Do retailers need to reevaluate their omnichannel strategies and tactics?

Discussion
Photo: Shoptalk
Mar 07, 2019
Ron Margulis

Four walls and no walls. Bricks to clicks and clicks to bricks. There has been Walmart’s acquisition of Jet.com and Amazon’s purchase of Whole Foods. And much, much more.

A convergence is happening in retail and it’s causing major disruptions across all retail marketing channels. Several sessions at Shoptalk 2019 discussed this convergence as both a challenge and opportunity for merchants that started in the physical world and their rivals that started in the digital one.

On the traditional retail side looking at ecommerce, the guidance ranged from emulating the physical shopping experience online so shoppers aren’t confused with the marketing strategy to using a combination of stores and distribution centers for efficient fulfillment.

On the digital side looking at physical stores, billboarding (blowing up elements of the online environment in the store) and using analytics of online shopping data to be more intimate with the shopper in person were suggested.

For both, the consensus from the experts is to test, test, test. The “fail fast” cliché was also bandied about, as was embracing the blur of the two channels in all merchandising and supply elements.

“A brand has to identify their customer’s behavior and then establish the best channel to serve them,” said Amy Errett, CEO of Madison Reed, a hair color ecommerce retailer starting to move to physical stores.

DISCUSSION QUESTIONS: Why is having an omnichannel presence becoming more critical for retailers that started with either physical or digital offerings? Is it more challenging moving from physical to digital or from digital to physical for retailers and consumer-direct brands?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Omnichannel presence is critical because it is an expectation of the shoppers."
"I believe many “omnichannel” (the retail buzzword of the decade) initiatives outlined by retailers in the past several years are mere tactics..."
"Retail winners have been piloting for years to amass learnings and determine what works best for them. Any retail company that is on the fence about this has already lost."

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22 Comments on "Do retailers need to reevaluate their omnichannel strategies and tactics?"


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Charles Dimov
BrainTrust

Look at the research. IHL points to a rise of 46 percent of omnichannel purchases during the holiday season. Other research points as high as a 60 percent increases. Customers want and are now expecting omnichannel as part of the shopping journey. They don’t know what it’s called, but they expect the service. Yet only 27.5 percent of retailers with more than 10 stores offer it. Today we have a huge opportunity gap. If you are in retail, get into omnichannel now for the early advantages. If you have got it, and the others don’t … who do you think will be losing out?

Going from digital to physical is more challenging. There are many more complexities and unknowns in the physical world. Both are challenging… but one migration is definitely easier than the other.

Chris Petersen, PhD.
BrainTrust

The simple answer is that retail success is no longer based on traditional “place.” Place is now where and when the customer chooses to shop. Today’s customers don’t see channels. They don’t think online versus store. They are increasingly expecting and demanding “seamless.” They engage on their terms in the ways most relevant to them on a given day. Omnichannel execution has become mission critical simply because that is how today’s customers engage and purchase.

Bob Amster
BrainTrust

The consuming public has its preferences; some prefer e-commerce and some prefer walking into stores, touching and feeling. Each channel can work to stimulate and support the other. It is a symbiotic, mutually-rewarding relationship between channels.

David Weinand
BrainTrust

To answer the first is pretty simple – because that is where the customer is. For 70 percent of transactions, the shopping journey starts in a digital channel but the value of stores is as great as ever as shoppers are increasingly using them for online pick up and returns in addition to traditional shopping. Shoppers expect a seamless online to physical expertise so for the majority of segments, being omnichannel is table stakes.

The challenges around physical to digital vs. digital to physical depends on the retailer or brand and who they employ. A digital retailer, to successfully open stores, should have people with experience and expertise with physical retail. The opposite holds true for physical retailers.

Dr. Stephen Needel
BrainTrust

Where do you get this 70 percent number, David? That’s certainly not the case for grocery, which is most of what people buy.

Heidi Sax
Guest

CB4 recently surveyed 1,000+ grocery shoppers to determine where they’re shopping for groceries and how they decide to shop and one store or channel over another. 58 percent of shoppers report buying groceries in-store very often, compared to only about 5 percent who buy groceries online very often.

The difference is huge, and I don’t think we can necessary conclude their journey starts online. Tech-heavy competencies like private label production, self-service checkouts, and apps that support BOPIS are generating a lot of buzz in grocery. Yet our research suggests that the single most important factor in determining grocery shoppers’ paths to purchase is whether they can easily find and purchase the products they want. When they can’t, about half will head to the closest competitor.

