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Omni-channel Retailing – A Must-Have Approach for Apparel Merchandising

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Author: Md. Khalilur Rahman Khan  Former Assistant Professor

Bangladesh University of Business and Technology  / Email: khalilbutex@gmail.com

Introduction: The Internet has revolutionized social interactions and behavior, resulting in the creation of new communication channels and platforms. Because modern retail customers can complete a purchase by visiting a store, calling a call center, or visiting a website, the number of online shoppers has increased, and this trend has impacted conventional retail industry entities that operate through physical locations.

The operators of offline retail stores are up against strong competition from online marketplaces. As a result, store owners are focusing their efforts on incorporating advanced technologies and conforming to evolving consumer buying habits, which has not been easy for traditional retailers [1].

In channel operation, the retail environments (i.e., where and when retailing occurs) and the participating individuals (i.e., merchants and customers, among other parties) are both critical [2]. Customers are increasingly utilizing various devices anywhere and at any time to shop via many channels, which is a dynamically growing phenomena [3].

Companies are constantly adding new channels, and customers are increasingly accessing various devices anywhere and at any time. A multi-channel retail structure is predicated on the simultaneous operation of several channels and concentrates on attention to customers’ preferences for one channel over others [4].

Academic researchers, scholars, and commercial experts have established a term known as “omnichannel retailing” in recent years. Omni-channel retailing is a relatively new phenomenon in the retail world. In fact, the advancement of mobile and digital technologies, as well as their applications in the retail business, has propelled in omni-channel retailing [4].

Omnichannel retailing is an approach that aims to serve clients when and how they want [5]. Consumers in an omni-channel ecosystem don’t rely on just one channel, but combine multiple channels from different businesses throughout a single shopping experience [4]. Companies are starting to realize that the industry has shifted and also that consumers are omnichannel by inclination, meaning they interact with the company through several channels. As a result, companies must strengthen their seamless presence [6].

One of the most dominant sectors of the global economy is the fashion apparel industry. This sector is considered one of the main retail industries [2], as it is distinguished by short product lifecycles, high market volatility, low demand predictability, and a high proportion of impulse purchases. Clothing retailers must provide consumers with a seamless shopping experience [7].

In this article, it is attempted to review the basic understanding and significance of omnichannel channel retailing in the context of fashion apparel industry.

Differentiation among Single-, Multi-, Cross-, and Omni-Channel Retailing

The exploitation of a single channel to contact customers is referred to as a single channel retailing approach; the options to operate in a physical channel exclude the virtual channel, and vice versa [8].
Multi-Channel Retailing refers to the activities associated in selling goods or services via several channels, or across all channels, where the customer cannot trigger channel interaction and/or the retailer does not manage channel integration [3].

Cross-Channel Retailing refers to the actions engaged in selling goods or services across multiple channels, or all widespread channels, in which the customer can initiate partial channel interaction and/or the retailer regulates partial channel integration. As a result, a Cross-Channel Retailer sells items or services across more than one channel or all widely used channel, with partial channel interaction triggered by the customer and/or partial channel integration operated by the retailer [3].

Omni-Channel Retailing includes all the steps involved in selling goods or services throughout all widespread channels, where the customer can initiate full channel interaction and/or the retailer facilitates full channel integration. As a result, an Omnichannel Stores offer goods or services throughout all common channels (as depicted in Figure 1), with the customer able to initiate full channel engagement and/or the retailer managing full channel integration [3].

Figure-1. Different Types of Retailing Channel [9].

Significance of Omni-channel Retailing

Although multi-channel retailing has been doing this for a long time, it has a number of shortcomings. Multi-channel retailing is not only costly (several inventories, redundant supply chain assets, etc.), but it also no longer resembles how today’s shoppers purchase, necessitating new forms of retail channel systems.

The transition from a multi-channel to an omni-channel business model is currently the hottest subject in fashion retail [10]. In today’s digital age, omni-channel has transformed the conventional separate paths to purchase into a seamless universal purchase model, making it a game changer for the retail operation.

Many enterprises are discarding multichannel in favor of a much more integrated strategy (i.e., omnichannel) in order to have a competitive edge by unifying and optimizing various channels, resulting in a unique experience for the customer [6]. With the implementation of the omni-channel model, the boundary between online and offline purchasing tends to dissolve, converting the retail industry into a showroom without walls [2].

Some customers don’t know whether they prefer to buy apparel online or in stores, while some do both. Even after undertaking internet research, some customers are more likely to purchase things offline. Some customers choose a shopping mall since it is a place where they may purchase items while also enjoying numerous sorts of recreation.

As a result, buyers can be divided into one of three groups based on how they finish their purchase: i) the RTB (Research, Testing, and Buying) client starts by searching online, then visits a physical store to inspect the product, and finally completes the purchase online; ii) the ROPO (Research Online, Purchases Offline) client begins by searching online but completes the purchase in a brick and mortar store; and iii) the showroom customer begins by searching in physical stores but completes the purchase online [6].

