

Strong leadership. At the end of the day, a

robust Omnichannel organization that delivers

a superior customer experience across all

channels is the only option for survival in the

marketplace. And the best chance for that is

with leaders who can reimagine retail with

the consumer in mind.

Contact us to learn more:

Jennifer LeeNational Retail and OmniChannel LeaderDeloittejenniferlee@deloitte.ca

Andrea NgSenior ManagerDeloitteandreang@deloitte.ca

Ali AsariaCEOTulip Retail ali@tulip.io

Marlon Rodrigues Head of MarketingTulip Retailmarlon@tulip.io

www.deloitte.ca

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