Leader or laggard, how omnichannel savvy are you?September 25, 2015
There have recently been a number of industry publications sharing interesting insights on the ever-growing omnichannel trend. In examining the role of omnichannel, there are a number of things marketers should think about, such as:
- How will physical and digital channels change in strategic importance in the next year?
- How far advanced are retailers in integrating physical and digital channels?
- How will retailers execute their omnichannel strategies, will they look to work with external partners, and in what areas will they look for support?
Let’s examine the answers to these questions below.
How will physical and digital channels change in strategic importance in the next years?
A report, “Online Retailing in Europe, the U.S. and Canada 2015‐2016”, released by the Center for Retail Research for RetailMeNot provides us with the following figures:
- The European countries with the largest online sales in 2015 will be the UK ($85bn), Germany ($72bn) and France ($50bn)
- The highest market share of online will also be found in the UK (15.2%), Germany (11.6%) and France (8.0%), the European average being 8.4%. In the U.S., the share of online will be of 12.7%
- The European countries with the largest mobile share of online spending are expected to be the UK (28.6%), Germany (27.7%) and Sweden (26.2%), the European average being 20.0% (26.8% in the U.S.).
The figures show the combination of a growth of online and a slight anticipated decrease of offline, which remains the undisputed main channel even in the UK where online is most developed representing 15.2% of all retail sales.
It is important to understand then, that online is not only a standalone sales channel but it is actually influencing offline sales. This fact has been conceptualised as “web-influenced” sales, to demonstrate the full importance of the digital channel and its interactions with the physical channel, which are at the core of omnichannel. Recent reports by Deloitte and Forrester Research further support the importance of the “web-influenced” sphere. In fact, in its “Navigating The New Digital Divide” report, Deloitte estimates that the percentage of in-store sales influenced by digital has grown steadily from 14% in 2012, to 36% in 2013, 49% in 2014, 64% in 2015 and should be close to 100% in 2019. Forrester is more conservative however, forecasting that by 2020 digital will influence 53% of total retail sales in EU-7, including a combination of online sales and offline sales influenced by online research.
In this environment where sales in physical stores remain the standard but are increasingly influenced by digital, a recent survey of 200 retail CxOs in Europe from Pierre Audoin Consultants, “Omnichannel Retail in Europe”, shows that the European retailers expect digital channels to become more strategically important in the next five years, but not at the expense of the store. Some 85% of German retailers and 80% of their French peers believe that the physical branch will become more strategically important by 2020, compared to 62% of retailers in the UK.
A report from the Center for Retail Research, states that successful retailers will be defined by their ability to operate online as an omnichannel business, as well as operating physical stores in a very competitive environment. The physical store will continue to go through an optimisation phase which has already started: a recent study by L2, “Omnichannel Retail 2015”, has shown that omnichannel leaders have been closing stores and optimising the performance of remaining ones simultaneously, achieving a better global store performance overall compared to omnichannel laggards. Moving forward, retailers should therefore work at merging the physical and digital worlds through strategies such as drive to store, phygital and store to web. Aside from pure players, which limit themselves to the online channel, retailers are listening to their customers – the ones driving omnichannel in many instances. In a survey from Pierre Audoin Consultants, 85% of European retailers stated that their omnichannel retail strategy is in place because customers are demanding it, while 89% said that their omnichannel initiatives are being driven by a need to improve the customer experience.
How far advanced are retailers in integrating physical and online channels?
For L2, whether a retailer has a strong “omnichannel IQ” or not is determined by their investments in the following:
- Site (fulfillment/integrated inventory, store locator such as Solocal’s BRIDGE, in-store events & services, account, online exclusives and CRM)
- Email (discounting channels, in-store incentives)
- Mobile (site and apps)
- In-store (point of sale, CRM, in-store capabilities)
L2 warns companies not to forget about the real essence of omnichannel: many organisations still think about omnichannel as an extension of their digital business or as a sexier name for e-commerce, evidenced by the fact that 41% of executives in senior omnichannel roles come directly from an e-commerce background. By failing to adopt a holistic approach, retailers miss the opportunity for clicks/bricks interplay.
