Omnichannel retail: Definition, types, benefits, examples

What is omnichannel retail?

Omnichannel retail is a strategy where retailers engage customers across their buying journey through multiple digital, physical and digital touchpoints. As customers move across these channels, applications and data move with them, creating a consistent, on-brand experience from start to finish.

With an integrated omnichannel retail strategy, retailers can provide hyper-convenient, personalised shopping experiences at every point on the customer journey, whether the customer is shopping online on a mobile device or in a store. The idea is to create a frictionless, seamless experience.

Omnichannel is not tobe confused with unified commerce and multichannel retail. Multichannel retail means using multiple channels to reach customers, but they operate independently. Conversely, unified commerce goes further by consolidating all retail operations into a single system, creating a more efficient and seamless process for customers and retailers.

Phygital retail

"Phygital" retail combines the physical and digital retail experiences. This allows for a seamless interaction between online and offline touchpoints. Examples of phygital retail include "Buy Online, Pick Up In-store (BOPIS)" in-store augmented reality (AR) experiences and smart mirrors and interactive displays. A phygital customer journey offers a blend of online and in-store experiences where customers might research online, experience the product physically and complete their purchase in-store or digitally.

Digital channels extend a retailer's reach to consumers wherever they are, offering convenience, accessibility, and data-driven personalisation. On the other hand, physical channels provide a sensory, tactile experience that strengthens brand engagement, especially in sectors where seeing and touching products is essential. Phygital experiences bridge the two, enhancing convenience, driving more informed purchasing decisions and providing a smoother, more integrated experience.

How omnichannel retailing works

Omnichannel retailing revolves around the customer, placing them at the centre of the shopping experience. Hence, retailers must align all their channels to ensure the customer's journey is smooth and consistent. In an omnichannel system, customers are free (and encouraged) to interact with the brand across any channel they prefer, often switching between them during their shopping journey.

Omnichannel retail connects all sales and communication channels to allow for seamless transitions. This includes digital, physical and phygital channels. The goal is to remove any silos between these channels so that data such as customer preferences, purchase history, inventory levels and promotions are shared across the board.

Components of omnichannel retail

Key components of omnichannel retailing include:

Consistent brand experience. The brand experience remains consistent whether the customer is browsing online, receiving marketing emails, visiting the store or using a mobile app.
Unified customer data: Customer data (preferences, purchase history, loyalty program points, etc.) is centralised.
Cross-channel inventory management. Real-time inventory updates are crucial for omnichannel retailing. Customers can check online to see if an item is available in a nearby store or order delivery from any channel.
Personalised experiences across channels. Omnichannel retailing leverages data from multiple channels to provide a more personalised shopping experience.
Cross-channel purchase and fulfilment options. Omnichannel strategies allow for flexibility in purchasing and fulfilment, such as Buy Online, Pick Up In-Store (BOPIS), Buy Online, Return In-Store (BORIS), or endless aisle, where store associates can help customers order unavailable items online and ship it to them.
Mobile integration. Mobile apps offer on-the-go access to the brand’s inventory, loyalty programs, and promotions. They also serve as an in-store tool for scanning items, viewing product details or completing transactions.
Customer service across channels. Customer service teams can access full purchase and interaction history if customers seek support via email, chatbots, phone or in-store.

Here's how omnichannel retailing works in practice:

Step 1: Online browsing

A customer browses the brand’s website and adds a few items to their shopping cart but doesn’t complete the purchase.

Step 2: Mobile app notification

Later, the customer opens the brand’s mobile app and receives a push notification reminding them of the items left in their cart and a personalised discount code.

Step 3: In-store visit

The customer decides to visit the physical store to try on the items. Using tablets or point-of-sale (POS) systems, store associates can view the customers’ online carts and preferences and guide them through the store.

Step 4: Cross-channel purchase

After trying on the items, the customer decides to buy one product in-store and order another online due to size availability. The in-store transaction syncs with the customer’s online account, reflecting updated inventory and order status.

Step 5: Loyalty and post-purchase engagement

The customer’s loyalty points from both in-store and online purchases are updated in real time. Later, they receive a follow-up email with recommendations based on their purchase and browsing history.

Designing an omnichannel retail system

A successful omnichannel strategy is an ongoing journey regularly curated to maximise connections between various data points from customer-facing technologies, back-of-house operational systems and supporting technology infrastructure to deliver a seamless customer experience.

To achieve this level of integration, omnichannel retailers need several key technologies:

Customer Relationship Management (CRM) systems that centralise customer data to offer personalised marketing and customer support
Order Management Systems (OMS) that track orders across channels and handle cross-channel fulfilment
Inventory management systems that provide real-time visibility into stock levels across stores, warehouses and online
Point-of-Sale (POS) systems that enable in-store and online transactions to be tracked seamlessly.
Marketing automations that sync campaigns across social media, email, and apps to offer consistent messaging and personalised promotions

In-store edge-enabled devices and technology, such as edge computing and artificial intelligence (AI), collect, process and analyse data closer to where it is generated so retailers can access near-real-time information about their customers.

Retailers also benefit from an additional layer of data security—by not sending data to a centralised data centre and processing it locally at the edge, fewer data is at risk in a single transaction.

With intelligence from edge to cloud, retailers can parlay insights from deeper customer and merchandising data analytics to understand long-term trends, inform targeted campaigns, and predict the future.

Businesses can offer personalised sales recommendations, confirm customer account information from any source where the customer has previously shared it, and further enhance the customer experience of the transaction, whether online, at a kiosk or on a personal device.

Benefits of omnichannel retail

Incorporating omnichannel retail enables retailers to improve customer engagement and experience, meet shoppers where they are and increase customer loyalty.

Here are some of the key benefits for both shoppers and retailers:

Improved customer experience. A seamless buying journey improves customer experience because customers can make purchases and get help quickly.
Added inventory visibility. Inventory visibility helps businesses get products to the right places, and all retailers have better upsell and cross-sell opportunities.
Flexible shopping options. Omnichannel retail allows businesses to meet shoppers where they are and provide the experience they’re looking for. This can look like offering multiple shipping and delivery options, such as BOPIS or curbside delivery.
Personalised customer experience. Omnichannel retail combines all aspects of the customer touchpoints so retailers can use the data from the various channels to create targeted experiences for the customer.
Greater reach. Retailers can reach customers in more places—the more channels, the more opportunities for exposure and building brand awareness.
Faster issue resolution. Meet customers where they are, exactly when they’re looking for support, which lowers average time to resolution and sets customers up for success.
Increased profit. It's easier for customers to purchase if they can find a product on multiple platforms and channels.

The commerce world is shifting; it won’t be retail or online but a hybrid of both. Omnichannel retail brings everything together in a customer-centric, all-in-one solution. Customers can enjoy a seamless, personalised, interactive buying experience with the right retail technology services.