The State of

Omnichannel
Retail
Survey of Leading Retailers
Exclusive Industry Analysis by
 Table of Contents

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

I. What Omnichannel Means to Retailers. . . . . . . . . . . . . . . . . . . . 8

II. How Omnichannel is Used. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

III. Managing Sales Spikes and Returns. . . . . . . . . . . . . . . . . . . . 16

IV. Challenges and C-Level Hurdles . . . . . . . . . . . . . . . . . . . . . . . 21

Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Methodology and About the Respondents . . . . . . . . . . . . . . . . . . 25

About Multichannel Merchant . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

About Brightpearl. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

The State of Omnichannel Retail 2

Introduction
The State of Omnichannel Retail: How retailers view the value and opportunity to better serve customers,
gain insights and drive sales with effective omnichannel strategies

In a very competitive retail environment facing relentless change, at the core, the promise of omnichannel is to better serve cus-
tomers, provide a barrier-free shopping experience and enhance brand differentiation. These changes and opportunities driven by
technology have rapidly transformed the retail industry.

To gauge this transformation, Brightpearl and Multichannel Merchant have developed this unique study – The State of Omnichannel
Retail. The study analyzes how leading retailers and other key companies and brands serving consumers are implementing omni-
channel retail strategies and marketing initiatives. The study explores the powerful combination of retail and technology and how
retailers are using technology to capture and analyze data, learn deep insights about customers, and enhance the entire customer
experience.

The study also covers trends, best practices, challenges and opportunities for omnichannel customer engagement by synchronizing
and personalizing experiences across multiple channels. The information and analysis in this report will help retail and marketing
executives make more informed decisions and improve their omnichannel strategies and approaches.

The report includes insights and benchmarks on:

• What omnichannel means to retailers
• How omnichannel is being used today
• Omnichannel capabilities planned for the future
• Retailers’ aspirations for omnichannel
• Most effective retail growth initiatives
• How retailers are managing peak sales periods, fulfillment and returns
• Value of process and workflow automation

The primary information source is an exclusive survey of leading retail and brand marketing executives. In total, survey responses
from 352 executives were used to develop the analysis, including many of the top companies in retail, information technology, finan-
cial services, consumer products, education and other key sectors. Brightpearl and Multichannel Merchant thank all of the respon-
dents for their invaluable contribution to the study.

The State of Omnichannel Retail 3

Executive Summary
The retail industry has transformed quickly to embrace and implement omnichannel strategies and
technologies. Only four years ago less than half of retailers were pursuing an omnichannel approach.
Today over 90% of retailers and brands have an omnichannel strategy or a plan to invest in one soon.
As the survey data in this report show, the primary focus of omnichannel is to provide a better customer
experience. But the findings also show the industry has a long way to go to more effectively implement the
promise of omnichannel strategies and platforms. Five of the key themes and insights from the survey are
outlined in this summary:

Key Theme #1: There's a Huge Disconnect – Nearly All Retailers Have an
Omnichannel Strategy in Place, But Most Feel Their Organizations are Not
Being Effective

Ninety-one percent of retailers and brands currently have an omnichannel strategy or are planning to invest
in omnichannel technologies in the near-term. In addition, 87% of retailers see omnichannel as critical or
important to their business. But only a small segment feel they have mastered this area or even
have the right omnichannel technology. This gap is enormous.

100 91%
87%

80

60

40

20 12%
8%

0
% Retailers with an % Retailers Agree % Retailers that Have % Retailers Say They Have
Omnichannel Strategy or Omnichannel is Critical or “Mastered” Omnichannel the Right Omnichannel
Plan to invest in Omni- Very Important Technology
channel

The Omnichannel Importance vs. Execution Gap is Enormous

The interest in omnichannel is very high – as one retailer said in the survey, "It’s about survival. There is
no other way." But the execution still needs significant improvement. These findings suggest omnichannel
strategies and platforms are not being used effectively or, worse, are simply not delivering on their
promises. Many retailers, even after a number of years of implementing omnichannel, still need the right
software platform, process and education on how to be effective. These findings raise the question: Why
is the omnichannel gap so large?

The State of Omnichannel Retail 4

Executive Summary
Key Theme #2: Most Retailers Don’t Have the Right Technology to Execute Their
Omnichannel Strategies – or are Not Sure if They Do or Not

A total of 45% of retailers and brands say they either do not have the right omnichannel technology or they
feel they would benefit from additional technology platforms. Also, an additional 43% say they think they
have the right technology but that may change, which means that many may not be sure if they have the
right technology or not.

