In the dynamic landscape of modern commerce, omnichannel has emerged as a guiding principle for retailers seeking to thrive in an increasingly digital world. But what exactly does omnichannel commerce entail, and why has it become such a pivotal strategy for retail and consumer packaged goods (CPG) companies? In this blog we will explore the multifaceted nature of omnichannel commerce, its profound impact on the retail industry, the technological trends shaping its evolution and the essential considerations for leaders embarking on the omnichannel journey.

What is omnichannel commerce and why is it gaining relevance?

At its core, omnichannel commerce represents the seamless integration of various channels through which a retailer interacts with its customers. It goes beyond mere multi-channel retailing by ensuring a consistent and unified experience across all touchpoints – whether online, in-store, via mobile apps or through other digital platforms. The hallmark of omnichannel commerce lies in its ability to synchronize data and operations, enabling customers to transition effortlessly between channels while retaining continuity in their shopping journey. According to Forbes, 90% of customers expect their interactions to be consistent across all channels

Consider a scenario where a customer begins browsing products on a retailer's website, adds items to their cart and later decides to visit a physical store to view the product and finalize their purchase. With an effective omnichannel strategy in place, the customer's online cart will seamlessly transition into the in-store environment, where store associates can access the same information and assist the customer in completing their transaction. Past interactions and purchase history are integrated, allowing for personalized recommendations and promotions tailored to the individual customer's preferences. The associate at the point of sale will also have visibility to drive the right conversations with the customer.

Reasons why retail and CPG companies are finding it beneficial:

In recent years, omnichannel commerce has emerged as a strategic imperative for retailers and CPG companies alike, driven by a coming together of factors that have reshaped consumer behavior and market dynamics.

1. Ecommerce explosion: The exponential growth of ecommerce, fueled by advancements in technology and shifting consumer preferences, has transformed the retail landscape. With an increasing number of consumers opting to shop online, or in an app on their smart devices, retailers have recognized the need to embrace omnichannel strategies to remain competitive in the digital marketplace.
2. Maximizing physical assets: Most traditional retailers have brick-and-mortar stores and pre-existing distribution networks tuned towards a physical experience for the customer. Companies are pivoting to leverage these assets as a differentiator and using them to provide enhanced customer experiences. Examples of use cases include: buy online, pickup in-store (BOPIS), same-day delivery fulfilled from store locations, returns enabled at stores, in-store customer desks enabled to address both in-store and online purchases, booking in-store appointments via apps and more. 

   Eyewear company Warby Parker is a great example of an organization with a great omnichannel focus. They have put together an eclectic physical experience through a mix of stores, pop-up locations and even a mobile store to enable customers to try out their product while encouraging them to buy online at a very competitive price point. Both channels effortlessly complement each other.

3. Personalization and customer engagement: Delivering personalized promotions or offers now transcends digital channels. The ability for a store associate to deliver a customized promotion to the customer physically in-store based on their cart and purchase history powered by analytics, not only provides a personal shopping experience, but also drives increased engagement and loyalty, resulting in higher conversions and upsell rates. 

   For example, the luxury cosmetics company Sephora has carefully crafted a very effective omnichannel strategy that has adopted a mobile-first, customer-centric approach. Their store associates are armed with digital tools leveraging data, powered by strong analytics that help them to recognize their customers and engage with them meaningfully in store. Their online site not only sells products, but also drives traffic to the store by facilitating services.

4. Involvement of CPG companies and vendors: The synergy between retailers and CPG companies has become increasingly vital in the omnichannel era. By partnering with CPG companies on joint marketing initiatives and promotional campaigns, retailers can extend their reach and influence, while CPG companies gain access to a broader customer base. This collaborative approach strengthens brand relationships and fosters greater brand loyalty among consumers. With the advent of the online marketplace, CPG companies have unparalleled access to customers and their shopping data.
5. Extended aisle: The ability to showcase and sell more products than what is available immediately on a store shelf to a customer in store is a powerful way to protect a sale from going to the competition. In-store orders combined with promotional free delivery options make this very compelling to the customer.
6. Dropship: The ability for a vendor to fulfill an online order directly from its inventory without having to send it through a retailer’s supply chain is a very lucrative delivery option for retailers as well as CPG companies. Retailers can set up “endless aisles” quickly, giving CPG companies the ability to sell a larger assortment of products without having to go through a “full” setup of products with a retailer and also allowing retailers to operate with lower inventories. 
7. Virtual customer service: GenAI solutions like ChatGPT and Copilot elevate customer interactions and allow for the more autonomous management of various tasks such as returns, fraud assessment, order updates and recalls, which all previously needed manual support.
8. Sustainability: Integrated physical and digital channels promote responsible commerce, with initiatives like direct-to-customer (D2C) and eco-friendly packaging to reduce carbon footprints.

