In 2012, Jerry Storch, then the CEO of Toys R Us, told attendees at the Shop.org conference that stores will never die thanks to omni-channel retail.

Since that time, many traditional retailers have invested heavily in omni-channel initiatives that seem wise, at least on the surface.

But are retailers' omni-channel hopes really delusions?

It's a question worth asking in the wake of horrible earnings reports from a number of high-profile retailers.

While the dismal performance of retailers like Macy's, Gap, Kohl's and Nordstrom could signal a weakening economy, the situation appears more complex than that and retail executives themselves admitted they don't have all the answers. 

"We're frankly scratching our heads," Karen Hoguet, Macy's CFO told investors and analysts.

She almost certainly isn't the only one who is doing so. Despite the woes of retailers like Macy's, April retail sales figures were strong.

So what gives?

In a nutshell: consumer behavior and the retail market are undergoing significant shifts, and this calls into question the viability of many retailers' existing omni-channel strategies.

Amazon's business is booming and it is rapidly expanding its footprint. Morgan Stanley says it's now the number two apparel retailer in the US. And it's not stopping there

While Amazon is growing and expanding, brick-and-mortar retailers turned omni-channel retailers aren't seeing the results they had hoped for.

For instance, Macy's digital sales are still growing by double-digit percentages but Hoguet revealed that they still "grew less rapidly than anticipated."

And click-and-collect, which still accounts for just 3% of Kohl's sales, apparently isn't enough to offset declining store traffic.

Given the widespread trends being seen across the retail industry, including growing fragmentation and the rapidly rising number of store closures, an argument could be made that omni-channel dreams are fast being replaced by nightmares.

Some might suggest that the industry is simply going through a rough patch and that downsizing is a painful but necessary part of the transformation that omni-channel retailers must endure.

But the optimistic vision laid out in 2012 by Storch, who is now CEO of Canadian retail group Hudson's Bay Company, clearly differs significantly from the reality in 2016.

There might be merit to the omni-channel concept generally, but many of the retailers that are banking on it can no longer pretend that it's their saving grace because for most of them, it almost certainly won't be.

Patricio Robles

Published 18 May, 2016 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (5)

Pete Austin

Pete Austin, CINO at Fresh Relevance

We see large numbers of new and growing "internet first" retailers, especially in sectors such as fashion, health and beauty. With all these new entrants, it's inevitable that traditional "bricks-and-mortar first" retailers are seeing more competition for the same pie.

So when assessing the success of e.g. omnichannel, it's important to measure the results against an average baseline for traditional retailers of shrinking sales.

As you suggest, this means omni-channel could be successful, yet not enough to make the difference.

over 1 year ago

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Michael Unan, Director at CIBC

True Omni-channel ecommerce is a myth and the term is overhyped. For most of us, we need to concentrate on executing a good multi-channel strategy before we pursue the unattainable.

over 1 year ago

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Gavin Peacock, CEO at TRC Solutions

Thanks for the article. Omni Channel comes under many different definitions but broadly the offering is giving the retail customer a similar experience across all channels, ie: Web, in store and over the phone, with 25 years experience speaking to Retail CEO’s they tell me that they see this as a default customer expectation.

Retail CEO’s say that if consumers don't have the same experience across the various channels then it is seen as an obstacle by all reasonable people. I however agree that the Unified experience that pundits are now calling Omni Channel is not the golden ticket some CEO’s may have thought. Omni channel isn’t very appealing to the customer, if the range, value proposition and delivery are not compelling.If these fundamentals are missing then it will only serve up a lack lustre shopping experience in a Unified Way.

over 1 year ago

Keith Lucas

Keith Lucas, Senior Digital Planning Manager at ArgosEnterprise

Thanks for article, really valid topic.

I have to agree with you, Gavin. Previous views on omni-channel have often searched for a replication of journey across channel rather than a tailored one for the customer at that time.

Now we have far more understanding of how customers use different devices I feel the right questions are being asked - what does the customer need on this device at this time to help them complete the journey? And if they decide to pick up on another device, what do they need there? How do we make it easier?

We get hung up on labels, the customer isn't using a 'channel', they're just shopping. That's what they ultimately see it as and we mustn't forget that.

over 1 year ago

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frida jones, Retail Analyst at Intelligence Node

I’d have to say I don’t completely agree. Help out with some clarity please.
Don’t success stories, like the one for Oasis (the fashion store from the UK), and Starbucks, Bed, Bath & Beyond, and Chipotle in the US itself, refute the ‘omni-channel retail is a delusion’ claims?

I’d just like to know if this statement is actually true. To me personally, the prospect of teaming up with a company like Intelligence Node, and taking in the benefits of omni-channel retailing, seems to far outweigh the risks.

over 1 year ago

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