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.)