% of retailers that DO NOT have

the right technology to execute 22%
their Omnichannel strategy

% of retailers that say they would

benefit from additional 23%
Omnichannel technology

% of retailers that think they have

the right technology now but that 43%
might change

0 10 20 30 40 50

These findings raise the key question: If omnichannel is so important, then why
do retailers and brands not have the right technology platforms? To shed light on
this question, other findings from the survey suggest the following challenges
retailers and brands are facing:

• Lack of understanding about what omnichannel is and represents,

especially among C-Levels executives.
• Confusion about omnichannel capabilities and lack of agreement on basic
definitions.
• Difficulty turning customer data into usable insights.
• Effort and cost of choosing and implementing new technology.
• Integrating omnichannel systems with other marketing and media
platforms.
• Challenges integrating different selling channels, e.g., ecommerce, in-
store, marketplaces, etc.
• Other retail issues requiring attention including competition, margin
compression and, in some cases, oversupply of physical store capacity.

The State of Omnichannel Retail 5

Executive Summary
It is also important to reiterate that retailing in every channel is challenging and the industry is
undergoing a type of transition that has never been experienced before, and integrating various sales Key Insight
channels is an added challenge. Retail has been one of the most disrupted industries over the past few Only 8% of Retailers
years and the disruption will only continue. In fact, the pace of change seems to be accelerating. Say They Have Mastered
Omnichannel and 12%
Key Theme #3: The Top Three Most Effective Retail Growth Initiatives Include Believe They Have the
Right Omnichannel
Omnichannel or are Closely Related
Technology Currently

The top three key growth initiatives for retailers are: Technology is changing
the way retailers interact
1.) Providing true competitive differentiation. with their customers, and
2.) Implementing an effective omnichannel strategy. barriers between sales
3.) Opening new sales channels and markets. channels have blurred
at least in the minds of
These findings reinforce just how critical omnichannel consumers. Yet only 8%
of retailers have mastered
is to retailers and brands. The survey finds retailers
this area, and 12%
feel the top three retail initiatives most effective believe they have the right
at driving business growth are (1.) providing true technology to support their
competitive differentiation, (2.) having an effective omnichannel strategy.
omnichannel strategy, and (3.) opening new sales
channels and markets. Besides product features and
benefits, differentiation is related to providing a better customer experience, which is the core promise of
omnichannel. The third most important initiative, opening new sales channels, is also closely related to a
successful omnichannel strategy.

Key Theme #4: Over Half of Retailers Consider Their Omnichannel Approach a
“Work in Progress” – and 19% Say it’s a “Struggle” or a “Pipedream”

Fifty-five percent of retailers and brands say omnichannel is a Work in Progress – and 19% say
omnichannel is a Struggle or a Pipedream. This means a total of 74% of retailers and brands are
essentially not satisfied with their omnichannel strategy execution and progress.

The State of Omnichannel Retail 6

Executive Summary
Key Theme #5: Omnichannel Means Various Things to Different Retailers – There
May be Disagreement and Confusion within Companies

The survey asked a basic question: What does omnichannel mean to you? The response finds that
omnichannel has multiple meanings. About two-thirds of retailers and brands agree with the following
three definitions, that while related are quite distinct: (1.) Having different methods for transacting with
customers; (2.) Delivering a seamless and consistent customer experience across channels; and, (3.)
Marketing geared towards customers converting on any channel.

What Does Omnichannel Mean to Retailers?

Some retailers and brands may need to reassess their goals and come to agreement about their definitions
of what omnichannel means. The goals and definitions are likely to differ, and possibly significantly, based
on where the executives and managers sit within their organization. For some the focus is on accessing
more up-to-date or even real-time customer behavior data to inform marketing and promotional campaigns.
For finance, the focus may be on detailed profitability analysis, scrutinizing inventory patterns and digging
into sales data for forecasting. For C-Level executives omnichannel may mean entering new markets, making
pricing decisions and to inform new products and innovations. Even with these different perspectives, nearly
all team members at retailers will agree the overarching goal of omnichannel is to better serve and commu-
nicate with customers and provide the most optimized, barrier-free transaction process across all channels.
But beyond these goals, there are differences of perspective and possibly some confusion as well. Retailers
need clarity around on their omnichannel goals and opportunities.

80
67% 66%
70 64%
60

50

40

30

20

10

0
Having different methods Delivering a seamless and Marketing strategies geared
for transacting with consistent customer experience towards customers converting
customers across all channels on any channel

The complete survey results are provided in the next sections of the report.