Technology trends shaping the omnichannel experience

The seamless integration of channels and data that defines omnichannel commerce would not be possible without the technological advancements driving its evolution. Several key trends are shaping the omnichannel experience and empowering retailers to deliver unparalleled customer experiences:

1. Headless or composable architectures: By going headless, commerce platforms can leverage the same underlying business logic to drive multiple experiences for the customer (.com, mobile app, in-store kiosk, point of sale, customer service desk, associate app, etc.). This drives consistency in presented information. An example of this would be the inventory levels of a product reflecting the same information to a customer viewing it on the app as the inventory manager sitting at corporate viewing it on their replenishment screens or a store associate checking inventory on their handheld for an enquiring customer. The capabilities are further extended by leveraging composable commerce principles where system designers will choose or “compose” the right components to form the system depending on the preferred set of business functions, improving speed to market.
2. Cloud computing: Cloud computing has revolutionized the way retailers manage their IT infrastructure and deliver services to customers. With cloud-based solutions, retailers can scale their operations dynamically, respond to fluctuating demand and ensure high availability and reliability across all channels. Cloud computing also provides the agility and scalability needed to support omnichannel commerce, enabling retailers to adapt quickly to changing market conditions and customer expectations.
3. Master Data Management (MDM): Robust master data management (MDM) capabilities are essential for maintaining accurate and consistent data across all channels and touchpoints. MDM solutions enable retailers to harmonize and synchronize product information, customer data, vendor information, inventory levels and other critical data elements, ensuring a unified view of the business, maintaining a single view of the truth (SVoT) and seamlessly integrating across channels.
4. Artificial Intelligence (AI) and Machine Learning (ML): AI and ML technologies are transforming every aspect of retail operations, from personalized recommendations and predictive analytics to virtual customer service and fraud detection. By harnessing the power of AI and ML, retailers can gain deeper insights into customer behavior, automate repetitive tasks and deliver more relevant and personalized experiences to customers across all channels. For example, AI can assess customer behavior across multiple shopping channels and drive recommendations in real-time, while the customer is in-store or on the app or .com. Coupling this with enabled store associates, as Warby Parker does, further elevates the in-store customer engagement. AI also can support operations by driving product information quality, and summarizing ratings and reviews in a meaningful way.
5. Social media and influencer marketing: Social media platforms have emerged as powerful channels for engaging with customers and driving sales. Retailers are increasingly leveraging social media platforms to promote their products, interact with customers and build brand loyalty. Social media is quickly transforming as a new channel that drives commerce directly and influencer marketing, in particular, has become a dominant strategy for brands to reach new audiences and amplify their message through trusted voices and personalities.
6. Enhanced cybersecurity: As omnichannel commerce involves the exchange of sensitive customer data and financial transactions across multiple channels, cybersecurity has become a top priority for retailers. Advanced security solutions, including encryption, multi-factor authentication and real-time threat detection, are essential for protecting customer information and ensuring the integrity and security of transactions.
7. Payment solutions and additional services: Innovative payment options such as subscription models, integrated financing and integrated insurance or warrantees enhance the omnichannel shopping experience, reduce friction and increase a customer’s propensity to engage and transact.

Key considerations for leaders implementing omnichannel

Implementing an effective omnichannel strategy requires careful planning, execution and ongoing optimization. Here are some key considerations for leaders embarking on the omnichannel journey:

1. Vision and strategy: Develop a clear vision and strategy for omnichannel commerce that aligns with your business objectives and customer needs. Define your goals, identify key success metrics and establish a roadmap for implementation and execution.
2. Customer-centric approach: Put the customer at the center of your omnichannel strategy. Know where to find them. Understand their preferences, behaviors and expectations across different channels, and tailor your offerings and experiences to meet their needs effectively.
3. Foundational elements: Establish robust foundational elements, including master data management, technical infrastructure and operational processes, to support omnichannel operations. Ensure data accuracy, consistency and accessibility across all channels and touchpoints.
4. Assess your technical debt. Do you have debilitatingly monolithic systems? Can your store inventory management system cater to concurrent access needs? Do you have systems that are black boxes to you? Are there complex business processes that are being managed manually? Having a clear path for such challenges should be integral to your strategy
5. Harmonization and collaboration: Foster collaboration and alignment across internal departments and functions to support the omnichannel initiative. Break down silos, encourage cross-functional collaboration and ensure that all stakeholders are aligned with the overarching goals and objectives.
6. Technology partner selection: Choose the right technology partners and vendors with the expertise, capabilities and track record to support your omnichannel strategy. Evaluate potential partners based on their technological capabilities, industry experience and cultural fit, and ensure that they can provide the necessary support and guidance throughout the implementation process. Gain clarity on roles that you will hire and roles that you will contract.
7. Continuous improvement and optimization: Implementing omnichannel commerce is an ongoing process that requires continuous improvement and optimization. Monitor key performance indicators, gather feedback from customers and iterate on your strategy to ensure its effectiveness and relevance in a rapidly evolving market.

How HCLTech is helping enterprises to enable an omnichannel experience

As retailers and CPG companies navigate the complexities of omnichannel commerce, partnering with a trusted technology provider can make all the difference. HCLTech is a leading global technology company with expertise in enabling omnichannel excellence for enterprises across industries.

With advanced AI and ML technologies, data analytics capabilities and industry expertise, HCLTech is helping organizations to optimize their omnichannel operations, deliver personalized experiences to customers and drive business growth. From strategic consulting and solution design to implementation and support, HCLTech provides end-to-end services and support to help organizations succeed in the omnichannel era.

Omnichannel commerce represents a paradigm shift in the way retailers engage with customers and conduct business. By seamlessly integrating various channels, leveraging advanced technologies and adopting a customer-centric approach, retailers can create differentiated experiences that drive engagement, loyalty and growth.

As the retail industry continues to evolve, organizations that embrace omnichannel commerce and invest in the necessary technologies and capabilities will be well-positioned to thrive in the digital age. By partnering with experienced providers like HCLTech and following best practices for implementation and execution, retailers can unlock new opportunities, differentiate themselves in the market and deliver exceptional value to customers across all touchpoints. The future of commerce in retail is omnichannel – are you ready to embrace it?