Omnichannel is all around us. It's a term not many of us are experts on, but as soon as we understand the term, we immediately recognize its value for both retailers and customers alike:
You're at work and you order a TV to be prepared for in-store pick up at Best Buy. You go in the store and collect your TV. That is omnichannel. You go on Foot Locker's website to review the newest sneakers available, and the next day go to the store to try-on and buy. That is omnichannel.
Omnichannel is defined as a culmination of all possible channels a consumer can engage a retailer or brand (and vice versa of course) in a seamless and streamlined manner to maximize both sales and customer satisfaction.
Now that we understand what omnichannel retail is, we need to also see how these platforms are being used globally, and more importantly, why the trend is on the rise for retailers to quickly implement and succeed in their omnichannel strategy.
1. Mobile applications adoption.
Whether it be for customers at home, on-the-go or inside the store, coupled with mobile apps for store staff, their managers and even for their CEOs, mobile apps are the tools that create maximum utility for all channels available to the retailer and their customers.
Mobile apps are used to close the gap on accessing the retailer's offerings from any venue, generate customer awareness of products and related details, purchasing options, delivery options, even to incentivize store staff to best understand the aforementioned details. Finally, to gain important customer insights and analytics for driving purchasing, sales, and distribution functions of the retail chain.
Mobile application adoption is the key reason behind the rise of omnichannel in retail today.
In the remaining six points, mobile apps will be touched on in a multitude of ways, so it's crucial to first identify how important this feature is to any omnichannel offering, and why mobile application adoption is the key reason for the rise of omnichannel in retail today.
2. The offline store as the retailer's greatest asset.
For years, brick-and-mortar retailers were plagued by the shopping preference of showrooming, or rather, visiting a retail store and later returning home to purchase items online, in many cases from Amazon or another ecom pure play. By mid-2014, however, this trend was observed to change, with most customers engaging in cross-channel purchasing behavior originating online and then driving them to stores for actual purchase of products (webrooming).
Consumer preference for in-store trial and testing of clothing and accessories can be as high as 85%.
For high touch-and-feel categories such as apparel, a recent ATKearney report noted that consumer preference for in-store trial and testing of clothing and accessories can be as high as 85%. This means with as much as we our intrigued by new apparel ecom pureplays with great product concepts and variety, we can't ignore the undeniable truth that customers want to ultimately try-on apparel products to make their final conversion decisions.
Store locations have enabled major retailers globally, most notably in the Chinese market via major portals like Taobao and courier solutions like S.F. Express, the ability to ship locally from stores to customers, thereby reducing inventory & in-land shipping costs and delivery time. Same day delivery is even a further push by retailers utilizing omnichannel technologies to capture the sale from the on-demand consumer, with U.S. players like Uber and Postmates already partnering with major retailers to make this vision come to life.
Large, centralized distribution centers will less and less become the norm globally as retailers become empowered to fulfill from their own store locations to local markets, optimizing for same-day delivery strategies and quick response to fast fashion market needs. Alibaba is also quickly chasing this strategy, so watch out Amazon!
3. The millennial consumer is a fickle friend.
As a card-carrying member of the millennial generation, I want to first apologize for the certain level of disruption our generation has caused for the retailer in targeting our interests and more importantly our attention as consumers.
We prefer to get our news from Reddit, our music suggestions from Spotify and dine at Yelp recommended locations. Our generation is being referred to as the "attention economy", with the greatest value of marketing and brand outreach being driven by simply the amount of time marketeers can harness a millennial's focus.
A recent entrepreneur.com article stated that millennials check their phones 43 times a day. With so many distractions, again the mobile application is a key communications platform between the retailer and the millennial consumer to keep them informed of the latest sales and promotions tailored to their interests, and communicate with them in a channel they currently provide so much of their attention.
As a strongly mobile-driven consumer, millennials using the retailer's mobile app expect not only utility for brand awareness and ecommerce shopping, but also to serve in-store functions such as in-app purchasing in store (to avoid queues), calling for assistance from store staff (and the store staff answers with their own apps as well. Hey, most of them are millennials too!) and finally a way to share with their friends moments from their customer journey and the products they really love. According to a research study by The Monogram Group, 52% of cited millennials indicated social media among places where they gathered information about new products or brands that interested them.
Retailers who actively engage millennial consumers in their preferred social media and entertainment channels will surely win out for this key demographic.
It is fair to expect that the millennial demographic will be the #1 driver for retailers to quickly adopt omnichannel strategies. Furthermore, retailers who actively engage millennial consumers in their preferred social media and entertainment channels will surely win out for this key demographic.
4. A retailer's store and ecommerce channels extend well beyond one country.
A recent Deloitte report stated that retailers in the UK and Germany generated over EUR 8 billion in online retail exports in 2012. What this reveals is that the highest growth areas for these retailers is in serving customers not traditionally from their target markets, but instead making products in all channels available, whether it be ecommerce or offline at new retail stores in developing markets.
Pop up stores and kiosks afford retailers the opportunities to establish physical presence in a new market with a minimal investment. These stores are mainly created and supported to build brand awareness and generate customer loyalty. Omnichannel technologies such as touchscreen kiosks, mobile applications, RFID and beacon proximity marketing can help to augment the effectiveness of these deployments.