The State of Omnichannel Retail 7

Executive Summary
I. What Omnichannel Means to Retailers
Key Insight
Today, Over 90% of
Retailers Have an
Omnichannel Strategy
Compared to Less Than
Half Only Four Years Ago

The retail industry has

transformed quickly to
embrace and implement
omnichannel strategies
and technologies. Only four
years ago less than half of
retailers were pursuing an
omnichannel approach.
Today over 90% of retailers
and brands have an
Percentage of Retailers with an Omnichannel Strategy in Place omnichannel strategy or a
plan to invest in one soon.
Survey Question: Does your company currently have an omnichannel strategy in place?

Over eight out of ten of the survey respondents say their company has an omnichannel strategy currently
in place. And 8% that do not have a strategy indicate their company has plans to invest in omnichannel
technologies. The embrace of omnichannel is not yet universal among retailers, but the industry is get-
ting close.

No, we do not have plans to implement

an omnichannel strategy 9%

No, but we’re planning to invest in 8%

omnichannel technologies

83%
Yes

The State of Omnichannel Retail 8

Most Important Retail Growth Initiatives
Survey Question: Please rank the following retail initiatives in order of most effective in driving
business growth, with 1 representing the most effective and 5 the least.

The top three most important retail growth initiatives are essentially tied to omnichannel. Offering true
competitive differentiation is considered, collectively, the most effective retail growth initiative. This is
followed by having an effective omnichannel strategy, and opening new sales channels and markets ideally
with access to new customers. Besides product features and benefits, differentiation is most often related
to seamless customer experience, which is the core promise of omnichannel. The third most important ini-
tiative, expanding new sales channels is also closely related to a successful omnichannel strategy. These
findings reinforce just how critical omnichannel is to retailers and brands.

Competitive differentiation 70%

Omnichannel retail strategy 62%

New sales channel and 61%

markets

Supply chain management 46%

New products/lines and
development
42%
Artificial intelligence
(AI)/Machine learning/ 31%
Automation of processes

0 10 20 30 40 50 60 70 80

What Omnichannel Means to Retailers

Survey Question: What does omnichannel mean to you?

Omnichannel has multiple meanings. According to the respondents, about two-thirds of retailers and brands
agree with the following three definitions: (1.) Having different methods for transacting with customers; (2.)
Delivering a seamless and consistent customer experience across channels; and (3.) Marketing geared
towards customers converting on any channel. There are many valuable aspects of omnichannel but there
is a lack of agreement around what omnichannel means. Multiple value aspects are important but this may
also mean there is disagreement within companies and possibly some confusion as well. It is important for
retailers and brands to internally discuss these issues and come to agreement on the definitions, but more
importantly their goals for omnichannel.

%
Having different methods for transacting with your customer (e.g., online, physical store, phone) 67%
Delivering a seamless and consistent customer experience across all sales channels 66%
Marketing strategies which are geared towards customers converting on any channel 64%
Processes like Click + Collect, buy in store deliver elsewhere 40%
Giving customers the ability to see all of their orders in one place 37%
Speedy delivery times 21%

The State of Omnichannel Retail 9

Secondary definitions selected by less than half of retailers are processes like Click + Collect, buy in
store and deliver elsewhere, and giving customers the ability to see all of their orders in one place.

Importance of Having an Omnichannel Strategy to Retailers Key Insight

The Top Payoff from a
Survey Question: How important is having an omnichannel strategy to your company? Successful Omnichannel
Strategy is Providing Bet-
Having an omnichannel strategy is considered very important or important by a majority of retailers. In ter Customer Service
fact, based on the survey, 42% say having an omnichannel strategy is very important, critical, and an addi-
tional 25% say it is important. While there are major
gaps in terms of goals and
Very important, critical execution, the omnichan-
42% nel promise is still very
Important
25% significant. The key payoff
from implementing omni-
Somewhat important 19% channel successfully is to
provide better customer
Not very important 7% service, according to 66%
Not at all important 6% of survey respondents.

0 10 20 30 40 50

Most Important Payoff from Successful Omnichannel Strategies

Survey Question: What do you see as the most important payoff of a successful omnichannel strategy?

While there are major gaps in terms of goals and execution, the omnichannel promise is still very significant.
The key payoff from implementing omnichannel successfully is to provide better customer service, according
to 66% of survey respondents. This is followed by increased sales and to differentiate among competitors.

That beating Amazon is rated so low as a payoff from a successful omnichannel strategy may mean a few
things. Omnichannel is more than simply an approach to competing with other ecommerce companies.
The focus of omnichannel is on serving customers more holistically across various channels. Online and
mobile, while growing very rapidly, are still only a small percentage of the total retail sales market. And it’s
not easy competing or trying to beat such a major company. In a way, Amazon’s recent investment in Whole
Foods and their experiments with physical store locations signals they see the value in selling via more
channels and are essentially developing what can be considered an omnichannel strategy.

