By Dietmar Rietsch, Pimcore
The table stakes have changed for retailers dramatically in the last two years. Brand loyalty is waning, and as McKinsey reveals, instead of holding on to their familiar brands in times of uncertainty, more than 75% of consumers switched brands, retailers, or channels as the pandemic spread. For customers today, convenience is as important as price, and personalization is more important than ever before. According to Salesforce, 90% of consumers – online and offline - look for digitally enhanced shopping journeys, while 78% value convenience even more now than they did before the pandemic set in. With the seismic impact of the pandemic lingering in the new year, retailers need to recalibrate certain core elements of their business strategy to reach customers wherever they are (online or physical outlets) in real-time and respond to volatile customer preferences proactively.
The Future Of Retail
Defined by a multichannel approach, the future of the retail industry looks promising – a world in which non-competing online and offline channels support each other to enable a seamless blend of digital shopping platforms with brick-and-mortar stores. Such a successful multichannel approach will help retailers add to customers’ convenience and allow them to enhance their value proposition by providing personalized recommendations to customers. The success of multichannel retail also will rest heavily on social commerce sales which are predicted to hit $79.64 billion in 2025.
Pioneers like Sephora offer a glimpse into such a future. The brand is a perfect case study of a successful retail multichannel strategy by combining offline (in-store) and online (app, augmented reality, and social media). Interestingly, while the pandemic has accelerated digital sales, studies reveal that as much as 78% of retail purchases will still be made in stores by 2024. Hence, retailers looking to secure space among the leaders in the future are focused on building an effective multichannel strategy.
How To Build A Successful Multichannel Retail Strategy
Generating more than $350 billion in the U.S. alone, multichannel sales are predicted to account for almost half (45.6%) of eCommerce business by 2023. Besides reducing operational costs and ensuring a wider audience reach, a multichannel retail approach also helps retailers deliver outstanding customer experiences and improve brand loyalty significantly.
The cornerstones of a successful multichannel retailing strategy include the necessary capabilities of delivering retail experiences that resonate with the customer, creating customer value, strengthening architecture, and ensuring a consistent customer journey across all touchpoints.
- Identify must-have capabilities
With the pandemic reinforcing unexpected and radical changes in the competitive landscape, identifying the necessary capabilities to deliver best-in-class experiences at each step of the customer journey is imperative for success. Retailers must invest in technologies that empower them to adapt to changing business demands and build resilience while managing ever-increasing customer expectations sustainably. For example, an effective multichannel retailing strategy must include inventory plans that take into account real-time physical and digital trends along with historical performance. By adjusting product assortment based on real-time trends, retailers can provide a more transparent view of product availability. The ‘new normal’ also demands that retailers invest in scalable in-store distribution capabilities to facilitate no-contact delivery, click-and-collect, buy-online-pickup-in-store (BOPIS), curbside pickups, buy-anywhere-and-get-anywhere (BAGA), buy online-ship-to-home, and other fulfillment methods.
- Link impactful customer value
Retailers need to provide capabilities that correlate clearly, directly, and immediately with consumer values, expectations, and behaviors as they relate to all the major customer-facing processes. As consumers increasingly seek products with specific attributes that line up with their values, providing the right product assortment is a crucial competitive differentiator today. Retailers can deliver value by utilizing technologies (voice-search, in-store digital display, geo-location services, social shopping, visual search, in-store app, virtual try-on, etc.) that help customers locate products swiftly and efficiently. In addition, by leveraging non-historical and nonlinear external data (weather conditions, neighborhood communities, and local events), retailers can make more relevant decisions on product assortment, predict demand patterns better, and cut down on out-of-stock items – all adding up to customer experience.
- Strengthen IT architecture
Retailers must improve their ability to rapidly respond to changes in consumer behavior, understand behavioral patterns, and tailor products to meet the customers’ specific needs. Often, this is inhibited by on-premises, legacy, and monolithic applications and infrastructure.
To pivot business capabilities to support new retail scenarios and accommodate exponential growth, retailers must strengthen their architecture and modernize infrastructure. They must include load balancers to efficiently manage sudden peaks and slumps in demand. Multichannel retail success depends on a robust underlying architecture that ensures agile and efficient supply chains, unlocks new data-driven opportunities, and allows retailers to create exceptional customer experiences by using augmented and virtual reality (AR/VR), artificial intelligence (AI), the internet of things (IoT), and other disruptive technologies.
- Ensure consistency across touchpoints
Continuously shifting consumer behavioral patterns have radically altered the way retailers engage and interact with their customers today. Surveys show that while 74% of customers use multiple channels to begin and end a transaction, 66% use multiple devices. As a result, retailers must present a consistent view across all customer touchpoints through cross-functional collaboration, ecosystem participation, and co-innovation. Customers today expect much more from retailers than fast and easy checkouts or friendly and helpful sales staff. They love to read reviews and compare products on eCommerce sites while moving seamlessly between online and offline touchpoints. With convenience becoming a hygiene factor (thanks to Amazon), retailers must offer a flawless, consistent shopping experience across every single touchpoint to ensure better customer engagement, more sales, and higher retention.
For the retail industry, there’s light on the horizon. 61% of consumers across the world are optimistic about the future, says PwC in their December 2021 Global Consumer Insights Survey. With in-store shopping recovering to pre-pandemic levels (47% of respondents shopping in-store daily/weekly) and mobile shopping clocking all-time high figures (41% shop daily/weekly using their smartphones), it appears that the future lies in multichannel retail. Although the business landscape will continue to shift for a long time now, retailers who can be omnipresent for their customers and make every touchpoint – online, in-store, social - frictionless and hyper-personalized will emerge as market-shapers in the new world.
About The Author
Dietmar Rietsch is CEO of Pimcore. A serial entrepreneur with a strong sense for innovation, technology, and digital transformation. He is a passionate entrepreneur who has been designing and realizing exciting digital projects for more than 20 years.