The hidden costs of omnichannel

There is growing discussion (especially at RetailWire) about brick and mortar stores struggling with the cost and complexity of “omnichannel.” In particular, department stores are finding it hard to operate as fulfillment centers and places for customers to shop — as long as they are unwilling to add payroll. Here’s my opinion, gathered from two recent blog posts.

First:

I have an acquaintance who sells shoes in a local department store, and who found herself spending time during the holiday season fulfilling BOPIS orders instead of serving customers in her own department. The company paid her time-and-a-half but the extra income didn’t offset her lost commission on her shoe sales. The program didn’t help the store’s reputation for customer service, nor associate morale.

Retailers (as in this example) need to figure out the true costs of omnichannel initiatives like BOPIS or ship-from-store in an environment where brick-and-mortar sales are flat or worse. They are compounding the sales problem by stealing store payroll to execute tasks unrelated to serving the customer or restocking the selling floor. Companies may push back by saying, “We can’t afford to add payroll”…but growing evidence suggests that they can’t afford not to, either.

Second:

As stores have seen underperforming locations and declining comp-store sales, their response has been a case of circular reasoning. The thought process of converting physical stores to “omnichannel” centers has led stores like Macy’s in some directions that are actually hastening the sales shortfalls.

Just in the past week, BrainTrust panelists have discussed the risk of trying to perform multiple functions (including omnichannel initiatives like BOPIS) without adding payroll — putting stress on the existing associates and cutting into expected levels of customer service. I’ve been in several mall anchors recently (not just Macy’s) where the store needs a physical refresh, or more sales associates, or more competent restocking of the selling floor.

It’s not a simple question of how to manage competing expenses, but neglect of a company’s core mission can only cut into its topline sales and profits.

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1 Response to “The hidden costs of omnichannel”


  1. 1 Seth Waite April 6, 2016 at 8:16 pm

    Omnichannel is not as simple as many digital channel advocates had assumed. The complexities outlined are definitely what can cause serious retail problems. Interested in seeing how this plays out.


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