Better customer service 66%

Increased sales 54%
Competitive differentiation 45%
Beating Amazon 7%
Other 12%

0 10 20 30 40 50 60 70 80

The State of Omnichannel Retail 10

How Retailers View Their Omnichannel Progress
Key Insight
Survey Question: Which of the following best describe how your company views omnichannel? Nearly Three Out of Four
Retailers and Brands are
Sixty-seven percent of the industry consider omnichannel to be vital or important, as noted previously, but Not Satisfied with Their
only 8% have mastered it, another 5% say they are close to nailing it, 13% say they are struggling, 6% see Omnichannel Strategy
it as a pipedream. The largest percentage, 55%, view it as a work in progress. There is a large disconnect Execution and Progress
between the importance placed on omnichannel and the execution. This raises the questions:
Fifty-five percent of
retailers and brands say
• Is the slow progress due to a lack of interest or investment from company leaders, or is there a gap in staff
omnichannel is a Work
skill sets, or a combination of these? in Progress and 19% say
• Is competition and margin compression and other retail challenges, considered to be bigger priorities today omnichannel is a Struggle
than emphasizing omnichannel? or a Pipedream. Adding
• Is this a channel sales and customer behavior data integration issue? these together finds a total
• Have technology providers over-promised? of 74% of retailers and
brands are not satisfied
with their omnichannel
progress and strategy
We’ve mastered omnichannel 8% execution.

We’re close to nailing it 5%

It’s a work in progress 55%
It’s a struggle 13%
Pipedream 6%
Not Applicable 14%

0 10 20 30 40 50 60

When considering these issues and questions

is it important to reiterate that the omnichannel
opportunity is still a relatively new development.
Consider how many years it took the retail industry
to implement and become proficient at ecommerce
as well as more recently develop an approach to
social media. It can be argued that many retailers
are still getting a handle on both ecommerce and
social media. It is also important to keep front and
center that the promise of omnichannel is a direct
response to consumer behavior and their desire to
buy the brands they trust via various channels and
formats. Retailers and brands are playing catch up
trying to stay on top of changing consumer behavior.

The State of Omnichannel Retail 11

Percentage of Retailers that Believe They Have the Right Technology to Execute
Their Omnichannel Strategy Key Insight
There is a Large Gap –
Survey Question: To what extent do you agree with the following statement about your company’s Nearly All Retailers Have
omnichannel execution? “We have the right technology to execute our omnichannel strategy.” an Omnichannel Strategy
in Place, But Most Feel
Technology is changing the way retailers interact with their customers. Yet only 12% of the survey respon- Their Organizations are
dents believe they have the right technology to support their omnichannel strategy. In addition, a total of 45% Not Being Effective
of retailers disagree either somewhat or completely that they have the right technology in place. This raises
Ninety-one percent of
the key question: If omnichannel is so important, then why do they not have the right technology platforms?
retailers and brands
currently have an
Agree completely – we have the
right omnichannel technology 12% omnichannel strategy or
are planning to invest in
Somewhat agree – we think we omnichannel technologies
have the right technology now but 43% in the near-term. In
that might change in future addition, 87% of retailers
Somewhat disagree - we would see omnichannel as
benefit from additional omni-tech etc. 23% critical or important to
their business. But only a
Completely disagree - we do not small segment (8%) feel
have the right technology in place 22% they have mastered this
to execute our omnichannel area or even have the right
strategy
omnichannel technology
0 10 20 30 40 50 (12%).

To shed light on this question, other findings from the survey suggest the following challenges retailers and
brands are facing:

• Lack of understanding about what omnichannel is and represents, especially among C-Levels executives.
• Confusion about omnichannel capabilities and lack of agreement on basic definitions.
• Difficulty turning customer data into usable insights.
• Effort and cost of choosing and implementing new technology.
• Integrating omnichannel systems with other marketing and media platforms.
• Challenges integrating different selling channels, e.g., ecommerce, in-store, marketplaces, etc.
• Other retail issues requiring attention including competition, margin compression and, in some cases,
oversupply of physical
store capacity.

It is also important to reiterate that retailing in every channel is challenging and the industry is undergoing a
type of transition that has never been experienced before, and integrating various sales channels is an add-
ed challenge. Retail has been one of the most disrupted industries over the past few years and the disrup-
tion will only continue. In fact, the pace of change seems to be accelerating.

The State of Omnichannel Retail 12

Aspirations for Omnichannel
Survey Question: What are your company’s aspirations for omnichannel?

This data table shows there are a range of aspirations for omnichannel, and there is no single consensus
area. Although over half indicate these are key aspirations for the future:

• Offering a customer loyalty scheme across all channels.

