The rise of omni-channel supply chain and its impact on modern retail

The transformative pace and power of business dynamics is overwhelming for some. A decade ago, the brick-and-mortar factory and retail outlets were the most crucial touch points between the customers and the buyers. But today, the intelligent consumer is implicitly demanding intelligent retail solutions.

Unique consumer categories use a mix of retail channels to shop and choose products according to their lifestyle and convenience. This, perforce, is the reason why omni-channel supply chain has become one of the fastest growing distribution channels in the retail universe and has led the Indian retail market to make up for 10 per cent of the GDP and 8 per cent of the total employment.

We may broadly understand the omni-channel supply chain as a multichannel distribution network which manages multiple methods of distributing and promoting products, with a primary focus on seamless customer experience. An omni-channel network includes distribution channels such as brick-and-mortar, mobile applications and websites and shares data between them, to let the consumers conduct business through their preferred channel.

Impact on Modern Retail

The omni-channel supply chain has risen significantly with major online brands delving into retail stores. Businesses have come to realise that profitability is driven by improving customer choices and the overall shopping experience. With companies opening more product distribution channels, omni-channel supply chain has fuelled the growth of offline stores by CAGR of 11 per cent and that of online stores by a whooping CAGR of 66 per cent within the period 2012-17.

Apart from driving sales and profitability of the modern retail market in India, the omni-channel network has impacted the modern retail in the following ways:

Revenue Growth: Companies which have opted for such supply networks have seen a 30 per cent growth in the lifetime of their customers, according to a study conducted by IDC in 2018. With customers having more shopping options to choose from, it has increased demand and has resulted in sustainable revenue growth.

Decreased cost: Over time, the impact of inventory holding costs have decreased due to the interoperability of the various channels and the availability of newer technology for visibility has allowed retailers to fulfil customers from the nearest fulfilment centre. This has decreased shipping cost and improved customer satisfaction which leads into repeat purchases.

Customer experience: Omni-channel network prides itself with its focus on customer experience. The fact that customers can keep in touch with the manufacturer and get help if needed, provides them with a sense of control and self-independence. The infusion of technology has led to higher customer retention and increased sales for the retailer.

Higher reach: Improvement in the general efficiency of the business through omni-channel network, translated into a higher reach for Indian retailers across all platforms. Irrespective of the choice of network chosen by the customers, the retailers can reach them and sell their products.

Healthy Competition: As leading brands fight for the limited shelf space on the brick and mortar stores, online retail is allowing customers to explore a plethora of products and services, from all over the globe. A consumer today has an added advantage of visiting the retail stores to experience the product as well as purchase it online and have it delivered at their doorstep. The Omni channel network has thereby paved the path for healthy competition among brands.

Branding: Higher visibility in all channels has meant enrichment of brand equity. The experience extends beyond a single point of contact and the consistency of communication on various mediums has further consolidated the brand messaging and communication. Hence an omni-channel supply chain delivers much value through customer retention and an increased velocity in purchase magnitude.

Customer satisfaction is the underlying factor of their buying experience, and omni-channel supply chain satiates this utility, subsequently leading to higher profits. Serving different consumers on their preferred channels makes the process as satisfying as possible. As through omni-channel supply chain, with top-notch user experience and price uniformity, this process of integrating multiple channels has revolutionised the modern retail industry of India.