Every second year, IMPACT Commerce — Scandinavia’s leading consultancy specialising in customer experience — presents Omnichannel Index, Europe’s largest of its kind. For the just-launched 2024 edition, the Copenhagen-based global venture joined forces with Google.
— It’s a huge project, where we research more than 350 companies across six markets. We go into all 350 stores physically to purchase products and return them, and purchase products online as well, and get in touch with customer service. We cover all aspects of the omnichannel and consumer journey, to be able to provide a lot of interesting insights, says Karoline Lotz Jonassen, Future Commerce Lead & Senior Consultant. She continues:
— Google has done a similar omnichannel study for several years and reached out to us this year to ask if we could do it together. What is great about Google is all the insights you can get about the more general consumer trends — and obviously has a strong brand.
On stage, you mentioned five key takeaways from Omnichannel Index 2024. Tell us more.
— The first one is Connected Stores, where we talk about how omnichannel today is much more than just Click and Collect or showing approximate availability online.
— The second is Generative AI. It’s obviously been the talk of the town since our last index, in 2022, and what we talk about is both predictive AI, which is no news, but also what generative AI will do and how it will change retail.
— The third part is about Loyalty & Customer Data — how it’s important that you have a holistic look at customer data so you make sure that you get the best possible ROAS (Return on Ad Spends). For loyalty, you have a scale. It goes from the rational part, such as discounts and points, and the things that when you ask customers, they say what they want. Then there’s the other part — the more emotional one, the connection, what’s going to make them love you and make their heart beat. That one is hard to copy.
Can you explain more?
— For many retailers, loyalty concepts are merely a ’Get 10% off your first order’ offer. A very rational and monetary benefit — which many users want. But we need to build on top of this in order to create a differentiating concept that build brand love. To build offerings and initiatives that co-relate with your brand purpose and values. If you do this well this is what’s going to build the emotional connection. For your users, that’s hard to put a price tag on and that’s when you have built brand love and true differentiation, says Lotz Jonassen. She continues:
— This leads to our fourth perspective, Communities. We need to tackle the fact that more and more people are getting lonely and the fact that especially our youth have a big challenge with mental health. While it might seem like that’s something for politicians or the individual to handle, you as an organisation or a company have a huge impact. If you handle millions of user journeys each year, you have a lot of potential influence to make.
— The fifth one is Sustainability. What we mainly talked about in the presentation was recommerce while in the index, we also measure compliance and upcoming compliance, traceability, and transparency.
You mentioned Connected Stores. How’d you describe it?
— It’s all about going on a journey. When starting it, the important thing is to have a plan and get started, and adjust as you get along. You’re starting with showing approximate availability and having the opportunity to pick up in-store. Those are the basics, a lot of companies are doing this. The second part is that you’re starting to make sure that you can also do this very fast to increase flexibility. Here, you start to do what we call pick and pack in-store. Instead of Click and Collect, where orders are shipped from the main warehouse and you collect them at the store, you now start to pick and pack the orders in-store so that customers can get them more or less right away. That’s the next step.
— On top of that, if you’re really good, you need to start building with a single view of orders and stock mindset, where you always ship the orders from the place that makes the most sense to you, Lotz Jonassen shares. That’s about keeping profits, revenue, delivery times, and emissions in mind. And then you build a model where you have advanced order ruling, so you always ship from where it makes sense and can start doing split orders, ship from store, and so forth.
On stage, you mentioned Ganni as a good example. What have they done so well?
— They started with RFID tags. Then, they implemented their stock management system into their mPOS (Mobile Point of Sale) — where the point of sale is not anchored to a cashier but payments can be taken on the actual shop floor — so they can do stock take in approximately 30 minutes now. That’s mad. When I worked as a store manager in retail, that was 24 hours full staff when we had to do stock-taking. They can now do that automatically every morning to make sure that they have more or less 100% stock accuracy in the store, which means that they can show the true availability of the products in store. Ganni also doesn’t have so many never-out-of-stock (NOOS) products. They always shift the products, so they need to ensure sell-out of all products for each drop, or they risk it will be deadstock. And deadstock obviously has a huge impact, both on the environment and profits — something that Ganni, a B-corp-certified brand is working to eliminate.
Moving over to Generative AI, what else can you say about that?
— The most important part that is going to happen in the coming years is that we are going from that right now, we are showing customers what of our assets or the things that we have we think they will like. That’s predictive AI. Then we are going to generate the ’solution’ in generative AI, where you’ll start doing 1 to 1 personalisation with more or less everything. We’re also moving to a place where it’s much more conversational, where you have a commerce conversation about what you need and then you’ll get your products.
And I know that you also have a lot to say about circularity.
— Yes. When we start building circularity, we need to build a full-circle circularity — renting, re-selling, repairing, refurbishing, and recycling. Just as you should do commercial business case calculations for new initiatives you should do the same with your sustainability glasses on. For renting it might not always be the most sustainable option based on shipment back and forth, the cleaning process, how many times you rent a product and what you do with the product after it’s ending its renting journey. For some categories, especially fashion you need to keep close attention to this.
— Reselling is more or less interesting for everyone, such as refurbishments of old products, which is very often used in electronics. In repairing, we now see repair services like back in the days when you got a coat and then had it for your whole life. Instead of ’one season and it’s out’, we need to get back to buying quality that we can repair — we’ll also see the EU’s coming Right to Repair Act change how consumers are going to be treated.
The end of the loop is recycling, with a general buzz about recommerce.
— It’s good that we now see that many are starting to test it and try it out. However, so far, there are very few that have succeeded in scaling it. If we really want to make a true impact, we need to build a model that we can actually scale, to make it a significant amount of the revenue for the businesses.
Your report is obviously full of stats and numbers. Which one stands out for you?
— Within sustainability, the fact that the companies only achieve a score of 19%. This makes it the second lowest scoring of our eight disciplines. And then, also keep in mind that the lowest scoring one is ’App’. And for some companies in the report, an app is not the right thing right now while many can utilise an app by all means. Sustainability, however, is something that everyone should be working with. And we’ve seen more or less no change. For the last report, as I recall, the number of companies doing second-hand was around 9%. Now, it’s just below 12. So, basically, no movement at all, and this has also been driven by new companies entering the index — and not the same companies doing more…
It should be a hygiene factor.
— Exactly. We are way beyond the point where we discuss if consumers will buy second-hand. In Denmark, it’s around 75% of the population who do some kind of second-hand shopping, so consumers want this but retailers and brands are not tapping enough into it — yet, says Lotz Jonassen.
Out of the trends you’ve mentioned, which one do you see coming? What will we talk about in your next report, two years from now?
— I think we’ll see an increased focus on generative AI. The way of measuring generative AI is still very new — we are mainly measuring predictive AI — but that will definitely increase. One of the other things that we’ll see is more focused on experiences. Those are hard to measure because we have quantitative data while experiences should be branded. So how do you measure and compare experiences? That’s one of those things that are hard to put into a number but I think features like clienteling will advance in the coming years.