• Running discounts and promotions across channels.
• Improving ability to analyze and understand customer behavior.

%
Ability to offer a customer loyalty scheme across all your channels 57%
Ability to run discounts and promotions across channels (including reporting) 57%
Improve ability to analyze and understand customer behavior data 56%
Offer customers the ability to view their orders across all your channels in one place 48%
Add or enhance ability for two-way communication with customers 46%
Ability for customers to order online and pick up in store 35%
Ability for customers to place orders in store to be shipped/fulfilled somewhere else 31%
Ability for customers to reserve online then pay and pick up in store 30%
Ability to accept store returns of online orders 28%
Add webstores 26%
Expand from using webstores only to our own channels and services 24%
Other 7%

The table above shows the omnichannel opportunity internally for retailers is really about integrating a
number of customer service, marketing communications, sales management and fulfillment tasks enabled
by technology. The data suggests, not surprisingly, there are a number of important opportunities and issues
to a range of companies. This wide range of aspirations also speaks to the complexity in the retail industry
today with so many channels and so much data generated by these transactions.

The top three selected aspiration areas in this question are marketing and customer behavior focused.
Retailers want to generate more customer loyalty, and run more targeted and effective discount and
promotion campaigns across channels based on customer data insights. On top of these issues, consumers
are getting harder to reach and retailers and brands are in search of other effective ways to communicate,
stay connected and engage with consumers.

The State of Omnichannel Retail 13

II. How Omnichannel is Used

Retailers’ Current Omnichannel Capabilities Today – and Planned for the Future
Survey Question: Which of the following omnichannel capabilities do you currently have or plan to
implement over the next six to twelve months, or after?

The data table compares retailers’ current capabilities with what they plan to implement over the next
year and beyond. The largest percentages of retailers are currently providing cross-channel returns or ex-
changes, personalized customer communications, and unified customer account and order history across
channels. The wide range of capabilities here also illustrate the complexity of the omnichannel opportu-
nity. While there are so many aspects and value elements, to excel requires commitment and focus. It’s
hard for any company to truly master each and every key area. This makes selecting the right technology
partner that much more critical.

Plan to Plan to Plan to

Have No
Currently Implement Implement Implement
Plans to
Provide within 6 within 12 Later than
Implement
Months months 12 Months
Cross-channel returns or exchanges 38% 14% 10% 5% 33%
Personalized customer communications 37% 16% 19% 14% 14%
Unified customer account and order 33% 12% 24% 14% 17%
history across channels
Making in-store inventory visible online 28% 16% 14% 12% 30%
In-store digital receipts 27% 10% 17% 12% 34%
Click + Collect or similar 26% 14% 19% 9% 33%
Inventory as fully available to all chan- 26% 14% 21% 14% 26%
nels from one location
Delivering a seamless and consistent 25% 30% 23% 11% 11%
customer experience across all sales
channels
Marketing strategies which are geared 22% 24% 24% 18% 11%
towards customers converting on any
channel
Cross-channel loyalty rewards program 17% 17% 20% 15% 32%
Ship to anywhere (e.g. pickup lockers) 12% 14% 19% 9% 47%

The State of Omnichannel Retail 14

Sales Channels Used by Retailers
Survey Question: Which of the following sales channels does your company use?

Besides managing multiple websites, half or more of the respondents also take phone orders and have
physical stores.

Multiple websites
71%
Telephone orders
51%
Physical stores
49%
Social commerce
47%
Mobile
45%
Wholesale
44%
Marketplaces
(e.g., Amazon, eBay) 40%
Other
16%

0 10 20 30 40 50 60 70 80

The State of Omnichannel Retail 15

III. Managing Sales Spikes and Returns

Many retailers make most of their sales during peak sales periods, often leading up to and around major
holidays. These peak periods are characterized by sales spikes and often product return and exchange
spikes as well. In response to both of these types of spikes retailers often require additional staff, but these
peak periods can be better managed with automation software and more effective omnichannel strategies.

How Peak Period Sales Spikes are Managed

Survey Question: Which of the following best describes how you manage demand spikes during peak
periods (Christmas, back-to-school, Valentine’s Day, etc.) in your fulfillment operations?

Hire extra staff

53%
Forward position inventory
40%
Add fulfillment shifts
37%
Create "hot zones" for faster
processing of popular SKUs 27%
Expand carrier options
20%
Extended opening times
17%
Other
20%

0 10 20 30 40 50 60

Retailers mainly hire extra staff to manage peak period sales spikes. Forty percent say they forward
position inventory and 37% add fulfillment shifts. It is interesting to note that 70% of retailers say they
either hire extra staff (53%) or extend opening times (17%) to manage sales spikes. The right software
platform built by retail experts can alleviate some of this expense.
Other responses provided by respondents cover that this is not an issue currently or they respond with
better planning and working with manufacturers and suppliers in advance.