So how are retailers performing on these aspects? IAB Europe recently conducted an Advertiser Mobile Audit on where the top media spending automotive and retail brands in nine European countries (including the UK) stand in relation to their mobile properties (websites and apps). In this audit, 219 automotive brands (approximately the top 25 in each market) and 394 retail brands (approximately the top 50 in each market) were audited against the following criteria, very much matching the ones mentioned by L2:
- Sites: mobile optimised site; responsive web design; GPS store locator (desktop site); book a test drive functionality (desktop site) for automotive or transactional (e-commerce) mobile site for retail; desktop site speed and mobile site speed
- Apps: iOS mobile app ; iOS tablet app ; Android mobile app ; Android tablet app; GPS store locator (apps); book a test drive functionality (for automotive only, on apps) for automotive or Transactional (e-commerce) mobile and tablet apps for retail
Despite the store locator function being integral to addressing consumers’ expectations of their online to offline shopping journey, the results found that:
- Only 62% of the automotive brands audited have a GPS store locator on their desktop website and this percentage is even as low as 28% in the UK. This is even lower on mobile and tablet apps where only 36% of the automotive brands (20% in the UK) audited have a GPS store locator, even though mobile and tablet are now more used than desktop.
- Only 64% of the retail brands audited have a GPS store locator on their desktop website (also 64% in the UK). Again this is lower on mobile and tablet app where only 40% of the retail brands audited have a GPS store locator (48% in the UK)
How will retailers execute their omnichannel strategies? Will they look to work with external partners, and in what areas will they look for support?
Pierre Audoin Consultants’ report states that non-tech challenges are the biggest omnichannel headaches with more than 80% of the companies interviewed stating that the development of a long-term channel integration strategy was a major challenge, while three quarters named transforming internal organisation structures as a pressing concern.
The biggest regional differences were in the responses from German and UK retailers. The development of a long-term strategy is a huge concern for the former (cited by 73% as a major
challenge), as was the need to make changes to the organisational structure (68%). But UK retailers are much more optimistic on long-term strategy planning (38% see it as a major challenge), and instead are much more concerned about understanding customer activity across multiple channels (43% vs 15% in Germany).
Support from third-party service providers is welcomed: the majority of retailers (57%) believe that they would benefit from external support in implementing and integrating omnichannel solutions. This reflects how stretched many internal IT teams at retailer companies have become in 2015, and shows that retailers have an appreciation of how difficult it can be to drive channel integration – not just in terms of technology, but also in transforming and optimising business processes. Retailers should aim to use best-of–breed, ‘off the shelf’ technologies, such as Solocal’s BRIDGE for store locators, to ease time and cost investment.
Improving omnichannel IQ by listening to the market and acting with agility
Let’s summarise this post’s key learnings:
- The physical channel will remain much more important than the digital one in retail as most of the retail sales will still happen in stores
- But the shopping journey is increasingly influenced by digital, with web-influenced sales representing between 53% and close to 100% of retail sales by 2020
- It is no longer web vs stores but web and stores – omnichannel is all about how to connect and cross-nurture these two channels to meet consumers’ expectations
- However not all retailers have taken this into account and there are still many laggards even among top brands
- A surprisingly high 36% of top retail brands and 72% of top automotive brands don’t have a store locator on their desktop website and this is even more on mobile and tablet app where 52% of top retail brands and 80% of top automotive brands don’t have a store locator
- Challenges in executing omnichannel strategies are mostly non-tech, and retailers are increasingly looking to engage with external partners on tech to focus on solving these headaches
With this in mind, retailers should capitalise on these opportunities in the coming months to grow their omnichannel IQ and leadership for 2016.
Why Omni-channel is a key success factor for growth in retailJuly 7, 2015
For the third year, the KPMG and The Consumer Goods Forum survey of senior consumer manufacturing and retail executives has been released: “To stand still is to fall behind: 2015 Global Consumer Executive Top of Mind Survey” is an instructive wealth of information for manufacturers and retailers about the reality of the international market for this particular sector catching up an expected economic rebound. The purpose of this blog post is to extract the insights brought by this survey on Omni-channel, Solocal Group UK’s area of expertise.