Omnichannel technologies empower these fast growth regions to leapfrog legacy infrastructure and adapt to new solutions.
Furthermore, according to a Gartner report: in high growth areas such as Southeast Asia and Africa, mobile payments transaction value will reach USD $165 billion and USD $160 billion respectively in 2016, with the USA only coming in at USD $37 billion for the same period. Omnichannel technologies empower these fast growth regions to leapfrog legacy infrastructure and adapt to new solutions. Digital currencies such as Bitcoin and DigiByte will also rise to meet the needs of these markets, and facilitate never-before-possible crossborder trade and consumer mobile purchasing.
5. Digitization of real-world products is needed for both retailers and consumers alike.
We have examined thus far the importance of the mobile app, the retail store as a powerful asset, and how crossborder sales contribute to accelerated growth in physical presence for the omnichannel adopting retailer. To keep pace with this growth, retailers are looking for ways to digitize their real-world products, and provide true omnichannel opportunities to their customers in any channel they may engage the retailer.
There are some good use cases out there right now for retailers beginning to do just this, including Macy's and Target of USA, Marks & Spencer of the UK, andZara of Spain. What I am referring to is these retailers' tagging and linking of products and their inventory information via RFID technology.
As an example, Macy's uses RFID-embedded price tickets to inform their back-end systems which products have hit stores, or those products that are now on the store floor. Customers can also use Macy's mobile application or website to see in-store inventory of products in real-time.
71% of consumers expect to view in-store inventory online, and 39% stated if store inventory was unavailable online, they would not visit the retailer's store.
A Forrester report noted that 71% of consumers expect to view in-store inventory online, and 39% stated if store inventory was unavailable online, they would not visit the retailer's store. This is astounding, considering the difficulty retailers globally are facing to even get customers in the door!
RFID item-level tagging can be used to empower key customer touch points, including: self-checkout, POS solutions, speedy and accurate returns, proximity promotion pushing, mobile application integration, in-store staff search and pick for customers, etc.
6. Personalization of offers and promotions is quickly becoming the norm for retail, even in-store.
Let's face it: The reason why so many consumers are increasingly becoming fascinated with ecommerce pure plays and their platforms is because they are provided a tailor-made, personalized shopping journey. In some ways, such as Amazon's user-specific pages and product suggestions, these e-tailers appear to know even more than ourselves for what we may be interested in buying.
As mentioned in point #1, the mobile app is the easiest way for retailer to begin providing these services to customers in-store, followed by other Internet of Things (IoT) technologies, including bluetooth beacon proximity marketing, product barcode scanning, connected fitting rooms, and suggestive selling on these platforms while customers are in the store.
There are many case examples of retailers implementing some or all of the above mentioned IoT technologies into their in-store experience, including Macy's with mobile app, beacons and connected fitting rooms, American Eagle Outfitters with mobile app and beacon platforms, and even Apple with mobile app and beacon platforms.
The connected fitting room is where apparel retailers will begin to see a new surge of in-store product sales.
The connected fitting room is where apparel retailers will begin to see a new surge of in-store product sales directly from the implementation of this omnichannel technology. Increasing units per transaction from product suggestions, allowing the customer to be serviced from the fitting room by the floor staff and even checking out from the fitting room are all strategic advantages of implementing these platforms.
Personalization of offers means that whether a customer regularly frequents one location or another, in San Francisco or Tel Aviv, the retailer follows this tailored-service and approach no matter where the shopper visits. Furthermore, the implementation of push notifications via bluetooth beacons for favorited items on sale in-store, or for similar items for outfit building returns a strong utility of the retail store for facilitating the customer's unique shopping experience.
The ultimate goal for every retailer is to deliver the same wonderful customer experience, no matter if they have 1 store or 1,000 stores.
The ultimate goal for every retailer is to deliver the same wonderful customer experience, no matter if they have 1 store or 1,000 stores. Omnichannel technology is quickly closing the gap to make that possible.
7. Smart staff means a happy customer.
Store staff are a critical component for the ongoing operations of omnichannel platforms, and typically are left out of the success equation.
Lack of store associate knowledge is the #2 reason for why omnichannel roll outs do not succeed.
An L2 Intelligence report recently noted that retailers often fail to educate and incentivize their store associates to properly understand their omnichannel platforms & offerings. Furthermore, lack of store associate knowledge is the #2 reason for why omnichannel roll outs do not succeed.
By enabling staff with mobile apps that can put all of a retailers products at their fingertips, they become immediately equipped to be the most knowledgeable experts on a retailer's offerings possible. This same mobile app can be used to receive in-store calls for assistance, bring products to changing rooms, or just to check out the customer on their own (think Apple store here).
Tying this mobile technology with incentive systems for commission or store discounts can also give store associates tangible tools and motivation to hone in on their performance and have a measurable means for being rewarded.
As mentioned in point #3 above, most store staff are millennials themselves, so empowering them with mobile tools to carry out their work is paramount to successful retail operations.
Check out our Tofugear Omnitech solution in action at House of Blue Jeans, and see how our platform matches up to the needs of omnichannel retail!