Measuring ROI of Omnichannel for Fashion

Omnichannel retailing is no longer a choice, it’s a competitive necessity. Beyond boosting revenue, an effective omnichannel strategy reshapes both internal operations and customer relationships. Internally, it drives cultural transformation, breaking down silos between marketing, IT, and operations, while encouraging process optimization, change management, and new incentive systems. Externally, it enhances customer engagement, loyalty, and lifetime value by ensuring consistency across touchpoints, expanding shopping options like BOPIS and mobile commerce, and improving product availability.

Measuring success goes far beyond financial metrics: while topline growth, cost efficiency, and ROI remain central, true value also lies in strategic and intangible benefits, customer experience, organisational agility, and long-term competitiveness. In short, omnichannel is both a growth engine and a cultural shift, enabling brands not just to survive but to lead.

Omnichannel retailing is not a luxury but a requirement for competitiveness. It delivers both financial returns and intangible benefits, such as enhanced customer experience and loyalty, creating long-term value.

What are the main strategic and operational benefits of omnichannel for modern companies?

Omnichannel retailing offers a range of crucial strategic and operational advantages for modern businesses, turning it from an option into a competitive necessity.

Strategic Advantages

• Improved Customer Engagement and Loyalty: Companies with an omnichannel strategy report a retention rate of 89% compared to 33% for those relying on a single channel. This is a key indicator of the impact omnichannel strategies have on enhancing customer experience.
• Revenue Growth:
  • Companies that implement omnichannel strategies see topline growth of 9.5% per year, versus 3.4% for others.
  • More opportunities for cross-selling and up-selling increase the value associated with each customer.
  • Omnichannel customers, while only representing 7% of the total, generate 27% of overall sales.
  • Expanding the scope of business across multiple sales channels (such as Buy Online, Pick-up In Store – BOPIS, or mobile ordering) helps drive conversion rates. During the pandemic (2019–2021), the conversion rate for BOPIS rose from 2.3% to 3.3%.
  • Brands using three or more channels report a 494% increase in order rates and a 250% increase in engagement compared to single-channel players.
• Meeting Consumer Expectations: Consumers already live in an omnichannel world, and businesses must keep up to avoid falling behind. 60% of shoppers expect to use services like BOPIS, whose sales have grown by 208%.
• Organizational Agility and Cultural Transformation: Omnichannel is a catalyst for cultural change, requiring marketing, IT, and operations to work together and share objectives. This creates intangible but essential benefits, such as improved organizational agility.

Operational Advantages

• Cost Efficiency:
  • Omnichannel integration reduces stockouts, optimizes the supply chain, and lowers customer acquisition costs, as each interaction becomes more effective.
  • Better inventory management is critical; the most profitable brands have superior stock control. Brands with an EBITDA margin above 40% typically maintain lower inventory levels.
  • 27% of online customers would leave a site if a product was out of stock, moving to a competitor. Stock management is therefore a key priority.
• Operational Efficiency:
  • Streamlined processes and faster customer service.
  • Integration of online and offline channels eliminates duplication and waste.
  • Brands gain the opportunity to rethink processes and internal organization to reduce redundancies and improve workflows.
• Better Product Availability Management: This includes inventory optimization and the ability to offer personalized services to each customer.
• Change Management and Incentives: For a successful omnichannel strategy, managing organizational change is crucial, as is defining a new sales incentive plan—an often-overlooked factor.

How does omnichannel transform internal and customer relationships?

Omnichannel retailing introduces profound transformations both in internal company relations and in the way a business interacts with its customers.

Transformation of Internal Relations

Omnichannel acts as a catalyst for cultural change within the organization. It requires unprecedented integration and collaboration across departments:

• Cross-Functional Collaboration: It forces marketing, IT, and operations to work together and share common goals. Operating in silos is no longer sufficient.
• Review of Organizational Processes: Each brand has the opportunity to reassess its processes and internal organization to reduce redundancies and improve workflows. This leads to greater organizational agility.
• Change Management: Implementing an effective omnichannel strategy requires strong change management involving all departments. This aspect is often underestimated.
• New Incentive Systems: Defining a new sales incentive plan is crucial. It is an essential component of a properly functioning omnichannel strategy, yet often overlooked.
• Sharing of Insights: Departments must share their knowledge about customer behavior and preferences (customer insights and trends). Merchandising should also be involved, as this information can influence collection development and pricing decisions.
• Strategic Alignment: The goal is to align marketing strategies across all channels and markets to maximize customer engagement and campaign effectiveness.

These internal benefits, such as organizational agility, are considered intangible advantages which, while difficult to measure, make the difference between a company that merely exists in the market and one that leads it.

Transformation of Customer Relations

Omnichannel is essential to meeting consumer expectations, as customers already “live in an omnichannel world.” The transformation of customer relations is expressed through:

• Improved Engagement and Retention: Companies with an omnichannel strategy report a retention rate of 89% compared to 33% for those relying on a single channel. Brands using three or more channels see a 250% increase in engagement.
• Enhanced Customer Experience: Omnichannel is not just about multiplying touchpoints but about ensuring continuity and consistency in the customer journey. This includes seamless integration, better product availability management (through inventory control), and the ability to deliver personalized services throughout the customer’s relationship with the brand.
• Increased Customer Value: With stronger retention and more cross-selling and up-selling opportunities, the value of each customer grows. Leveraging cross-selling and up-selling also enhances engagement, enabling the development and promotion of additional initiatives.
• Adaptation to New Shopping Modes: Consumers expect to use options such as Buy Online, Pick-up In Store (BOPIS), whose sales have grown by 208%. In fact, 60% of shoppers expect this option to be available. Mobile e-commerce is also expanding rapidly, reflecting customer expectations of flexible shopping experiences.
• Higher Conversion Rates: Expanding across multiple channels drives higher conversion rates. For example, the conversion rate for BOPIS increased from 2.3% to 3.3% during the pandemic.
• Importance of Stock Management: Product availability is critical, as 27% of online customers would abandon a site and switch to another if an item were out of stock. Effective inventory management and better product allocation contribute to a positive customer experience.