According to a report, omnichannel shoppers now account for one out of every three shopping engagements (shown in figure-2). More than 60% of shopping journeys now include a digital component for research or transaction, with this percentage expected to increase at three times the rate of in-store sales about 40% of purchases are still performed in physical locations without online research [11].

Figure-2: Breakdown of shopping journey in apparel [11].
Image Courtesy & Source: www.mckinsey.com
This implies that clothing retailers must provide consumers with a seamless shopping experience in which they can search for products online, compare the prices on their mobile devices, try things on in stores, purchase through any of these three channels, and have the product delivered to their home or picked up from a store or another convenient location [7].

Indeed, the problem of the ROPO effect (Research Online, Purchase Offline) may be effectively solved using an omnichannel strategy. Furthermore, omnichannel retailing provides significant benefits such as value co-creation, customer satisfaction, greater sales, customer loyalty, and personalization.

Omni-channel Retailing and Supply Chain

As a result of the transition to an omni-channel strategy, the traditional fashion supply chain must play its game — becoming faster, more agile, responsive, accurate, optimized, and innovative. Previously independent channels must now converge into a single channel that can deliver items, facilitate sales, and enable returns – all while maintaining complete visibility and control at a cost structure that is sustainable [10].

The “ability to promise” an exact delivery date is done on the basis of quantity and location. Integration in omnichannel retailing also gives retailers information into their whole supply chain inventory, which can help them lower total inventory levels, avoid stockouts, and cut delivery times. If such consumer information exists at any point throughout the supply chain, it will be easier to make an accurate capability to offer. Consequently, it is feasible to capitalize on what the client expects at the exact time and place [12].

Supply chain and logistics will, in fact, be a significant differentiator for omni-channel fashion retailing success. Accurate and real-time end-to-end inventory; lean warehouse operations for e-commerce orders; adapted retail operations for omni-channel product flows; optimized downstream delivery; efficient and leveraged return flows are all requirements.

Omni-channel Retailing in Apparel Industry

Retailers of apparel and fashion are dealing with a new type of customer. They look at things on the website, read reviews on social media, compare costs on online marketplaces, and purchase it in the physical stores. A brand’s future is dismal if it isn’t available on any of these channels. In fact, with the help of Omni channel retailing, an apparel retailer can provide customers with a 360° view of their purchases across all channels, whereas with multi-channel retailing, customers can only choose from a limited number of channels [13].

A clothing company, manufacturer, or retailer is in a better position if it can sense what a client is more likely to buy (in terms of size, fabric, color, quantity, and so on) as well as how they are more prone to shop (via whatever channel) [12].

Many clothes fashion items are seasonal and have a short life span. Retailers aim to clear their inventories fast as the seasons change while still selling things at full price. The reactions of fashion items to price changes and promotions will differ. While demand for some products rises quickly in response to a significant discount, demand for others rises only when the price is adjusted at an optimal level.

Retailers in the fashion industry require a model that is tailored in to the best markdown techniques, which might vary greatly from product to product. Retailers will never be able to anticipate these price tactics for seasonal inventory without a comprehensive omnichannel approach; rather, they will be left with fringe sizes and styles, compelling them to get rid of dead inventory [14].

Apparel merchants also have increasingly difficult options in terms of inventory assortment and allocation. For example, a single jacket may be available in seven sizes and three colors, resulting in 21 distinct SKUs. If a business has 100 stores and 500 styles in a few colors and sizes, they must be able to make significant decisions based on millions of conceivable combinations on a regular basis in an ever-changing environment. It is impossible to efficiently calculate demand, manage inventory, assortment, prices, promotions, and purchase orders without an integrated real-time solution [14].

Cue Clothing Co., an Australian clothing brand, is a real-world example of omnichannel implementation. It makes use of consumer data to give customers a seamless experience throughout all touchpoints. Whether in-store, online, via customer care, live chat, or any other channel, any team member can know who the consumer is, their purchase record, shopping habits, and tastes.

Data collecting is also a top priority for the brand. They require customers to create an account before adding items to their shopping cart, laying the groundwork for follow-up activities such as cart abandonment emails, retargeting, and other strategies [15].

Finally, because clothing consumer buying behavior has shifted as a result of technological advancements, future apparel merchandising research in the area of omnichannel is expected to be highly valued. As a result, apparel makers and retailers must begin immediately by integrating their many business activities into a unified “omni-channel” strategy. Until then, retailers will remain one step behind their customers — and competitors — that have already caught on to the omnichannel model.

1. Amarnath Nagula, Jiawei Liu, Obstacles in transitioning towards omnichannel retailing: A dynamic capability perspective, January 2020. Retrieved from https://www.diva-portal.org/smash/get/diva2:1389939/FULLTEXT01.pdf
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7. Tatiana Teplova , Omnichannel: New buzzword for clothing merchants, Feb 2015. https://www.fibre2fashion.com/industry-article/7517/omnichannel-new-buzzword-for-clothing-merchants
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