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Five integrated components to fortify omnichannel retail

For retailers, these tactics unlock value and customer trust through great experiences — when implemented cohesively, not individually.

In brief
  • An EY study into today’s market leaders shows that, to some extent, retailers are doing the same things, just with different mindsets and maturity levels.
  • Technology underpins how retailers can claim an advantage in customer insights, functional integration, distribution, real estate and inventory management.

In the fallout from the pandemic, retailers swung hard to survive through a renewed focus on e-commerce, then to reimagining stores as foot traffic returned. Now retailers are facing renewed questions about how best to define their omnichannel strategy in a world where customers have increasing power and information and where “normal” never lasts long. Strangely, the term “omnichannel” itself seems both out of date and yet more vital than ever.

For instance, you can track everything that a customer does online, but are you empowered to do the same in your stores? And are those stores also seamlessly functioning as an extension of your e-commerce channel? Do you have an e-commerce function, or a unified strategy integrated with stores for seamless experiences, better economics and greater customer lifetime value?

Questions like these can help retailers and direct-to-customer brands be proactive and predictive with meeting customers in the right channel at the right time with the right product, providing a value proposition differentiated to the market norm. Historically, that has been expensive to achieve, but new methods are transforming the customer acquisition equation by leveraging data, deploying better and more targeted marketing, and driving efficiencies. These are not independent goals, however, but future-focused capabilities that enable each other — or struggle to deliver differentiated competitiveness when addressed piecemeal.

E-commerce goes back to the trend line

To find out who’s winning in this complex market, we evaluated retailers across the past several years on factors such as net income margin, rate of e-commerce penetration and how much that e-commerce market share has grown. Our analysis reveals that, even though store footprints have been reduced, the best-in-class e-commerce retailers are able to keep net income margin at above-average levels — by leveraging their in-store operations to balance cost savings and efficiency with growth and scale, ultimately driving a unified customer experience across channels.

In a revealing finding that goes against conventional wisdom of winning in a market, these retailers are all largely doing the same things — but with different mindsets, different maturity levels and therefore different results. Chief customer officers are therefore challenged to accelerate their capabilities, tear down the remaining borders between channels and go deeper, beyond the surface of what’s familiar, into the next level of unified commerce. 

Core omnichannel retail foundations to build on

Three key operational excellence functions served as table stakes among the companies that accelerated up the maturity curve in their omnichannel capabilities and better integrated in-store operations with their e-commerce programs.

Consumer in practice: Three ways inventory precision can boost retail profit

For more actionable guidance on how digital tools and a strategic approach can help retailers achieve inventory precision and increase profit, read the full playbook.


Young happy african american man in casual wear and sunglasses running with empty shopping cart outdoors against blue wall with copy space. Shopping, consumerism concept

This operational framework will be familiar to most retailers, but you must establish it before reaching the next level: the commercial model of the future. These capabilities include deploying behavioral science to understand customers and microtargeting to them, expanding inventory through an “endless aisle” approach, and using generative AI (GenAI) for personalization at scale — all driven by data, seamlessly leveraged on digital channels and in stores.

Our analysis of current players in the market reveals two overarching factors: investments in innovative technology and the ability to use that tech to integrate their offline and online assets. But that’s not the full story. 

How to propel omnichannel retail to the next level

Through omnichannel order management systems, integrated marketing stacks, modernized point of sale and other software and hardware, technology platforms help enable seamless experiences for customers — in stores and through e-commerce — and improved inventory visibility and management for flexibly fulfilling orders. The end-to-end experience is streamlined for customers and for employees.

But just like how owning the finest materials doesn’t automatically make you a great artist, such investments should be coupled with five strategic supplemental components. Much like a work of art, these components must blend together harmoniously, uniting vision, technique and creativity to stand out from the competition. Retailers leave ROI and competitive advantage on the table unless these focus areas are interlocked as a cohesive strategy for the future, with each building on the others.

1. Functional integration

Is your operating model and data infrastructure siloed between e-commerce and physical stores, or have you developed a cohesive unit centered around delivering seamless customer experience?

2. Customer insights

With consumer centricity at the heart of operations, are you analyzing all touch points to build a holistic view of preferences, behaviors and buying patterns? 

3. Next-generation inventory

Given the right customer insights, how are you utilizing advanced analytics to ensure inventory is optimized to meet demand precisely where and when it’s needed?

4. Distribution partnerships

Having ensured your customers find what they want where they want it, how are your distribution strategies adapting to deliver these choices to them swiftly and efficiently? 

5. Real estate strategy

How is your real estate strategy interconnected with insights, inventory and distribution to enhance experience and maximize your footprint? 

When approached cohesively, these efforts all build toward one overarching differentiator for retailers: a better customer experience, from brand engagement, order placement through delivery and return. Leading companies are complementing back-end omnichannel fulfillment inventory and logistics tracking with an intuitive user experience, flexible return policies and loyalty-driven customer service. Digital twins can also be explored for optimizing inventory management, product placements and store layout. And with the advent of GenAI and better AI, you have better mechanisms for real-time data analytics and recommendation systems offering personalization at scale. It’s becoming easier to micro-target certain segments at a previously unimaginable level of specificity — without significant increases in headcount to pull it off.

Canadian Tire unleashes the potential of customer data

An iconic Canadian retailer drives personalized customer service with smarter data management and advanced analytics. Learn more in this case study.

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Amid continued volatility and an economy driven by complex customer demands, retailers that are striving to gain real-time visibility into stock levels, offer flexible fulfillment options and modernize merchandising through personalized and dynamic customer experiences are most set up to win. An EY analysis of retailers identifies key factors for e-commerce success to truly capitalize on these efforts — not only through innovation in technology. Enhanced processes for inventory tracking, talent upskilling, strategic partnerships, tailored real estate strategies and ultimately a unified experience must be integrated across the retail continuum. Together, these areas drive greater customer retention and cost takeout.

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