The Retail Buzzword of the Year

 | Dec 31, 2012 | 4:30 PM EST  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

sks

,

jwn

Omnichannel has to be the retail buzzword of 2012. Funny, for as often as retailers refer to the word, not many outside the industry seem to know what it means. If you Google it, you'll find Wikipedia explains omnichannel as a "seamless approach to the consumer experience through all available shopping channels, i.e., mobile internet devices, computers, bricks-and-mortar, television, catalog, and so on."

Sounds simple, right? Quite the opposite.

Integrating in-store and online takes years, vision and plenty of loot. Don't forget, we are talking about the seamlessly merging inventory, systems, returns, shipping, pricing and customer service. 

A recent episode of retail therapy at Saks (SKS) sums up the importance of this buzzword -- and why it is not going away any time soon. I purchased an item at the New York flagship store the day before Thanksgiving. There were plenty of sales, but I am a Saks sales associate's dream and fell for a full-priced item. The sales associate assured me this item would not go on sale any time soon. Fast-forward several weeks later, I see the item 60% off at Saks online. Annoyed, I pull up Saks' online chat and explain my issue. The response? Unfortunately, the stores do not honor a sales price adjustment; online and stores are two separate entities.

What? Wait a minute. What happened to omnichannel? Management mentioned it no less than 10 time on the third-quarter conference call.

I am not picking on Saks, but this illustrates the urgency for integration as multichannel consumers spend well in excess of exclusive-channel shoppers. Saks has started the omnichannel process, but it will take place in a phased approach through 2016. The problem is that customers, like myself, may get frustrated along the way and seek alternatives. (Note: As of the end of last year, Saks no longer breaks out dotcom sales.) 

That brings me to Nordstrom (JWN), the happy medium between Macy's (M) and Neiman Marcus/Saks. Nordstrom was the forward thinker in the group and as early as 2009 began integrating online and offline inventories. The company is focused on making omnichannel the real thing and will spend 30% of capital expenditure ($140 million) on ecommerce this year. Investments including HauteLook and a mobile point-of-sale rollout should keep JWN well ahead of the pack. 

And just to be sure, I tested out the same scenario on Nordstrom.com. The response? There is a price difference occasionally, though they say they do their best to make sure prices are the same in-store and online. Though it does happen, they say they are happy to honor one another's prices. Now that is a customer-friendly response. (Note: JWN does break out online sales, which increased 38% last quarter.)

Columnist Conversations

Kass:
Whirlybird Janet Yellin lowers LOCO to a sell.
Conclusion It's the last week of the month in the swing of earnings season (full list below) and that means da...
TWTR is trading $37.89, down 0.7% with IV30™ up 3.5%. This is an earnings preview note surrounding the ...
Cummins is under its third straight day of heavy distribution. On Thursday CMI fell over 1.5% on its he...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.