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Winning the Omni-channel Retail Race

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Demand for an omni-channel retail model, in which a customer’s experience is unified across all channels, is rising rapidly. WNS DecisionPoint(TM) conducted a study to determine the economic value added to companies which have made great strides toward the omni-channel model. The results showed that omni-channel innovators added 2.9 percentage points of economic value compared to the -.65 percentage points conceded by risk averse retailers. Embracing the omni-channel model is clearly the more profitable choice.

As a result of its profitability, omni-channel retailing is becoming standard in the retail industry. Companies who have operated via one channel (such as brick and mortar stores) or multiple yet disconnected channels (such as physical stores and a separate, unintegrated online store) will be forced reckon with omni-channel or risk losing revenue/profitability. After all, omni-channel’s objective is to enhance revenue growth and profitability amid high market saturation and rising internet penetration, therefore enhancing economic profit. This research report draws up the blueprint for delivering omni-channel’s promise of ‘one’ customer experience. Some points it highlights are:

- Executives must be advocates and leaders of this new strategy
- Technology must support robust data analytics
- Inventory must be moved efficiently and its tracking centralized
- Customers must be offered greater fulfillment options and a seamless experience across channels

To understand the challenges of omni-channel retailing and comprehend the benefits it is already bringing to certain companies, read the full report at:

http://www.wnsdecisionpoint.com/our-insights/reports/detail/43/winning-the-omni-channel-retail-race

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Winning the Omni-channel Retail Race

  1. 1. wnsdecisionpoint.com Winning the Omni-Channel Retail Race True Value of Omni-Channel Retail
  2. 2. 11 Wnsdecisionpoint.com Shift to omni-channel retailing bear fruits Omni-channel Innovators are clearly economic value accretive vs. Followers and Risk Averse omni-channel retailers Risk Averse Retailers Followers Innovators -2% 0% 2% 4% 2 2.5 3 3.5 4 4.5 5 AverageEVA Average OCC Relationship between OCC and EVA WNS DecisionPoint™ conducted a study to determine the economic value added by companies which have made great strides towards the omni-channel model. Retailers were classified into three categories basis the level of adoption of omni-channel capabilities – Innovators (highly mature omni-channel operations), Followers (moderately mature omni-channel operations) and Risk Averse (least mature omni-channel operations) In terms of economic value accretion (on an average), Innovators added 2.9 percentage points (PPs) value, and Followers reported 2.46 PPs increase while the Risk Averse conceded -0.67 PPs from their investors’ wallet  Innovators tend to generate better EBIT Margin because of higher customer retention and conversion  Followers generate higher revenue per unit of invested capital as increasing number of consumers are now being able to take advantage of omni-channel capabilities OCC – Omni-channel Coefficient (WNS proprietary technique to assess the Omni-channel Maturity); EVA – Economic Value Added To know more about OCC, please read the full report here
  3. 3. 22 Wnsdecisionpoint.com Start from the top and make goals of the restructuring clear to achieve omni- channel status 58% 18% 14% 10% 58% 17% 16% 9% 55% 17% 18% 10% 50% 21% 22% 7% 48% 22% 24% 7% Stores IT Distribution Centers Other Specialty Retail CapEx Share 2009 2010 2011 2012 2013 Organizational Restructuring  Assign omni-channel responsibilities to a designated leader  Centralize common activities (such as customer service, merchandising, loyalty management) across channels IT Responsiveness  Provide unified view of customer and inventory  Standardize data from various structured and unstructured sources  Implement advanced data analytics Strong Supply Chain Network  Optimize inventory  Offer more fulfillment options  Restructure distribution centers Adaptive Business Process  Revamp financial processes, primarily internal reporting and incentive compensation to align with new sales model  Integrate contact centers with omni-channel strategy To understand the key investment areas for achieving omni-channel status, please download the full report Omni-channel related CapEx (for specialty retailers) accounts for 45% of all investment spending after increasing 20% YoY in FY13
  4. 4. 33 Wnsdecisionpoint.com Leverage physical stores’ supply chain proficiency to gain advantage over online peers Traditional retailers' supply chain costs are roughly 3x1 lower Physical store operators generally tend to order in bulk and bear less handling costs Traditional retailers utilize economies of scale while shipping goods from distribution centers to store ~82%2 of the ordering / fulfillment / receiving decisions involve stores and 70%2 create store visits Stores present significant cross-selling and up-selling potential when a customer comes for pick up Increasing convenience of “buy online and pickup/ship from store” 1 Report by Cowen and Company, 2015 2 Investor Presentation by Hudson’s Bay Company, 2015 Read the full report in detail to know more about leveraging stores’ capabilities in omni-channel world
  5. 5. 44 Wnsdecisionpoint.com Omni-channel future – The Road Map 01  Assign omni-channel responsibilities to a designated point of contact with well-defined financial targets 02  Redesign organizational structure in such a way that channel specific requirements (mainly operational) remain intact and common activities (customer service, merchandising, marketing, loyalty management etc.) are centralized 03  Assess the readiness of the technology, SCM, real estate and shared services team to implement omni-channel capabilities (both back-end as well as front-end) by conducting internal and external benchmarking 04  Decide on the functions that need to be outsourced or retained in-house 05  Consistently track and measure the progress of omni-channel progress across channels using relevant key performance indicators and objectives
  6. 6. 55 Wnsdecisionpoint.com A credible insights hub for companies looking to transform their strategies and operations by aligning with todays realities and tomorrow’s disruptions. Email: perspectives@wnsdecisionpoint.com Website: wnsdecisionpoint.com @WNSDecisionPt WNS DecisionPoint WNS DecisionPoint

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