While e-commerce currently accounts for just over 3% of grocery sales, the impact of online on retail should not be underestimated. A recent report by Deloitte found that upwards of 64% of total in-store sales will be directly influenced by digital by the end of 2015 – that’s up from 49% in 2014. The impact of digital is also transforming pre and post-purchase as consumers increasingly tap social networks to share their experiences and get inspired; today just 30% of shoppers look to retailers for information vs. 70% just three years ago. What’s going on here?

The Death of Omnichannel?

All signs point to a digital transformation unfolding in retail, and it goes far beyond the “omnichannel” trend that has been abuzz of late. Omnichannel is one of those terms that means something different to everyone, so let’s start with a working definition; according to omnichannel.me, in the context of retail it is “cross channel being done well.”

This simple definition suggests omnichannel is all about having a retail presence on all relevant channels (in-store, desktop, mobile, etc.), with a consistent consumer experience across each. So far so good, right? At first glance this seems to capture the digital transformation taking place in retail today, but some argue it falls short. According to a recent article in RetailDive, Why omnichannel as you know it is ‘dead’, the focus of omnichannel is still predominantly on the “moment of truth” or purchase in each channel, rather than on the holistic consumer journey that takes place across channels around a single purchase:

Rather than merely focusing on the “buy” that digital can help drive, retailers need to focus on the whole consumer journey: before, during, and after visiting the store.

While reports of the death of omnichannel may be greatly exaggerated, it is clearly time to expand our understanding of how consumers shop in the new digital reality. Let’s explore this further.

The New Digital Reality

Today, it’s common for a consumer to start her journey by researching a product online and/or visiting the brand’s website before leaving the house. At the store, she looks for coupons on her mobile device or even purchases the item online. After the purchase, she might feel inclined to share her experience on social media. This is the new digital reality – one that creates a deluge of novel data and complexity.

So in a world where shoppers are in control and move fluidly between channels as they progress through their consumer journey, how do brands and retailers adapt? I see three key implications:

• Using syndicated POS data is no longer adequate for determining pricing, promotions, and positioning of products. With over half of all purchases being influenced by digital, the traditional approaches to planning are sure to yield an incomplete picture of the consumer journey and all its influences. Relying exclusively on POS data is like a doctor relying solely on a patient’s temperature to make a diagnosis, regardless of the circumstances – it’s bound to lead to misguided conclusions. Instead, retailers and manufacturers must now take into account a number of new digital signals across diverse platforms, including social, mobile, digital coupons, branded sites, email, etc.

• With brand loyalty in steep decline since 2008, there is a growing need for CPGs to engage directly with consumers to increase loyalty and gather insights on individual consumer needs. To this end, several leading CPGs are going directly to consumers with social media and other online services. This allows them to not only form tighter relationships with their consumers, but also gather additional insights about their behavior and preferences – insights that were previously inaccessible to most brands. As we shall see, this can also lead to more effective pricing and promotions.

• Instead of just relying on big data analytics to extract meaningful signal from overwhelming noise, the increased complexity brought on by a proliferation of digital channels means it is necessary to take a more structured approach. To this end, several companies, including BIC, Unilever and Kimberly-Clark, are now running digital experiments designed to “manufacture” the precise signal that’s required through an iterative process of test and learn. Rather than searching for a needle in a haystack, this allows for the systematic use of digital platforms to “ask and answer” discreet questions, such as: what is the optimal in-store promotion for a given product, channel, and/or region?

There is little doubt the new digital reality introduces an order of magnitude more complexity to the consumer goods and retail landscape; it requires a paradigm shift in where and how data is captured, as well as in its application to the shopping experience. However, this also represents a significant opportunity for a much deeper understanding of consumers and their journey – no longer do insights need be confined to the purchase alone.

Are you ready to move beyond omnichannel and embrace the new digital reality?