It’s not difficult to find a news story saying retail is dead – that retailers should just close their brick and mortar store and go ‘all in’ for ecommerce. Not so fast. Recent research from Harvard Business Review suggests that an effective omnichannel experience leads to greater instore spending. Well-informed consumers make stronger connections to the retailer’s brand. You just need to engage with them on the channels they want in the combinations that they want.
I’m going to start this blog by challenging some other pieces of conventional wisdom. Statistics show that 80% of US shoppers have bought something online within the last month. In fact, 51% of Americans say they prefer to shop online – a figure that rises to 67% for Millennials. Yet, the HBR research of 46,000 US shoppers showed that omnichannel customers ‘spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers’. In addition, the more channels a customer used to engage with the retailer, the more they spent. Those customers using four or more channels spent on average 9% more instore than those using a single channel.
Omnichannel represents flexibility to customers
What I take from this is that customers don’t really make an offline/online distinction anymore. They just want to shop in a way that’s right for them. The evidence of the HBR study suggested that what customers really enjoy is the ability to use all the retailer’s touch points in different combinations. They may want to research online or on their smartphone and purchase instore or purchase online and pick up instore. They may well take one approach for one purchase and another for their next. The key is for the retailer to provide the information they need to make decisions and the flexibility to purchase as their needs and lifestyle dictates.
Customers now are happy to do thorough research across digital channels prior to going instore to make their purchase. The HBR research showed that conducting prior online research led to 13% greater instore spending. This is a little against conventional wisdom, which states people research instore and buy online. But that really doesn’t matter. Whichever way around the purchase happens, retailers have to create a consistent experience across channels to make it easy for the customer.
Boost revenue, reduce costs
So a good omnichannel experience makes customers buy more but that’s only half the story. Omnichannel retail has developed against a backdrop of continually declining instore visits and growing competition from online brands. It is as much about increasing efficiency as it is about boosting revenue. Traditional brick and mortar retailers begin to have real advantages over competitors when implementing a comprehensive omnichannel strategy. These include:
- Brand and product consistency
Customers experience the brand and retail experience consistently across channels. Omnichannel retail allows companies to establish a single central platform – such as OpenText’s ECM platform – that brings together all information such as product, pricing and promotion and makes it accessible on any channels.
- Supply chain visibility
Retailers gain far greater visibility into customer demand and the inventory needed within the supply chain to service demand across all channels. Inventory doesn’t need to be dedicated to specific channels but retailers can work closely with suppliers to more closely match inventory to sales. Omnichannel retail provides a huge amount of supply chain data that can be analyzed to create a highly accurate picture of present and future customer demand across channels. OpenText™ Business Network provides a global platform for trading partner collaboration and advanced supply chain analytics that let retailers make more effective use of inventory.
- Targeting and personalization
Omnichannel retail lets retailers know their customer far better than you can through a single channel. You have access to customer data regardless of the channel on which it was created. This enables the retailer to build an individual customer profile, identify their buying patterns and preferences and compare with the behaviors of other customers to identify trends. Big Data analytics makes it easy for senior executives and business users to gain real insight into their customers. This data is fed into your Customer Experience platform to create highly targeted, personalized and consistent communications and marketing delivered to the right channel at the right time.
Omnichannel drives customer loyalty
Perhaps the most compelling reason for adopting an omnichannel strategy is the fact that it will increase customer loyalty. The HBR research showed that, within six months of an omnichannel shopping experience, customers had paid 23% more repeat shopping trips to the retailer’s stores than single channel customers – and were more willing to recommend the retailer to family and friends. In addition, IDC found that omnichannel customers have a 30% higher lifetime value than those who shop using only one channel.
The reasons for going omnichannel are clear but retail adopters have often struggled to achieve the expected results. They have found the move from multi-channel deployment to omnichannel retail challenging. I think that some retailers have focused too heavily on technical integration and not enough on how omnichannel will deliver excellent customer experience and real business differentiation. I will go into more detail on this in another blog but the HBR research shows that, if you can get omnichannel right, the benefits are there to be seized.