Winners are more optimistic about getting to profitability for omnichannel orders.
Even as the way people shop has changed drastically in recent years, retailers have been applying systematic, incremental changes to old processes and the systems that supported old ways of shopping that are not just adjusting fast enough. A recent study from RSR Research has found that retailers must move faster, spend begrudging amounts on tech and employees, and — at the same time — get out of the Amazon price war.
In fact, the report states, “It seems odd, after at least seven years of retailers trying to respond to consumers’ increasingly digitally enabled shopping behaviors, to say that companies are still in the early days of offering an integrated digital/physical shopping environment that works for consumers and is profitable for retailers, but that in fact is the case.”
According to the results, which compares retail “winners” against their less successful counterparts, 32 percent of over-performers reported that one half or more of their store sales are influenced by the digital channels, compared to just 11 percent of all other retailers. And Retailers who respond positively to that challenge win more share-of-pocketbook from their customers and drive more top-line performance in the store.
The study also found that “winners” are most concerned that new competition is challenging the business model (including cost structure and profitability), while their lesser-performing peers are most concerned that consumer expectations change too quickly to respond.
When asked to rank business challenges, there was a marked change in prioritization from 2016 to 2017.
When asked to respond to the challenge, “Online competitors are changing the cost structure and profitability of our business model,” in 2016 38 percent of winners and 47 percent of others ranked it as a top-3 business challenge, while in 2017 it is now a top concern for 58 percent of winners and 54 percent of all other retailers.
“Consumer expectations outpace our ability to deliver cross-channel experiences”: This challenge was rated by 46 percent of winners and 43 percent of other retailers as a Top-3 business challenge in 2016, but jumped as a top concern for 55 percent of winners and 54 percent of others.
“The way consumers use different channels to make purchase decisions is unpredictable, but important to understand’: This challenge was listed by 60 percent of winners and 43 percent of non-winners as a top challenge in 2016, but dropped to 55 percent of winners and 35 percent of non-winners in 2017.
Ultimately, the report found that “Underinvestment in enabling technologies is seriously damaging retailers’ ability to execute omnichannel activities profitably. While the best performing retailers ascribe significantly higher value to such Technology Enablers as a single cross-channel customer platform and improved cross-channel analytics, most retailers have simply cobbled together whatever solutions they could to create a somewhat satisfactory customer experience. Today, many believe their solutions are sub-optimal.”