What CEO's need to know about cannibalisation and exponential complexity of the omni-channel

Posted by Thomas Andersson on

Online has led to widespread high-street store cannibalisation putting profitability at risk. CEO's need to look at organisational fundamentals to remedy the damage done to the many multi- or omni-channel (whatever you want to call it) retailers.

At its most basic - retailers have not given any thought to new business when rolling out the online channel and have continued to focus on existing customers and demographics hence inviting channel cannibalisation.

For example, John Lewis (excl. Waitrose) increased revenue by 5.6% CAGR 2008-18. In the same period online has grown as a share of revenue from 13% to 42% at a rate of 18.3% CAGR 2008-18.

The normal retail response has been to think about in-store experience and task-convenience as a way to generate more traffic. However, the results have been limted.

So, what should retailers do?

    • Focus on the basics. Customers don't want to be told they cannot return a sweater because it smells a bit or because you think they have used it.
    • Frictionless experience means no friction. Do not locate your click & collect point on floor 365, but have it easily accessible on ground floor, perhaps even in the front of the store.
    • etc.

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