Sharing Kevin O'Leary's Omni-Channel Epiphany!
Recently I attended the Retail Council of Canada's STORE Conference and to be honest when I heard Kevin O'Leary was speaking, all I expected to hear from him was a funny and entertaining talk.
This advance expectation was rapidly confirmed when he started by saying that his CBC co-host Amanda Lang was definitely the best looking communist on television! But little did I know that the balance of his talk would represent one of the most interesting dissertations on omni-channel I've heard to date!
So insightful were his comments that I made the extra effort to track down the transcript of his session to share with you all what I'm calling, 'Kevin O'Leary's Omni-Channel Epiphany'.
Out of Kevin's 50 minute presentation there were two passages which resonated most with me and positively validate parts of my own emerging vision for the most effective omni-channel retail logistics strategy and I'm pleased to share these with you courtesy of the RCC.
"I find it fascinating the debate going on in deciding, if you're a retailer, this debate between 'brick & mortar' and 'omni-channel', or digital or whatever you might want to call it, is a huge decision.
How much money do you spend every 5 to 7 years upgrading your stores versus how much should you spend right now digitizing it?
Or connecting with your customers electronically, or spending on social media, or figuring out a way to change the (customer) experience. I would think this is a very significant balancing act.
It was very simple if you looked at most retail models, every 7 years you had to upgrade otherwise the place started to look old. Well you can look old today if you don't have a digital strategy if your customer wants it.
So I think deciding on how to deal with this balance is going to be a very significant challenge going forward."
Kevin then went on to share a story about his son who on the day of his prom needed a new belt and turned to his social and digital channels to find just the right one. Simply put he wanted it NOW! So as soon as he found it digitally and a store with inventory he borrowed Kevin's truck and drove straight to store to buy it without even calling to ensure it was there.
All of the above frames the vexing problem and dramatic changes retailers are facing and the balancing act they need to complete successfully in order to succeed and flourish in today's emerging omni-channel world.
Already suitably impressed with the research, preparation and insights Kevin had shared, I wasn't expecting more, but in my view the next few moments of his talk were truly a logistics omni-channel epiphany. I'll let Kevin's words do the talking...
"If it's true that you can digitize the business and reduce the cost of inventory, which is an area that fascinates institutional investors. Why do the stores have to be so big? Why can't these guys cut their costs at retail and be more efficient and only carry the goods in the stores that people are buying now and warehouse the rest somewhere else away from that nasty per square foot cost?
That's a very smart and intuitive question and I would have to think that in the future you'll get a lot smarter or at least optimize the cost of capital associated and invested in retail space, which continues to get more and more expensive.
Is it true that across all retailers that you could have smaller more efficient locations and your internal rate of return on capital would go up? Sounds Utopian to me but very interesting as theoretically that should work"
Thanks Kevin for very succinctly stating the opportunity and some of the potential benefits of creating an omni-commerce logistics network to rapidly service stores and consumers. A logistics network that would not only allow retailers to reduce inventories and store size, but also eliminate the duplication of inventory in the seperate logistics networks currently being operated (in almost all cases) to service stores and e-commerce orders.
In addition, these reductions in inventory can also act as an offset to help position retailers to implement the needed multiple facilities across the country to support this strategy. These will allow retailers to even further improve the service lead time for rapid replenishment of these smaller stores, and at the same time improve the customer experience for direct to consumer e-commerce fulfillment to support same or next day delivery in most cases.
Listening to Kevin's very astute point of view, and how a more innovative approach to omni-channel may now even have the power to transform the very financial foundation of the retail business has helped to even further validate my own omni-commerce views.
And today I'm sharing this with you all in the hope that such innovative omni-commerce thinking will lead each of you to experience your own omni-channel epiphany and take action.