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Operating model transformation cross-channel retailers: theory and practice

What are the key issues a retailer has to address in the operating model to achieve successful cross-channel transformation? Below we have listed some of our believes against the outcomes of the European Cross Channel retail research conducted by BearingPoint in 2012.

In conclusion, one could say there is a vast amount of work to be done in order to build competitive cross-channel capabilities in European retail companies. Despite the recession, many retail companies are investing substantially in cross-channel capabilities.


Strategy
What is the impact? What European retailers do?
To create a competitive cross-channel retail organisation, the strategy needs to address all aspects of the value chain, and systematically introduce innovative cross-channel concepts.
  • «Almost half of the EU retail companies say they address customer segments differently across channels»
  • «Only one third of European retail companies have a companywide cross-channel strategy»
  • «42% of the European retail companies state that they find it important to analyse costs and revenues carefully, to keep costs under control and to selectively generate new services or enter new markets. Only 19% state that keeping costs under control is their most important goal.»

Formula design
What is the impact? What European retailers do?
Formula design gets more extended. All channels are an integral part of the formula as the consumer experiences it.
  • «More than half of EU retail companies say they have harmonised prices on all channels»

Processes
What is the impact? What European retailers do?
Key complication in the processes is that inventory and orders are not channel or store-specific anymore. Items bought in one channel might be picked up in another and returned in a third.
  • «27% say that closed-loop feedback of sell-through/ order management/ merchandise planning is already realised»
  • «Only 17 % of the respondents offer multiple order/ pick-up/ delivery options»
  • «Most companies have a mixed mode in cross-channel fulfilment, a quarter does not have cross-channel capabilities at all»

Organisation
What is the impact? What European retailers do?
To harness the innovative power and local execution power of the world outside the retail company, a network of partners might be required that are much looser organised than a classic top down retail organisation. These partner networks used to include franchisees and large suppliers. They might now be extended to local suppliers, local individuals who perform services, social communities, key persons in social communities, key customers, IT partners and media partners.
  • «Almost half of the retail companies state their management structure is decentralized and participatory, thus encouraging many organisation members to be involved»
  • «Only 7% of European retail companies have equipped their stores/associates with mobile technology: 45% expect to implement this within the next 3 years»

Systems
What is the impact? What European retailers do?
Technology is key to some aspects of the cross-channel transformation. The heart of the organization IT  will be affected as business  cannot be based on regional/ outlet-based processes only, but need to move towards customer/ order-based processes.To create a consistent customer experience, information about this customer should be available on all interaction points (360° view of the customer).Also specific capabilities might be needed for direct consumer interaction such as e-commerce suites, social on-line and in-store automation for consumers.
  • «Only 15% of the European retailers state that they are currently satisfied with their IT landscape in terms of supporting cross-channel retailing»
  • «33% of European retail companies synchronise customer information across all channels»

Source of the citations: «C3 Retail – Cross-Channel- Commerce in Retail Business», 2012, BearingPoint

Read more about the transformation in the recent point of view: Growth strategy, Cross Channel Retail

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