Omnichannel Strategy Considerations

Article

Technology adoption for the integration of online-offline purchasing: Omnichannel strategies in the retail environment. Savastano, M., F. Bellini, F. D’Ascenzo, & M. Marco.

Journal

International Journal of Retail & Distribution Management, November 2019, Volume 47

Reviewer

Dr. Allan W. Gray, Executive Director and Professor

Summary

The purpose of this paper was to explore if and how technology adoption at the retail level positively affects customer experience in an omnichannel retail environment. The authors have two key findings from their research. First, they identify two types of omnichannel technology experiences that matter to customers: technologies aimed at enhanced utilitarian customer experiences—i.e., time saving tools—and technologies aimed at hedonic customer experiences—i.e., enriching the customer experience through interactive, customized experiences that appeal to the emotional worth of the shopping experience. The second key finding identifies important objectives of the retailer under each type of omnichannel technology experience. Utilitarian omnichannel customer experiences are implemented to allow retailers to improve customer experience, leading to increased interaction with the retailer and increased repeat business. On the other hand, hedonic omnichannel customer experiences are implemented to allow retailers to improve brand image and differentiation, leading to a higher willingness to pay due to enhance customer experience.

What this means for Food and Agricultural Business

As the agricultural industry continues to barrel toward the ever-increasing presence of digitization, retailers are challenged to consider their future digital strategies along a number of fronts. We have heard many arguments about whether ecommerce and the associated digital experiences for farmer customers would supplant the traditional retailer. The industry has discussed and considered various responses to the increase in use of ecommerce and digitization with strategies ranging from no response to defensive pricing, to unbundling of products and services to investments in alternative ecommerce platforms. This article contributes interesting thought about the strategies around ecommerce and digitization, including the omnichannel approach, customer use focus and the outcomes we want from our strategies.

The authors challenge us to consider the viability of an omnichannel strategy where we interact with our customers in both a physical and digital environment. Increasingly, consumers are engaging with retailers using both digital tools and physical store environments. While the customer experience in agriculture is certainly different than those of grocery, restaurant or other retail experiences, often the behaviors we see at the consumer level end up making their way to the customer level in agriculture. For example, the use of Twitter as a marketing communication device was originally a consumer-based tool but has now become a key tool in agribusiness marketing. How will the farmer of the future want to interact with their agribusiness product/service providers in a digital environment? Will they want to interact both digitally and in person? My suspicion is yes. If I am correct, thinking critically about the right omnichannel approach for your firm will be increasingly important.

This article is not unique in its focus on customer experience. In his book, The Digital Transformation Playbook, David L. Rodgers argues that any digital strategy being considered by a firm must start with the customer experience as the central focus of the strategy. Focusing on customer use cases can be a helpful concept when considering how we want to interact with the farmer customer in our digital strategy. Is the customer looking for more utilitarian interactions with us in the digital space? That is, can our digital strategy enhance the farmer customer’s experience by saving them time, increasing their convenience or creating greater accessibility to our products/services? What is the timing, place and situation where a strong digital channel would be the preferred method for our farmer customers to help them get their job done more effectively? Alternatively, we might ask what opportunities we have to use a digital channel to enhance the farmer customer’s hedonic experience with us. Can we give the customer a digital channel to customize products/services to meet their needs? For example, can we have digital apps that allow them to not only order products or services but also be able to assign when and where these items are delivered, see those product/services located on a map and know their time of delivery, similar to the way consumers see the Uber car arriving to pick them up? Can we use strategies like this to enhance the farmer customer’s emotional connection to our company?

Finally, the authors suggest that the strategy we pursue, with respect to the omnichannel strategy we implement, depends on the final objective we hope to achieve. It seems that often we think of our digital strategy as a collection of tools we have to offer to customers (internal or external). But the article challenges us to think more strategically about our digital channel strategy and the outcomes we want. Are we looking to utilize this digital channel to improve customer loyalty, share of wallet and/or repeat purchases? If so, the authors suggest we focus our attention on a digital channel that creates a better utilitarian experience for our customers (time, convenience, cost, etc.). If, on the other hand, we are looking to increase our brand strength, upsell customers to higher profit margin products/services and/or reduce their objections to our prices relative to competitors, our digital channel strategy should focus resources on creating a unique, tailored experience that appeals to a customer’s emotional connection to the company—what the authors call the “hedonic” category of digital channels.

As we continue to navigate the age of digitization, the strategic questions we should be answering involve thinking about our omnichannel strategy, its value to the customer experience and what our objectives are from the new channel. To me, agribusiness is still, and likely will always be, a personal business. The dynamics of the industry, complexity of the value chains and the pace of innovation all require people to work with each other in the industry to solve problems. As such, I don’t see the digital age supplanting the traditional relationship between the agricultural retailer and the farmer customer, but this article has me thinking much more about the role that the digital channel should play in enhancing that relationship through an omnichannel approach.