Dave Bruno
BrainTrust

Omnichannel is really no longer a subset of retail — it is retail. The retailers that will thrive are those that best integrate and align their brand promise into every channel. Digital channels are the new centerpiece of the brand story, while physical locations represent opportunities to bring the brand promise to life. How those things manifest will differ from brand to brand, but those who stay true to their brand and their customers’ expectations in each channel are those who will thrive.

Art Suriano
BrainTrust
Successful retailers today need to be secure online as well as in-store. We’ve come a long way from when many retailers were treating their internet as one business and their stores as another, yet there was always one customer who would shop both. Today we see a better blend of both web and in-store opportunities as the same. BOPIS is an excellent way of getting customers who buy online into the store and is just one example. There are still some retailers like Staples who often make the mistake of penalizing the customer with internet-only offers and in-store only offers. Don’t attempt to tell the customer how and where to shop if you want their business. Molding your web and your stores into one company is vital, and it is how customers expect the retailer of their choice to be. Retailers who have developed successful omnichannel practices have been and will continue to be the big winners. Remember, there is no one or nothing more important than the customer, and ALL retailers need to listen… Read more »
Harley Feldman
BrainTrust
Omnichannel presence is critical because it is an expectation of the shoppers. Younger shoppers like their phones and are comfortable with mobile purchases, yet they also sometimes want to pick up and shop in-store. Older shoppers who have grown up buying in stores have discovered the value of shopping, reviewing and purchasing online. For the retailer, this means most of their shoppers prefer to have both options — the definition of omnichannel. A recent study showed that retailers who have both online sites and stores have twice the sales as the retailers that have one or the other channel but not both. No wonder Amazon is moving toward more stores. It is more challenging to move from digital to physical. Putting together an online service is a technical development based on what the retailer is already doing in stores for maintaining customer data, ordering goods, hiring associates and fulfillment. Retailers moving from an online presence to stores must deal with all of the store issues above, which will be unfamiliar to a strictly online retailer.
Mohamed Amer
BrainTrust

Consumers don’t think in walls or no walls; they do in value and convenience. The smartphone has put millions of products at our fingertips. This has happened over many years and that accessibility and transparency is permeating everything we do inclusive of in-store visits. Since we, as consumers, navigate with little active thought, between physical and digital, the retailer must also provide that frictionless journey to capture our purchases.

It’s always more difficult to go from what you know to what you do not. There’s no easier path except that in the main, going from physical to digital is more challenging since it undermines many of your core assumptions of what makes for a profitable retail business. Moreover, to think and execute in two distinct arenas as separate strategies will always fail. Only an integrated strategy that encompasses both aspects and are unified around the customer will prove lasting.

Gene Detroyer
BrainTrust

It is much more challenging moving from physical to omnichannel because of the legacy thinking, “Oh, we will lose sales in the store” and the legacy business model.

How critical is it? So critical that there should be no such thing as physical and digital in the retailer’s mind. It is all one today and it is moving so fast that there should be a continual reevaluation of the business model to be sure that the latest trends by shoppers are understood and addressed.

This is no longer a business where we can build a store and just operate it.

Ralph Jacobson
BrainTrust

The mantra of “location, location, location” STILL hasn’t changed. Be where the customer is whether online, in a mall, or on Mars. The difficulty of migrating/expanding your business into other key channels has everything to do with how agile you have built your business for inevitable changes in the future. Darwin was right, too.

Ray Riley
BrainTrust

There will be no shortage of highly informed positions from the BrainTrust today on this one. I believe many “omnichannel” (the retail buzzword of the decade) initiatives outlined by retailers in the past several years are mere tactics, and tend to lack any overarching resemblance of strategy. Target being a positive example of laying many tactical bricks in a comprehensive and visibly strategic wall.

Andrew Blatherwick
BrainTrust
The retail world is definitely converging and when people said the High Street was dead, many of us said wait and see because digital retailers will need to show a presence. That is happening now. As traditional retailers go online, and digital retail goes to stores, which is the easier move? I am sure each will claim they have the harder task as they struggle to take on the demands of the other side. In truth, both are hard because the two types of retailers are coming from such opposite sides of business. Online retailers are more like software companies than traders, they created their business because they understood and liked the technology not because they were retailers at heart. Traditional retailers are traders who do not really like technology, though they accept they have to have it. Online retailers have created an opportunity for a large number of people who did not want to be retailers but had an interest in a particular area of merchandise. These specialists are still more technology than trader… Read more »
Cynthia Holcomb
BrainTrust

Strategically, if the mantra of “omnichannel” had truly been embraced by retailers, physical to digital or digital to physical would be a distinction without a difference.