The State of Omnichannel Retail 16

Percentage of Sales Resulting in Returns
Survey Question: What percentage of your sales result in returns?

According to the survey respondents, on average, store returns are just under 10% and online returns
are over 11%. Even a small reduction in returns can make a meaningful positive impact on margins.
• Store Returns: 9.7%
• Online Returns: 11.4%
• Overall Returns: 12.2%

Retailer Processes to Manage Customer Returns

Survey Question: What processes do you have in place to help manage customer returns?

To help manage customer returns retailers mainly use dedicated fulfillment center staff. Only one-third of
the respondents use a specific software or technology solution or designate store staff to manage this
process. Currently the approach is staffing first. Yet the right software platform can be of help.

Dedicated fulfillment 40%

center staff

Software/technology solution 33%

(OMS, WMS, etc.)

Designated store staff 33%

Third-party logistics provider 20%
Other
17%

0 5 10 15 20 25 30 35 40

The State of Omnichannel Retail 17

Impact of Returns on the Bottom Line During Peak Periods
Survey Question: How much of a negative impact do returns have on your bottom line during peak season,
e.g., Thanksgiving to Christmas, Valentines, etc.?

The bottom line impact of returns during peak sales periods is considered to be moderately impactful. For example,
a total of 42% of the respondents say the impact is somewhat to extremely impactful. Even a modest improvement
here can positively impact profitability and save considerable staff and management time.

Extremely impactful
13%
Very impactful
3%

Somewhat impactful
26%

Not very impactful

35%

Not at all impactful

23%

0 5 10 15 20 25 30 35

The State of Omnichannel Retail 18

Returns Impact
Survey Question: Where does the returns impact come from?

The main impact from returns is the disposition of returned goods followed by the need to discount
returned product and damaged inventory.
Some of the other responses include the negative impact on cash flow, the fact that the impact may not
be tracked, and issues with customer addresses.

Disposition of returned goods

13%
Excess inventory that must then
be discounted for sale 3%
Damaged inventory
26%
Increased labor costs
35%
Increased shipping costs
35%
Other
23%

0 5 10 15 20 25 30 35 40

Percentage of Retailers that Automate Processes and Workflows

Survey Question: Do you automate some of your processes and workflows to save time and resources?

Fifty-eight percent of retailers already automate some of their processes and workflows. A majority of
retailers are focused on using systems to automate manual inventory and purchasing tasks. The pressure
to improve productivity has led
to a greater focus on the role
Somewhat of technology in creating effi-
cient retail operations. Nearly
23% one in five (19%) retailers in
the survey do not automate
Yes
No processes but instead choose
58% to handle their process manu-
19% ally often with extra staff and
extended store hours. These
retailers may be missing out

The State of Omnichannel Retail 19

Likelihood of Adopting Automation to Help Manage Peak Period Demand Spikes
Survey Question: How likely would you be to adopt automation if it allowed you to manage demand
spikes during peak periods (Christmas, back-to-school, Valentine’s Day, etc.) without taking on more
resources, i.e., extra staff?

Nineteen percent of the retailer respondents say they are extremely likely and 35% say they are very likely
to adopt automation to help manage demand spikes during peak periods. A more effective automation
platform can help retailers be more strategic by reducing the time spent on mundane tasks that create
little value.

Extremely likely
13%
Very likely
3%

Somewhat likely
26%

Not very likely

35%

Not at all likely

23%

0 5 10 15 20 25 30 35

Extra Temporary Employees Added to Handle Peak Period Demand Spikes

Survey Question: On average, how many extra temporary employees do you take on to handle demand
spikes during the peak Thanksgiving-to-Christmas period?

The average number of temporary staff added to handle demand spikes around key holidays is 98, according to
the survey respondents. The top 50% of retailers that responded to the survey say they hire an average of 190
staffers, and the top 25% hire 269.

The State of Omnichannel Retail 20

 IV. Challenges and C-Level Hurdles

The range of challenges impacting retailers and brands in relation to their omnichannel strategies and
approaches have been touched upon in the report. Directly below is a more complete ranked set of
challenges and issues impacting their omnichannel strategies. These challenges are also directly related
to hurdles in securing C-Level buy-in for omnichannel investment.

Top Omnichannel Challenges

Survey Question: What are the top three challenges related to enhancing your omnichannel strategy?