This survey aims “to help industry executives better understand the ever-changing impact of industry disruptors, competition and the economy on their companies’ strategic priorities”. Two notable facts are mainly highlighted in this survey asking 539 influent senior consumer manufacturing and retail executives over the world about their own strategic priorities for the coming years. The first one is the general focus on expansion or top line growth shared by all the panel. The second one is the way to achieve this top line growth.
For this second point, if the solutions are various to reach the growth, one particular mean seems to prevail. And this prevailing action is to develop the disruptive tool to stay into nowadays game for every retailer: omni-channel retailing.
Among all the priorities, one seems persistent: omni-channel
Growth is without any doubt the main target and according to the survey 73% of the respondents said expansion or top line growth is very or critically important. To be more precise about 40% said it was critically important, and 42% said it was their number one focus.
Then arrives the Consumers trust and the Omni-channel strategy, which also represents for 25% of the respondents their greatest challenge.
The omni-channel strategy is rarely the first priority or the first investments, But the omni-channel strategy is always mentioned as one of the priorities or one of the strategic investments. If omni-channel strategy is a priority -but not the top priority- it is yet perceived as the best growth driver (53%) and this is probably why it is persistent. Omni-channel strategy is not a goal but a driver, and probably more by being a new conception of retailing.
Omni-channel is perceived, rightly, as an absolute tool for increasing the consumer trust, necessary for generating growth. It is obvious to say consumers always have a technological lead over retailers, and their capability to use new consumption means are a key point to take into account, in a way to satisfy them and create a deeper engagement and trust. For retailers, digital tools and an omni-channel distribution are necessary to provide an expected service for their customer.
As the survey mentioned it “The omni-channel is still relatively new, but technology disruptions are, by now, par for the course for the consumer-driven industry. It has – and will remain – on the bleeding edge of change. Omni-channel has the ultimate goal of letting every consumer shop and purchase on their terms – a tall order indeed.” For that reason omni-channel is considered as both a key area targeted for investment and a top challenge. Digital retailing is on an edge; on one side there is the threat of being too conservative and then overtaken, on the other side the opportunity to take serious competitive advantages over one’s competitors. The right balance is into the consumer’s hands and experience, asking for new sales and distributions channels and a shopping experience using tools he knows best.
Omni-channel use is a pillar of nowadays goods and services distribution organisation
Omni-channel retailing is a proof of customer understanding. By offering the customer the possibility of using new sales and distribution channels, retailers are improving customer experience. This point is strategic for any expansive customer acquisition strategy. At the question “Which of the following strategies are most likely to drive your company’s top line growth over the next two years?” the first answer elected, before customer retention, customer acquisition and targeting new demographic groups, is new sales channels and distribution strategies. The reason is simple; new sales channels and distribution strategies would automatically bring more customers, maintain the former ones and reach the new demographic groups already using the new channels.
The two most common strategies for developing loyalty identified through the survey are “exceeding customer expectations” and “engagement in social media conversations”. How to exceed customer expectations without using digital retailing tools when online, and especially mobile, has become so important in the customer purchasing behaviour? How to engage in social media without developing a new digital channel up to the supply chain?
The supply chain process should evolve completely to be part of an omni-channel distribution process. Supply chain through an omni-channel scope is a clear enabler to growth. A customer-driven industry, as retail is, needs to rethink from the beginning to the end its supply chain. Nowadays, customers identify and localise shops before purchasing. They also look after local store inventories to know where the closest place to get a product is and if the product can be delivered or collected on the same day. The digital disruptive promise is to purchase whenever and wherever. The whole supply chain needs to be built accordingly to a competitive omni-channel strategy and offer. Linear and analogic processes are replaced by horizontal and cross-channel strategies in nowadays digital reality.
