A 2-part blog where we explore why retail brands struggle to deliver seamless online-offline experiences.

Let’s start with an example. When building a new retail brand, your focus is on the basics. You find a payment terminal to accept money from customers. As your business grows, you realize the need for an inventory management system to keep track of your stock. Success leads to expansion, and soon you have a second store with its inventory. Initially, you don’t consider these inventories as connected; after all, that wasn’t a requirement from day one.

As your business scales, you face new challenges. Different regions, various vendors, and leftover stock from previous seasons need to be sold off—these complexities require more sophisticated solutions. Each time, the most logical step is to integrate different systems, each designed to handle a specific task effectively. This approach, while practical at the time, results in a tech stack composed of multiple systems and numerous integrations.

When the need arises for more complex workflows—such as buying online and picking up in the nearest store, or exchanging an online product at a store near you—the limitations of the fragmented tech stack become apparent. Demanding omnichannel customer requirements are only possible if data flows seamlessly across applications, ideally with one central platform holding your data rather than each isolated system having an additional slice of data.

In our observation, retailers exploring omnichannel options usually find themselves facing three significant obstacles:

1. Multiple Millions of Dollars Invested in Legacy Systems. There’s no way they want to start over.

2. Employees are resistant to change. Newer automation might lead to them losing their jobs, maybe things fail, or maybe people just don’t want things to change.

3. Complexities integrating any new application, let alone a new POS system.

Each issue is complex and needs to be addressed on a need-by-need basis. When you need advice on the right way to change systems, let us know (LINK TO CONTACT US). Consulting 100s of brands with their move towards a unified commerce solution, we have a deep understanding of how to help brands transition to true omnichannel workflows.

With that, let’s address each challenge retailers face with their omnichannel migration.

Old vs New

The problem with legacy systems is the desire to hold onto them. Over the years, retailers have invested millions of dollars into these systems, making them work through significant upfront capital and sometimes sheer willpower. When considering a new system, the cost seems exorbitant—not just for the new investment, but also for maintaining the existing one. As a result, management often focuses on immediate goals, making the budget for overhauling legacy systems hard to justify, especially when the current system seems to be working and quarterly growth numbers are rising.

However, it’s crucial to reframe our thinking about these systems. Any tech investment has a 10-15 year lifespan. When this lifespan ends, it’s time for a fresh round of investment in a more advanced tech stack. Here’s why:

Newer Tech in the Market

Every 15 years, the tech landscape undergoes massive change. Previously, platforms like Oracle xStore were the go-to for retailers. Now, Unified Commerce Platforms, which are cloud-native and come with features like Buy Online Pickup In-Store, are on the rise.

These modern platforms centralize data in one location instead of each application having an incremental amount of information in the database. Thus, the ROI on these systems is hard to measure on a 12-month timeline. But on a 5-year timeline, you’ll notice a rise in loyalty, higher cart values, and more sales channels being unlocked. That’s cause we put the first rule of business ahead of us – always delight the customer.

Always delight the customer

A customer walks in and asks for a size ten shoe. Instead of going to the stockroom to search for the product, sales specialists can easily look it up on their phones, right when they are talking to the customer. This one change enables the sales associate to build a stronger bond with the customer, vs the previous experience of abandoning the customer to search the stock room for 5 minutes. And should the product not be in store, we can deliver the product to the customer’s doorstep. The punchline is – from a nearby store. With unified commerce platforms, all your inventory is connected. Sales specialists can sell items that are not in their store, ensuring they can close the sale and the customer gets the product delivered via the most convenient fulfillment channel.

Each delightful ah-ha moment with the brand increases brand recall, which directly results in higher lifetime value.

With XY, we champion connected inventory. Each store can fulfill orders, even if they are placed online. This gives the sales specialist a larger inventory to sell an item to a customer, also helping increase the brand’s topline.

Staggered Roadmap for Modernization:

Transitioning from legacy systems doesn’t have to be a disruptive, all-at-once overhaul. Think of a mid-office approach, that connects with ERP solutions, so that some of your old systems can be operational when the new Unified commerce solution is live. This way, you can start the process of modernizing your tech stack incrementally, instead of all at once. Here’s an example of how the mid-office implementations allow for incremental migration of the legacy stack.

Moreover, companies like Amazon continuously innovate with features like “buy online, pick up in-store” or “buy online, return in-store.” These features are becoming common expectations. In the future, customers will think of a brand holistically, without distinguishing between online and offline touchpoints. This shift means retail outlets must focus on creating a seamless experience, one that is channel agnostic.

When looking at the next 20 years, a system overall would be needed. The first question you could ask is, “What do customers of the future expect”, and then define tech constraints on those.

There are 2 more reasons why retailers fail to modernize their tech stacks, specifically, the internal resistance of the organization to change and the integration dilemma. We’ll cover both of these next week, in the upcoming blog.