What does omnichannel retail really mean today? - SmartBrief

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What does omnichannel retail really mean today?

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Target Drive Up -- What does omnichannel retail really mean today?


Omnichannel retail is perhaps the most overused phrase in the retail industry — but it’s also perhaps the most unavoidable. For years, omnichannel retail represented something aspirational that retailers were striving for. However, today, after two years of pandemic-driven lockdowns and consumer shifts, the reality of omnichannel retail is here.

Those who are able to keep up with the ever-quickening delivery race and bring a full omnichannel cycle to their shopping experience are the ones who will be poised to succeed.

The delivery race gets tighter

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

Grocery retailer Albertsons and DoorDash are taking speedy delivery a step further. The two companies teamed to offer shoppers in more than 20 US cities grocery delivery 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 from over 6,300 stores nationwide in a new partnership with Target-owned Shipt.

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

Even smaller retailers can’t avoid entering the delivery race, particularly in the grocery space. Regional grocery chain Lunds & Byerlys, like Walgreens, looked to Shipt to expand its delivery reach. The companies’ partnership will allow the retailer to double its delivery order capacity and shrink its delivery time slot to a one-hour window, Lunds & Byerlys’ E-commerce Director Jenny Pearson said.

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

The delivery race is even reaching the most rural customers in today’s omnichannel retail reality. Amazon is recruiting small mom-and-pop florists, restaurants and other businesses for help with last-mile delivery in rural parts of the US. Getting packages to customers in those areas can be costly and complicated, but rural shoppers have grown to expect quicker delivery times for their online purchases, just like their suburban and urban counterparts.

But the delivery race doesn’t just refer to e-commerce packages being delivered to consumers’ homes. In today’s omnichannel reality, e-commerce fulfillment happens even at brick-and-mortar stores.

Omnichannel experience finally penetrates brick-and-mortar

It has been a long time coming, but omnichannel retail has finally penetrated the brick-and-mortar store. There were many stops and starts leading up to 2020, but the pandemic put retailers in a position where they had no choice but to figure out how to bring online orders and fulfillment into their physical spaces.

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

Target used the pandemic as an opportunity to launch and grow its Drive Up and buy-online-pickup-in-store services, and the retailer plans to invest up to $5 billion this year, in part to continue improving its digital shopping features and fulfillment services. Among the improvements is the addition of merchandise returns and Starbucks orders to Drive Up services. And the retailer is even testing nail-painting robots at some of its stores.

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

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

“We’ll continue to test, learn and make changes based on what our customers tell us,” Walmart executive Alvis Washington said of the format. “As we do that, we’ll quickly adjust and deliver an even better, more engaging experience in 2022 and beyond. After all, when customers choose to shop in-store with us, we want them to feel wowed and inspired — and that their time was well spent.”

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

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

“The companies that have gotten much more sophisticated about the way in which they combine those experiences for consumers, how they use the stores to do fulfillment, how they use the stores to create engagement opportunities, how they use online to drive foot traffic and vice versa…the sophisticated operators that move seamlessly between online and using the store, I think they’ve got a lot of opportunity,” Shay told CNBC.