Innovation always has two sides of a coin. It might seem risky but also might be a key competitive advantage. To convert any innovation into growth, customer behaviour knowledge is necessary, and a key point to create loyalty is to answer to customer’s use expectations. There is more to lose by being overtaken by competitors who provide the expected disruptive omni-channel shopping experience, than by innovating.
The use of technologies use has radically evolved these last five years. Rather than destroying stores, the disruption brought by the digital tools and online shopping have changed the way one’s goes in them. This disruption does not take customers away from shops but creates new means of experience. Customers ask for more detailed information, such as opening hours, product availability, promotions, delivery time and are ready to create a truly new relation with brands through the brands’ digital and physical assets, creating new connections between retailers and customers.
Omni-channel is the retail new pillar, a disruptive pillar which is radically reversing common processes. Answering customers’ will is perceived – rightly – as a key for growth and as the retailers’ main goal today. Omni-channel revolutionises linear organisation systems and imposes a diagonal and cross-channel vision in every retailing aspect.
Omni-channel strategy is the core of a new retail vision, driven by customer behaviour which directs any external growth ambition. This distribution model becoming the new retailing, marketing and distribution strategies matrix because it imposes to redefine each supply chain step – from provision to delivery, through ordering, stock management, communication and CRM.
Solocal Group UK has been aware for long of the digital tools disruptive impact and the upheaval this results in consumer habits as this was covered in a previous blog post on “Bridging the gaps on the customer journey”. In particular, Solocal Group UK’s web-to-store solution Leadformance has been developing and operating a SAAS platform of digital tools that enable retailers to adapt to these new consumer patterns. This platform is currently used by more than 160 brands worldwide. Please contact Solocal Group UK team if you want to discuss further how your brand can grow its business by implementing omni-channel solutions fitting the expectations of the customers.
Bridging The Gaps On The Customer JourneyOctober 14, 2014
Every day we take part in a journey. It doesn’t require train or bus tickets and we don’t need to make sure there is enough petrol in the car. The journey that I am referring to is the one that billions of us as consumers make when we decide or find the need to purchase something. It is the customer journey.
Unfortunately, similarly to some of our other travel experiences, many of us have less than smooth experiences, leaving us disgruntled and vowing never to make the same mistake again.
The typical customer journey is comprised of six stages:
- Discovery and consideration (through word of mouth, content or advertising)
- Research and evaluation (both online and offline)
- Purchase (both online and offline)
- Product returns, exchanges or maintenance
- Customer feedback, which fuels the discovery and research stages of the journey of another customer
Getting the customer journey right requires planning, a high level of commitment and a certain amount of empathy to avoid any pitfalls along the way. After all, we are all passengers at some point.
Avoiding flaws at each leg of the journey
At each stage of the customer journey, there is a risk that the brand could lose the customer if they don’t sufficiently engage with them and meet their requirements. When a shopper encounters a flaw, retailers become open to the risk that the customer might be tempted to switch to a competitor who is better able to engage with them, or may even abandon their intent to purchase all together. This means that having even one weakness along the customer path could dissuade potential customers from continuing on their purchase journey, harming other marketing strategies which have been implemented along the way and hindering ROI overall.
It’s therefore crucial that brands engage with customers along each stage of the purchase journey. And while engaging with consumers has become more difficult with the advent of online and mobile shopping, technology has enabled us to develop multichannel marketing solutions that will support brands looking to optimize their customer’s journey both online and in-store.