How can you effectively measure the return on investment of an omnichannel strategy?

Measuring the return on investment (ROI) of an omnichannel strategy effectively goes beyond simple financial analysis. It must include strategic and operational metrics, while also recognizing the importance of intangible benefits.

Here is how the ROI of an omnichannel strategy can be measured, based on key points:

1. Direct Financial Metrics

These are fundamental and often the CFO’s main focus:

• Revenue Growth:
  • Topline Growth: Companies with an omnichannel strategy record annual topline growth of 9.5%, compared to 3.4% for others.
  • Omnichannel Sales: Measure the percentage of sales generated through omnichannel activities (e.g., 13% of physical sales and 20% of online sales, according to Mins).
  • Contribution of Omnichannel Customers: Omnichannel customers, while only 7% of the total, generate 27% of overall sales.
  • Conversion Rate: Expanding business scope across multiple channels (such as Buy Online Pick-up In Store – BOPIS – or mobile ordering) is aimed at improving conversion rates. For example, during the pandemic the BOPIS conversion rate rose from 2.3% to 3.3%.
  • Cross-Selling and Up-Selling: Quantify the increase in cross-selling and up-selling opportunities that boost customer lifetime value.
  • Order Rate Growth: Brands using three or more channels record a +494% increase in order rates.
• Cost Efficiency:
  • Reduction of Stockouts and Supply Chain Optimization: Measure the impact of reducing lost sales due to stockouts and improving supply chain efficiency. Better inventory management is correlated with higher profitability (brands with EBITDA margins above 40% typically have lower inventory levels). Since 27% of online shoppers abandon a site when an item is out of stock, inventory management is critical.
  • Lower Customer Acquisition Costs (CAC): More effective interactions enabled by omnichannel strategies can reduce the cost of acquiring new customers.
• Net Profit Margins: A fundamental metric for CFOs, who focus not only on topline growth but also on gross margin to identify potential issues (e.g., excessive discounting that erodes profitability).
• Return on Investment (ROI): Ensure that the benefits outweigh the investments made.

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2. Strategic and Operational Metrics

These focus on the impact on customers and organizational performance:

• Customer Retention: Companies with an omnichannel strategy achieve an 89% retention rate compared to 33% for single-channel businesses. Measuring this rate is a key indicator.
• Customer Engagement: Brands using three or more channels see a 250% increase in engagement compared to single-channel players. Cross-selling and up-selling opportunities also strengthen engagement.
• Adoption of New Shopping Methods: Track the use of services such as BOPIS, whose sales grew 208%, with 60% of shoppers expecting to use it. Growth in mobile e-commerce (from 4.4% to a projected 10.4% of total sales) is another key indicator.
• Operational Efficiency: Assess process streamlining, faster customer service, and the elimination of duplication and waste thanks to online/offline integration. This may include warehouse optimization and better product allocation.
• Customer Experience Quality: While difficult to measure directly, improvements are reflected in consistent integration, better product availability management, and the ability to deliver personalized services throughout the customer journey.

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3. Intangible and Organizational Benefits

ROI is not just about numbers—intangible benefits are crucial:

• Customer Loyalty and Experience: Hard to quantify, but they make the difference between a company that is present in the market and one that leads it. They contribute to long-term value creation.
• Organizational Agility: Omnichannel acts as a catalyst for cultural change, pushing marketing, IT, and operations to collaborate and share goals. This creates greater agility—an essential intangible benefit.
• Reduced Redundancies and Improved Workflows: Each brand has the opportunity to review processes and internal organization to enhance efficiency.

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Key Considerations for Measurement

• Change Management: Often underestimated, but fundamental to the success of any omnichannel project, requiring the involvement of all departments.
• New Sales Incentive Plans: Defining an adequate incentive scheme is essential to an effective omnichannel strategy, though often neglected.
• Sharing of Insights: Departments must share customer behavior and preference insights (consumer insights and trends), with merchandising also involved in decisions around collections and pricing.
• Tailored Adaptation: There is no universal “magic recipe.” Each omnichannel project is unique and depends on the company’s strategy, history, and level of technological and organizational maturity.

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Conclusion

Omnichannel retailing is not a luxury but a requirement for competitiveness. It delivers both financial returns and intangible benefits, such as enhanced customer experience and loyalty, creating long-term value.

Ultimately, omnichannel retailing enables businesses to build stronger, longer-lasting relationships with customers, ensuring greater satisfaction and loyalty. At the same time, it streamlines internal dynamics, transforming the company into a more agile and cohesive organization.

Measuring the ROI of an omnichannel strategy requires a holistic approach that combines concrete financial metrics with analysis of strategic, operational, and intangible indicators. It must be recognized as a transformational journey that generates long-term value.