Omni-channel Retailing. Blurring boundaries, converging sectors and convenient choices. 5 things to consider in 2017.

Omni-channel Retailing. Blurring boundaries, converging sectors and convenient choices. 5 things to consider in 2017.

Back in May 2013 the Retail Research Centre forecast a bleak high street by 2018 with a very much reshaped retail landscape. As we approach 2017 how real are these forecasts of a 22% decline in stores and a near doubling of online sales?

With the iconic BHS going into administration last month and re-emerging as a nimble and efficient online brand, we reflect on the large changes that have taken place in recent years and what the near future may be like.

Without doubt there will be fewer stores and retailers are already taking action to accommodate the new shopper who sees no boundaries of physical and digital shopping, only a single brand that should deliver a single and consistent experience across all channels.

Mobile is King, personalisation is Queen and choice is a must if the customer of today is going to be kept satisfied and their thirst quenched for fast, interactive, comparative, convenient and any channel shopping.

A decade ago, going shopping meant taking a trip to the shops or browsing through a catalogue. High street brands such as Next successfully penetrated markets by combining two channels well, fulfilling it excellently and providing a rounded service through the till point instore and via call centres. Customers were happy, delivery and return expectations lower, profits were not bad and retail jobs abundant.

While online shopping was on the rise, it was hardly the new norm for consumers and it was definitely not an activity that involved multiple devices, including the smart phone.

Who would have predicted that by 2016, around one in three digital retail transactions would take place on a mobile device and that UK consumers would be turning to apps to buy things like new shoes for same-day delivery? Or even delivery by drones would be even getting talked about!

A lot has changed in the past 10 years, and while the likes of Neal’s Yard Remedies, Next, F Hinds, Bags Etc, Argos, Tog 24 and John Lewis have reshaped themselves, overhauled their retail software management systems and multiplied the channels they sell through ranging from eBay, online, catalogues, instore digital technology, M-commerce and ecommerce to meet, join and thrive in the new market conditions, many retailers are still asking themselves:

  • What will the next ten years will look like?
  • What will they need to do increase profit in a price sensitive market?
  • How do they need to redefine and redesign the systems that provide the backbone of their operation?
  • And importantly, how do they restructure themselves in a very merging physical and digital and blended sector retail world.

2007 – 2016 Review (Centre for Retail Research)

YearCompanies FailingStores AffectedEmployees Affected
2016 (to August)181,20723,578
2015 (12months)257286,845
2014 (12months)431,31412,335
2013 (12months)492,50025,140
2012 (12months)543,95148,142
2011 (12months)312,46924,025
2010 (12months)2694410,930
2009 (12months)376,53626,688
2008 (12months)545,79374,539
2007 (12months)252,60014,083

Whilst the number of companies failing has dropped, the number of stores affected is high reflecting the changes taking place and the large and medium size retailers who are being forced to close their doors including Beales, Austin Reed, BHS, MFI and Mexx.

A wind of change has blown across our landscape. Whilst doors may close to the forces of ecommerce and economy, new windows of opportunity open as new forms of market disruption surface and retail software and technology advances.

The New consumer

New heights of customer experience, impatience and a breath taking array of channel choice, delivery options and ways to pay, is creating board room debates and IT pressures for retailers up and down the country.

With consumers now expecting a seamless shopping experience across an increasing range of connected devices and outlets in which immediacy and convenience are table stakes, it is becoming a matter of life and death for some.

And this is only set to expand over the next decade as we see the traditional UK high street condense, converge and shrink. Take for instance Habitat now an occupant within Sainsburys’ stores, who would have expected the brands to co-exist a few years ago?

But today in a world of crashing vertical sectors, desire for instore experiences and destinations the old rules are broken and new rules are being created at an unrivalled pace.

Many consumers will want an environment where shopping is an event experience in its own right. This will translate into interactive, highly engaging online and real-world retail environments, alongside social instore cafeterias and comfortable product browsing areas.

The adoption of instore AR, online catalogues for extended aisles is already a blossoming phenomenon. Online retailers such as Made.com, Google and The Idle Man are popping up on the high street to offer “experience” and “try before you buy” and brands such as Made By Google delivering “experiences” in shopping centres and on the high street  – it is becoming a fine grey line between instore and online retailing.

The online march onto the high street for the essential “brand and product experience” is accelerating the amalgamation of the online and physical shopping experience. It is no longer just about bricks and mortar stores offering Click and Collect via their website, it is all about blending digital and physical experiences into one and delivering omni-channel experiences at every opportunity and point of brand experience.

A Changing Retail Front

Boundaries have already blurred between physical stores and online as consumers combine their mobile phone into the instore shopping experience. No longer a threat, mobile technology is becoming a key enabler to purchase and retention.

Retail physical spaces are shrinking and will continue to as big brands and smaller ones adopt instore online commerce and software to provide extended product choice through digital aisle, delivering the shopper a larger array of choice and delivery options.

2016 has already seen a surge of online brands (and brand manufactures) effectively entre the physical space to showcase their goods, own labels and tap into physical world shopping experience using temporary pop-up stores. The old rules and boundaries are diminishing and distinction is no longer so much about online or instore but by an entire end-to-end experience built on convenience, instantaneous service and extended choice.

As consumers become more and more instantaneous, no doubt it will not be long before same-day delivery is the norm, Click and Collect points a network across town centres through strategic partnerships.

Today the mind-set needs to change from an online versus instore battle, reactive competitive price war to a proactive strategy of process efficiency, holistic service delivery and intelligent profit margin growth. Retail is becoming and will become, dominated by effective multi-channel retailers who have adopted new, agile, scalable and highly integrated software systems.

The Age Of The Smart Shopper

The widespread adoption of increasingly powerful smartphones with larger screens will continue to improve the mobile commerce experience. Responsive ecommerce websites are essential not only for search engine optimisation but to allow mobile shoppers to browse and purchase swiftly and with ease.

These developments are turning the smartphone into a platform that can support the entire shopping journey, from product search and discovery to comparisons, recommendations and payments. By the mid-2020s, we can expect to see contextual location to be an integral part of the retail experience, providing a way for retailers to deliver targeted, timely, contextually relevant messages to consumers.

Mobile payments are excelling and it won’t be long before our loyalty programs and rewards become smart phone dominated.

How to stay ahead?

As we head into 2017 here are five things to consider:

  1. Stay agile by adopting new cloud technologies and embracing partnership opportunities.
  2. Rethink traditional channels. As hybrid purchasing behaviours continue to emerge, retailers must take a creative hybrid approach to their business models and expand to at least three channels, preferable five through a single cloud retail management system.
  3. Review supply and fulfilment chains. In an age of instant gratification, ensure how fit for purpose your software and IT infrastructure is for today’s customer experience and business strategy.
  4. Understand the consumer journey so you know where sales and interactions are happening and where to focus your resources.
  5. Experiment with experience to create an emotional bond and relationship of trust with consumers, grow intrigue and new engagements through new events, partnerships and creative uses of technology.

The world of retail is undergoing an unprecedented wave of innovation. As a retailer, staying ahead is critical to success. How will you stay ahead of the curve?

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