The importance of seamless connections
A recent study by Accenture, which offers some insight into the customer journey, highlighted the importance of a seamless customer experience:
- 37% of UK retail shoppers still cite a seamless customer experience as the main area for retailer improvement. This is down 17% from last year, indicating that the seamless customer experience is improving
- Retail stores remain an important part of the seamless experience, as customers are increasingly opting to shop in-store: 28% of shoppers surveyed globally are planning to shop more in-store in the future
- Webrooming (a concept we commented on earlier in this blog) is growing and has become more prevalent important than showrooming: 79% of UK shoppers have webroomed in the past year vs 71% who have showroomed
- UK department stores, mass merchants and home improvement retailers scored very highly in terms of capability assessment, whereas consumer electronics and a few large apparel retails lag behind the seamless leaders
To help create a seamless customer journey, research by Capgemini published last year clearly stated that brands should invest in digital tools to support the ‘clicks to bricks’ journey. The company identified 13 digital services which customers can use across the purchase cycle. These include: store locator solution, store happenings, e/mcoupons, product locators and click & reserve services, appointment booking system, online personal shopping, m-payments and multichannel loyalty programmes. In today’s digital age, while customers have come to expect these tools, they are surprisingly still not implemented by a significant part of the businesses: the IAB UK Mobile Retail Audit, released in June 2013, found that only 48% of the top 50 UK retailers have a store locator on their mobile site.
Improving the customer journey
While the Accenture research shows that there has been an improvement in seamless customer experience there’s clearly still a long way to go to achieve complete customer satisfaction. The latest UK Customer Satisfaction Index reveals that satisfaction has continued to fall among UK customers, leaving people more unhappy with their customer experience now than they were in January 2011.
Our advice for a brand to ensure it is providing a seamless, smooth customer experience is to consider the following steps:
- Map the customer journey out to identify the gaps and frictions
- Identify what gaps to bridge first through customer research. Expect some surprises, as you might experience discrepancies between the customers’ expectations and your perception
- Address these gaps by implementing solutions and services that meet customer expectations
- Review the implementations’ impact and continuously optimize
Solocal Group’s mission of connecting brands and customers is strongly linked to the customer journey, and this is a topic we will continue to investigate and discuss during several upcoming industry events including Internet Retailing Customer Experience Research Briefing (October 22) and Local Search Today! – The Customer Journey (December 16) – hope to see you there!
How webrooming and omnichannel retail is bringing customers back in-storeAugust 20, 2014
There has been an undeniable change in people’s buying habits in recent years, with how consumers choose to buy and research products evolving as technology does. Armed with smartphones and tablets, consumers now have access to multiple retail channels throughout the entire customer journey, prompting retailers to adapt to accommodate this.
The extent in which retailers have begun to do this and optimise for mobile can be seen in the IAB Mobile Retail Audit, released in June 2013. The study found that 74% of the top 50 UK retailers had a mobile optimised site, 64% of the retailers have an app, but only 48% have a store locator on their mobile site.
As a result of the increase in online activity, two trends have emerged in the retail industry, which have been dubbed ‘webrooming’ and ‘showrooming’. To define these terms, showrooming is when a customer visits a store to view a product and then makes the purchase online, whereas webrooming refers to the reverse; researching online to then purchase in-store.
Merchant Warehouse recently published a report which demonstrated the growth of webrooming, and highlighted how researching online directly impacted sales in bricks and mortar stores. The study revealed that people tend to research online or on a mobile device before going on to purchase in-store, with 69% of smartphones users aged 18-36 years having practiced webrooming, compared to only 50% who practice showrooming. The findings also show that nearly 80% of local searches on mobile turn into a purchase, with nearly 90% of these purchases being made in-store, highlighting just how important a tool the internet is for driving in-store sales.
This way of thinking can be further supported by a recent report from L2 and Rich Relevance, which examined omnichannel retail tactics and the importance of implementing an omnichannel strategy to take full advantage of webrooming. The study found that by improving the in-store shopping experience and process for the customer as a whole, retailers became able to convert showroomers into webroomers.
As a result of today’s digital age, consumers are beginning to expect omnichannel capabilities, making it essential that suitable cross-channel solutions are in place to meet this need. Being able to offer online ordering with in-store pick up services, easy to navigate store locators, product availability checking or appointment booking, for example, are all tactics retailers can use to drive traffic in-store and increase brand loyalty.
If recent studies have shown us anything, it is that modern technology and cross-channel solutions are empowering the customer, and are an excellent means of providing them with a relatively unlimited amount of information. If used correctly, the omnichannel retail experience is a powerful thing, and one which retailers should utilise as a valuable tool for creating a better customer experience, leading to increased revenue and better customer retention.