1. Customers are Omnichannel
Santiago Gallino – Tuck School of Business
Toni Moreno – Kellogg School of Management
January 2017
July 2013 – LBS – London, UK

2. Learning Modules 1. Demand forecasting 2. Inventory Decisions
3. Assortment Planning
4. Pricing Decisions
5. The omnichannel customer
6. Fulfilling omnichannel demand
7. Omnichannel journeys
8. Supporting an omnichannel strategy

3. M5.1 Introduction 1
Retailing has change dramatically over the last few years.
This change has been driven by the fact that customers are now omnichannel customers.
Customers were able to buy things “virtually” before: Think of catalogs or even TV shopping so there is nothing new here… so we can think that there is not much new here.
This will be missing the point. The most dramatic change is about what retailers where doing but on how customers behave, how we behave, and what we expect from retailers.
No one expected to receive a catalog order next day. Or to visit a showroom near you to touch the products that QVC offer on TV.
Home depot – Trader Joe’s
Nordstrom – Banana Republic – The North Face

4. M5.1 What needs to Change 2
We are going to study the disruption in retail that has been driven by Omni channel customers.
We want to understand what are the implications for the retailer’s operations, systems, and customer interaction.
How this change affect the incentives policies at the retailer and why cosmetic changes might not be enough to be competitive in this changing environment.
Home depot – Trader Joe’s
Nordstrom – Banana Republic – The North Face

5. M5.1 Omnichannel Customer Evolution3
The omnichannel customers is not a customer that buys things online and in a store… omnichannel customers are more than that. They didn’t appear immediately after retailers start to offer an online store.
This change in customer behavior has been enable by a series of technology changes available to customers, and gradually adoption of this technologies by retailers.
Sometimes this changes has been proactive and sometimes reactive to customers needs.
Home depot – Trader Joe’s
Nordstrom – Banana Republic – The North Face

6. M5.1 Examples 4 Today customers can:
Go to the retailer’s website ordered multiple products and return at the B&M store whatever they don’t like.
A customer might receive a Facebook message from the retailer reminding her that a dress that she was looking for is now available at a store near by and if she visit the store today she can get a discount to buy that dress.
A customer can by something in a store in NYC fly home and return it in San Diego where the assortment of the store is completely different and the retailer don’t even carry that product in that store.
A customer that can’t find a product while visiting a store is helped by a sales associate to place an order on a mobile device that will arrive to the customer’s work address next day.
And the list can continue…
Home depot – Trader Joe’s
Nordstrom – Banana Republic – The North Face

7. M5.1 One Omnichannel Customer
Thinking of customer by channel in which the close the transaction: Online or B&M, might not be the best way to think about them.
The same customer can behave very differently depending on the circumstances and the product category they are trying to buy.
One the same day a customer can walk in store and buy a pair of shows and later that day can be buying online something she saw at the store but was not fully convinced at that time.
We need to break the Online – B&M buckets.
Home depot – Trader Joe’s
Nordstrom – Banana Republic – The North Face

8. M5.1 Who is my competitor 6
In this context it is challenging to see who is my competitor.
Should I look on the stores near by, the online stores visited by customers, a combinations of both…
Understanding who I am competing against is harder but as crucial as ever.
Home depot – Trader Joe’s
Nordstrom – Banana Republic – The North Face

9. M5.1 Implications for the Retailer7
To be successful in this environment the retailer need to adjust the process and system to enable all this different combinations.
The goal is for the customer to have a frictionless experience when interacting with the retailer.
Home depot – Trader Joe’s
Nordstrom – Banana Republic – The North Face