Jasmine Glasheen
Staff

Physical to digital can be a difficult move for retailers who have been around a while, since they often have to learn to reach online customers, which means marketing in a new way.

Online brands that build up to physical retail, such as Madison Reed, have already identified the location of their core customer base. They’re starting out with built-in customers at every physical location, which is why these brands tend to be so successful with brick and mortar.

Steve Dennis
Guest

I have long said that it is not about being everywhere (as “omni” implies) but by showing up in remarkable ways for customer’s where it really matters. I prefer the term “harmonized” retail, because the real key is to eliminate the discordant notes in the customer journey and to amplify the wow in beautiful ways to create a memorable experience.

As a practical matter it is often easier for DTC brands to move in physical retail because they can place “right-sized” stores in the best locations for today, whereas legacy retailers are often hindered by poorly spaced and laid out stores in less desirable real estate. Digitally native vertical brands also have the huge benefit of having built their front-end customer facing systems in the cloud and without having to undue silo-ed systems, metrics and incentives.

Ken Morris
BrainTrust
Omnichannel services have become “table stakes” for retail, as consumers now expect it. In fact, some will choose a retailer based on the availability of omnichannel offerings. According to BRP’s consumer study, 68 percent of consumers will choose to shop at a retailer that offers the ability to order products from inventory across stores, online and mobile — instead of one that doesn’t offer this service. The need for an omnichannel presence is no more evident than in the recent trend for many e-commerce retailers to open physical stores – Amazon and other online-only retailers. The store is not dead! It is much easier and more economically feasible for a physical retailer to launch an e-commerce site than for e-commerce retailers to open physical stores. For smaller e-commerce retailers, they may start their move to physical stores with a smaller, co-location space with an existing retail chain to reduce the expense and allow for faster development. Shopping is still theater and people love to go to the theater for a “live” performance. You must match… Read more »
Kai Clarke
BrainTrust

Yes. Disruptive business is a key to survival and omnichannel marketing is part of this. As technology continues to change our expectations, we must adjust our business models, expectations, systems, processes and procedures to reflect this. Amazon is clearly leading this disruption, and others are pushing to adjust. As this model changes and morphs to include omnichannel marketing in each of its disruptions, the business marketplace must adjust itself to survive and the retailers who comprise each category must adapt or perish.

Cathy Hotka
BrainTrust

Great column, Ron. In 2019 the customer not only expects an omnichannel offering, but a seamless one. It’s table stakes. Retail winners have been piloting for years to amass learnings and determine what works best for them. Any retail company that is on the fence about this has already lost.

Craig Sundstrom
Guest

This seems more like an exam essay than a discussion point, but both are necessary because as digital becomes more widespread (for formerly physical), and as competitors grow (for formerly digital), a retailer will lose much of their potential customer base if they only sell in one sector.

I’m not sure which is more challenging, but I’m not sure it matters: you start out as one or the other … it’s not like you get to choose your history.

Zach Zalowitz
Guest

90% of my 40+ projects were focused on transitioning digital experience into a physical store, and I can tell you from experience this is the more challenging of the two. Why? Because most of these retailers still have 70-80% of their revenue coming from bricks, and typically at a higher margin per transaction. I’ve found that most retailers are resistant to change because they’re not focused enough on the change management aspects of an Omnichannel Transformation Project.

From the customers’ perspective, the jury is in! Digital, specifically Mobile purchase, will continue to trend up. The goal line will keep moving for retailers to provide a quicker and more convenient shopping experience, which is why you’re seeing an explosion in BOPIS and “easy returns” (Buy Online, Return In-Store, aka “BORIS”) projects.

The bottom line is, an Omnichannel presence is no longer becoming critical. It’s already critical.

wpDiscuz
Braintrust
"Omnichannel presence is critical because it is an expectation of the shoppers."
"I believe many “omnichannel” (the retail buzzword of the decade) initiatives outlined by retailers in the past several years are mere tactics..."
"Retail winners have been piloting for years to amass learnings and determine what works best for them. Any retail company that is on the fence about this has already lost."

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