Retailers Without Omnichannel Strategy Can’t Gain: Study
Bangaluru: Retailers who do not rely on one touchpoint but leverages multiple channels, both online and offline for their purchasing decisions have an edge over online-only retailers by leveraging their store assets, highlights a survey from the Harvard Business Review (HBR).
Retailers need to invest across channels to attract consumers. Online relating is a huge hit among tech-savvy, time-crunched consumers. However, many customers also prefer physical stores for touch and feel of the products.
The study done collaborating with a major U.S. company, which operates hundreds of retail stores across the country, can also be applicable in major global markets including India that heavily relies on online and offline channels.
Customers were asked about every aspect of their shopping journey with the retailer, focusing on which channels they used and why. And they were also asked to evaluate their shopping experience. Of the study participants, only 7% were online-only shoppers and 20% were store-only shoppers. The remaining majority, or 73%, used multiple channels during their shopping journey. We call them omnichannel customers.
The study states, “Traditional retailers are feeling the heat. Even as competition intensifies, shoppers’ visits to retail stores are declining every year, leading one industry veteran to ominously ask his peers, “Is anyone not seeing large traffic declines?”
Online retail, on the other hand, is thriving. Retail sales through digital channels (including mobile sales) increased by a massive 23% in 2015. Much of these gains have gone to online retailers. Amazon is the biggest beneficiary, now accounting for 26% of all online retail sales. What is more, as it continues to expand aggressively into new categories like grocery and fashion, Amazon’s existential threat to traditional retailers is greater than ever.”
Here are some of the findings of the study:
Omnichannel strategy is a panacea for a difficult environment
Under these hostile conditions, traditional retailers have staked their futures on omnichannel retailing. The omnichannel strategy hinges on the idea that providing a seamless shopping experience in brick-and-mortar stores and through a variety of digital channels not only differentiates retailers from their peers, but also gives them a competitive edge over online-only retailers by leveraging their store assets.
Omnichannel customers are avid users of retailer touchpoints
Omnichannel customers loved using the retailer’s touchpoints, in all sorts of combinations and places. Not only did they use smartphone apps to compare prices or download a coupon, but they were also avid users of in-store digital tools such as an interactive catalog, a price-checker, or a tablet. They bought online and picked-up in store, or bought in the store and got their purchases shipped. In what follows, we count each app, digital tool, and shopping venue provided by the retailer as a separate channel.
The more channels customers use, the more valuable they are
The retailer’s omnichannel customers are more valuable on multiple counts. After controlling for shopping experience, they spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers. Even more compelling, with every additional channel they used, the shoppers spent more money in the store. For example, customers who used more than 4 channels spent 9% more in the store, on average, when compared to those who used just one channel.
In today’s channel-rich environment, omnichannel capabilities drive the engagement of core shoppers with the retail brand and ultimately draw them to the physical store. Traditional retailers with physical stores will do better not only by leveraging the power of the online world, but by synchronizing the physical and the digital worlds to provide shoppers with a seamless, multi-channel experience that online pure plays simply cannot match, the study concludes.