The top three challenges retailers face when considering how to enhance their omnichannel strategy are bud-
get pressure and margin compression, the ability to glean usable insights from data, and integrating different
sales channels. Following these, just under half of retailers say choosing and implementing new technology
and integrating with other marketing and media platforms are also challenges.

Budget pressure and margin compression 61%

Turning data into usable insights
58%
Integrating different selling channels e.g.,
ecommerce, in-store, marketplaces, etc. 52%
Choosing and implementing new technology 48%
Integrating with other marketing and
media platforms and campaigns 48%
Communicating the value and
need to senior management 42%
Competition from online retailers 36%
Price transparency 36%
Findings and keeping good staff 33%
High customer expectations 30%
0 10 20 30 40 50 60 70 80

That budget pressure and margin compression is considered the biggest challenge to enhancing retailers
omnichannel strategy presents a conundrum. The promise of implementing a successful omnichannel
strategy, in addition to providing a better customer experience, is that it will make retailers more efficient,
more informed with customer data and insights, and provide the ability to better merchandise and commu-
nicate with customers across channels. In short, the promise is to more effectively serve customers, drive
revenue and increase margins. Yet, the challenges impacting retailers is impacting their bottom lines and
may be holding back their efforts to invest time and resources in upgrading their omnichannel strategy.
Investment budgets are tight at many companies.

The State of Omnichannel Retail 21

Biggest C-Level Investment Approval Hurdles
Survey Question: What are your biggest hurdles to getting C-Level executive approval for
omnichannel investments?

The main hurdles to secure C-Level approval for

omnichannel investments are the challenge of proving
ROI and a lack of understanding around omnichannel,
which were both selected by 43% of the respondents.
The finding in the table above that 25% of executives
don’t understand the need for omnichannel strategies
and technology can be looked at another way: that
75% actually do understand the need. But this raises
the question again why is omnichannel still a work
in progress? To help shed light on this issue, just
consider the previous data table. The top challenge
is budget pressure and margin compression. This
is an indication that retailers have a bigger issue on
their hands and that the transformation in retailing
resulting in a very challenging business environment
is either making companies hesitant to invest more in
omnichannel or their attention is elsewhere. Yet, a more
effective omnichannel approach that an elite 8% of the
industry is experiencing is one of the solutions to this
challenging environment. Clearly, it’s also an issue that
43% of retailers say they have a challenge proving the
ROI of their planned investments.

Can’t prove ROI

43%

A lack of understanding
around omnichannel 43%
and what it represents

Budgets focused
elsewhere 39%

Executives don’t
understand need 25%

Other
14%

0 10 20 30 40 50

The State of Omnichannel Retail 22

Conclusion

The promise of omnichannel is very powerful. In fact, the omnichannel promise is a number of
opportunities and value propositions. Yet as the data in this study show, there is a very large gap in terms
of retailer implementation and execution. Over 90% of retailers and brands have an omnichannel strategy
or are planning to invest in this area soon. But only 8% of retailers feel their company has mastered
omnichannel, and only an additional 5% say they are close to mastering this area. In addition, only 12% of
retailers believe they even have the right omnichannel technology platform and partners.

The reasons for the gap are outlined in this report. One of the bigger picture issues is that retailing is
undergoing a major transformation in reaction to power shifting to consumers via online information and
competition. This transformation is the main reason why retailers are looking to omnichannel strategies
and technology in the first place. But there is a conundrum. Many retailers are experiencing sales
challenges and margin compression especially at their physical stores. It is no secret, many top retailers
are fighting for survival. These wider challenges look to be limiting investment budgets and commanding
retail leadership attention. Retailers need to invest more time and resources to effectively implement
their omnichannel strategies, but they are distracted by other issues.

There are also other factors involved more specifically related to why many of the omnichannel promises
have not been delivered yet. For one, the focus on omnichannel is still relatively new. A more basic issue
is there is disagreement and lack of understanding about what omnichannel actually is and the value
of the opportunity. For example, is omnichannel more of a marketing solution. Or is it technology for
warehouse management, fulfillment and logistics. Is it a tool for finance? Or is omnichannel not really a
solution, but an overarching strategy to integrate sales channels, which are often in silos, and provide a
more seamless shopping experience for customers?

There is more agreement about the overall goals of omnichannel, which are fairly clear: to provide a better
customer experience integrated across all channels, and to better understand customers to ultimately
drive customer loyalty and increase sales. An effective omnichannel strategy enables consistency of
message and shopping experience across all touch points. Retailers and other companies that use
multichannel sales and marketing approaches understand the power of omnichannel but are still playing
catch-up.

The State of Omnichannel Retail 23

To summarize some of the most important research findings:

• Today, over 90% of retailers have an omnichannel strategy compared to less than half only
four years ago.

