Back to insights
Scott Chepow considers the rapid rise of omnichannel retail, from the surge in e-commerce to the evolving role of brick and mortar and the implications for commercial negotiations. As retailers and brands navigate a more complex and interconnected landscape, the ability to negotiate for value across channels has become a critical capability.
Back in March of 2021, Mastercard’s announcement that 75% of apparel purchases in the previous month had been online was astounding. If anyone had been in any doubt of omnichannel’s future, I'd like to think that news would have persuaded them that it is well and truly here to stay. Today’s statistics are more consistent but also showing the continued growth of e-commerce as a channel. Today, roughly 45% of retail apparel is sold online with women’s fashion the clear market share and growth leader. As an aside, judging by the amount of boxes that show up on my front step with my beloved bride’s name on them, I think she may be skewing the results significantly to growth.
Years ago, I recall a food and beverage company sharing with me that they’d received a substantial percentage ask on all e-commerce sales through a particular retailer. Their response: “Take it. I only sold 18 units on your website last year.” At the time, they thought it humorous. I doubt they would feel the same today.
E-commerce is just one member of the omni family. Online grocery pickup, as a component measure of the click and collect family, had reported growth rates as high as 1,000% through the pandemic. In May, OGP had its first dip under monthly sales of 9.5BUSD after 9 consecutive months above that figure. Still, OGP is exhibiting significant YoY growth.
Bricks and mortar retail growth has been all over the place over the past year with some retailers reporting record growth and others shuttering. There is only one thing to be sure of: omni is not going anywhere, as brands and retailers seek to deliver a more seamless, stronger relationship with the consumer while at the same time driving an improved customer experience. This seamless, stronger relationship with the consumer is designed to increase stakeholder value for the retailer and, in turn, the brands that supply them.
So, how do we work with our counterparts to negotiate for the maximized value in this omnichannel world? I’ll give you the simple answer. It might be one you’re not going to like because the answer is, it depends. It depends on both parties’ ability to create value, and their desire to create value through negotiation.
In a world where both parties possess the ability and desire to create value, they have that by stepping back and assessing what creates value for their counterparty within the guardrails of their own empowerment. Both parties need to be conscious of consistency across platforms in product mix, promotional activity, pricing, speed of delivery, and most importantly, their own ability to deliver on the promises they make across channels.
In a world where one or both of the parties does not possess or desire to create value through negotiation, it becomes an exercise in the extraction of value from the omnichannel negotiation process. In which case, one or both of the parties pursues a self-interest agenda and things can get competitive and confrontational in the negotiation process.
Heading down this pathway, each party needs to ask themselves some serious questions: what is my appetite for friction and conflict in negotiation? What is my BATNA if things don’t work out? How do I fix what I might damage or even break in the relationship? And, by the way, since negotiation takes place in the head of the other party, we should also take a step back and predict how our counterparty is going to answer all the same questions.
So many questions arise in the omnichannel world of negotiation, and it all ties back to three things.
1. What is your organization trying to achieve?
2. What is their organization trying to achieve?
3. What type of negotiation am I going to undertake to maximize the value for my stakeholders?
If you can answer those questions and strategize the negotiation process around them, you will put yourself in a position for the best result. And I say that with one caveat. Do not forget that omnichannel is designed to improve the consumer experience.
About the author
Scott Chepow is the Regional Head of Sales and Delivery at The Gap Partnership, based in the United States, where he leads the design and implementation of negotiation solutions for Fortune 500 companies.
How The Gap Partnership can help you
The Gap Partnership specializes in transforming negotiation into a strategic advantage. With our expertise, we equip your teams with the skills and mindset to negotiate effectively, help standardize your negotiation processes for consistent success, and work with your leadership to foster a culture of collaboration and alignment across departments. Let us partner with you to embed negotiation into your organizational DNA, ensuring sustainable growth and a competitive edge in every negotiation.
