With Amazon alone gaining 65 billion dollars in market value over the past five years, it isn’t news that retail leads the way in a historic disruption of the relationship between buyers and sellers. The popularization of smart phones and tablets, expanded offerings online and the maturation of a generation of buyers raised on the Internet have proven to be fertile ground for the bloom of digital marketing channels, and trouble for traditional commerce. How enterprises respond to this tectonic paradigm shift in the buyer’s journey will determine the winners and the losers of the future.
Clicks are beating bricks with “Endless Aisles.”
The traditional business model typified by retail is facing an increasingly embattled existence. Using tracking devices installed in 40,000 retail outlets, data firm ShopperTrak reports that store visits are falling 5% year over year, every month. According to Moody, annual growth in revenue at the 100 largest retailers has slowed dramatically—to less than 3%.
What’s emboldening this trend? Clearly one of the key factors is the online experience of “endless aisles.” Sitting in the comfort of your own home, you can peruse the inventory of vendor after vendor at any time—a seemingly impossible marketing advantage over dimensionally and temporally restricted brick and mortar stores.
Is this the beginning of the end for traditional retail?
It doesn’t look good. Office Max and Sears were amongst the leading store closers in 2014 with hundreds of outlets shuttered between them, the year bid final adieu to Blockbuster, while the fate of retail industry stalwart Radio Shack hangs in the balance after the company filed Chapter 11 in February.
Reports of retail’s impending death are, however, greatly exaggerated. Online shopping, predicted by Forrester to exceed $370 billion by 2017, will still account for just 10% of all USA retail sales. Meanwhile, innovative new store formulas are flourishing. Apple’s unique retail approach was validated in 2014 once again, with a fiscal performance that Tim Cook called without hyperbole “one for the record books.”
While a number of factors are at play, the driver that may be changing consumer expectations the most is that buyers interact in unique new ways with multiple marketing channels before they purchase.
Welcome to “The Omni-Channel Paradigm.”
The buyer’s journey has changed. Typical buyers are doing online research before and/or during the actual buying process. Customers use multiple marketing channels to evaluate product selection, pricing, special offers, availability and reviews by other consumers.
In particular, this paradigm shift centers on mobile phones and tablets. For most of us, our mobile devices are integral parts of ourselves, within reach 24 hours a day. Whether retailers view mobile as an existential threat or as an opportunity, consumers expect shopping to be a highly personalized and seamlessly consistent omni-channel experience.
But customers prefer to buy online now, right?
Actually—wrong. Humans are sensory beings— brick and mortar stores have an enormous advantage in being able to offer shoppers the opportunity to see, touch, feel, and smell the products of interest. While digital marketing channels may be an important part of the new buyer’s journey, studies indicate that 85% or more of customers prefer to buy in stores and welcome local marketing customized to their preferences.
What is important in both the retail environment and other industries is that sellers present a more intimate and personalized experience across all the marketing channels that buyers touch. It is no longer good enough to employ a “one size fits all” approach, or even to maintain awareness of buyers in separate silos according to marketing channel. Buyers should experience a consistent brand experience on their desktop, mobile device and in-store, and should benefit from custom tailored offers that suit their known preferences and buying history.
But what about those “Endless Aisles?”
While a single retailer truly can never match the full catalog of online options, it can make available to in store customers the full range of its inventory. Aided by technology, retailers can direct buyers to nearby stores where an item is in stock or arrange for home delivery. Buyers who prefer the flexibility of shopping online but want the convenience of local accessibility can purchase electronically and pick up their items at a nearby store—the “Click and Collect” model.
Indeed, some leading retailers are already successfully experimenting with unification between digital and physical shopping realms. After losing $1.2 billion in 2012, Best Buy began turning its stores into distribution centers for online shoppers, and currently offers 1-hour delivery in some markets. Staples, which plans 225 closings by year’s end, is rolling out omni-channel prototypes featuring 55-inch screens for online browsing and tablet-armed associates.
5 Ways to Win, in an Omni-Channel World:
- Optimize your website and search engine results to feature local store inventory and engage consumers based on individual purchase history, especially catering to mobile devices.
- Use loyalty programs, near field communication devices and other permission based marketing to provide a consistent and personalized experience online and in-store. Incentivize in-store purchase with coupons and exclusive offers customized to shoppers’ preferences.
- Make available on your website, through in-store kiosks and via store associates all the information a buyer needs to know where their item is in stock locally.
- Provide free Wi-Fi access, equip store associates with mobile devices and train them to help customers find the items they need.
- Reconfigure stores to add fast local delivery or “click and collect” services for items purchased online.
It likely won’t be smooth sailing for retailers and other traditional businesses in the coming years. Those who commit to unifying the customer experience across digital and physical touch points, however, have an opportunity to leap ahead of the competition and cement long-term relationships with customers.
This article was syndicated from Business 2 Community: How To Compete and Succeed In An Omni-Channel World
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