• T he top three most effective retail growth initiatives include omnichannel and other closely
related strategies. The top three key growth initiatives for retailers are: (1.) Providing true
competitive differentiation; (2.) Implementing an effective omnichannel strategy; and (3.)
Opening new sales channels and markets.

•N
 early three out of four retailers and brands are not satisfied with their omnichannel
strategy execution and progress. Fifty-five percent of retailers and brands say omnichannel
is a Work in Progress and 19% say omnichannel is a Struggle or a Pipedream.

•O
 mnichannel has multiple meanings. About two-thirds of retailers and brands agree with the
following three definitions: (1.) Having different methods for transacting with customers;
(2.) Delivering a seamless and consistent customer experience across channels; and (3.)
Marketing geared towards customers converting on any channel.

• T he key payoff from implementing omnichannel successfully is to provide better customer

service, according to 66% of survey respondents. This is followed by increased sales and to
differentiate among competitors.

• The main response to customer returns is to spend more on staffing. To help manage
customer returns retailers mainly use dedicated fulfillment center staff. Only one-third of
the respondents use a specific software or technology solution or designate store staff to
manage this process.

• T he top three challenges retailers see when considering how to enhance their omnichannel
strategy are budget pressure and margin compression, gleaning usable insights from data,
and integrating different sales channels.

Rapid change in technology has left retailers and marketers playing catch up. The first part of this decade,
retailers and marketers invested in learning social media. Then they responded to the data and analytics
revolution, along with the challenges impacting many brick and mortal store business models. Only fairly
recently they began implementing omnichannel strategies.

Another key theme seen in the survey data is that retailers are still in need of assistance on how to execute
omnichannel effectively. Many need to understand best practices and insights, and what’s working in particular
around channel integration, and capturing and analyzing customer behavior. Traditional merchandising and
marketing skill sets need to be complimented with software and information systems skills.

Retailers and companies using multiple sales and marketing channels also need the ability to source
the right omnichannel software platform provider and other partners. The promise of omnichannel is very
significant. Many retailers and brands need to take the time to assess their progress, identify the gaps
and move ahead with a new commitment to their omnichannel strategy. As one retailer said in the survey,
it’s about survival.

The State of Omnichannel Retail 24

Methodology and About the Respondents
In August and September 2017, Brightpearl and Multichannel Merchant conducted a survey of leading
retailers. A total of 352 responded to the survey. The response is from an elite group representing many
of the largest retailers and brands in the world.

Respondents’ Industries

%
Retail 37%
Information Technology 13%
Financial Services and Insurance 10%
Consumer Products 7%
Education 7%
Automotive 3%
Media and Entertainment 3%
Travel and Hospitality 3%
Food and Beverage 3%
Other 13%

Total Number of Employees at Company

%
1 to 5 23%
6 to 10 13%
11 to 25 13%
26 to 50 0%
51 to 100 10%
101 to 1,000 20%
1,001 to 5,000 10%
More than 5,001 10%

Annual Company Gross Revenue

%
Under $1 million 23%
$1 million to $10 million 20%
$10 million to $50 million 7%
$50 million to $100 million 10%
$100 million to $500 million 20%
$500 million to $1 billion 7%
Over $1 billion 13%

The State of Omnichannel Retail 25

About Multichannel Merchant

Multichannel Merchant reaches key decision makers responsible for ecommerce, management, market-
ing and operations at companies that sell merchandise through multiple channels including ecommerce,
mobile, social, and catalog. Multichannel Merchant delivers original research as well as in-depth analysis
of trends and best practices, news, tactical/how-to, executive summaries, technology and supplier com-
parisons, tip sheets and resource information to help companies sell and deliver products wherever and
whenever the customer wants them – at home, work, store or other locations.

Visit us at http://www.multichannelmerchant.com

About Brightpearl

Brightpearl is a powerful-yet-simple retail management system that helps mid-sized retailers and whole-
salers expand and compete with larger rivals by streamlining sales and supply chain functions across
multiple online and offline channels. Brightpearl’s cloud-based software and services enable omnichannel
merchants to manage the heart of their business by combining purchasing, inventory management, CRM,
order processing, accounting, fulfillment, and reporting into a single reliable system. Founded in 2008 with
offices in the U.S. and UK, Brightpearl is used by more than 1,200 merchants around the world.

For more information, visit www.brightpearl.com.

Connect with Brightpearl on Twitter (@BrightpearlHQ), LinkedIn (linkedin.com/company/Brightpearl), and

Facebook (facebook.com/brightpearl).

The State of Omnichannel Retail 26