In the post-Covid era, retail leaders were caught unawares by the consumers renewed enthusiasm for physical shopping. The relentless growth in online channel share was significantly boosted when some stores were forced to close during lockdowns, and the public was encouraged not to go out. As restrictions were lifted, people have flocked back to stores and online has lost some of the shares it gained. Nevertheless, online is here to stay and growth is starting to return.
The resurgence in physical retail has served to highlight that some leadership teams may have embraced online too avidly, perhaps to the detriment of their store businesses. The reality is that for most multi-channel retailers, it is essential to optimise both, preferably complementing rather than competing with each other.
How can this best be achieved? Key strategies include omnichannel retailing, leveraging technology for enhanced experiences, considering sustainability and social responsibility, and exploring hybrid retail concepts. Finding the right balance between high street stores and online platforms is crucial for success, but how is this achieved is simpler said than done.
The power of omnichannel retailing
Omnichannel retailing goes beyond mere industry jargon; it stands as a foundational strategy for contemporary retailers. It revolves around crafting a cohesive shopping experience that seamlessly spans diverse channels, encompassing brick-and-mortar stores, online platforms, mobile applications, and more. Each channel has a purpose. The ultimate objective is to empower customers with the convenience and flexibility to shop in a manner that aligns with their preferences and lifestyles. Putting brand loyalty at the forefront of their decision-making.
For instance, imagine a customer browsing products on their smartphone, adding items to their cart, and then seamlessly transitioning to a physical store to try them on before making the final purchase. This is a simple example of an Omnichannel approach, as most successful retailers have implemented this strategy, offering services like "Buy Online, Pick Up In-Store" (BOPIS) to cater to the needs of today's consumers. How can this be elevated further for enhanced customer experience?
Leveraging technology for enhanced customer experiences
Technology plays a pivotal role in reshaping the way we operate currently, expanding in many different industries and sectors. Personalisation, AI-driven recommendations, and enhanced convenience are just a few of the benefits technology brings to the table in a retail scenario. However, it's essential to select the right technology solutions that align with your business goals and consumer base.
For instance, consider the impact of personalised marketing emails based on a customer's browsing history or purchase behaviour. These simple yet effective solutions can be set up with ease. Online giant Amazon's recommendation system is a prime example of how AI can drive sales through tailored product suggestions all with the use of data. Adapting upselling to suit the channel used.
Balancing wider offerings and sustainability
Retailers that expand their product and service offerings often experience increased revenue. The key is to strike a balance between offering more choices and maintaining sustainability and social responsibility. The problems of overstocking are multifaceted, just as well as understocking. There’s an opportunity to forecast accordingly.
An excellent case study is the outdoor retailer Patagonia, which not only offers a wide range of outdoor gear but is also committed to sustainability. They encourage customers to repair and recycle their products and donate a sizeable portion of their profits to environmental causes.
The emergence of hybrid retail
The concept of hybrid retail is gaining traction, as it combines the strengths of both physical and online shopping. Hybrid retail offers the efficiency and flexibility of e-commerce while retaining the tangible experience of in-store shopping.
Consider an example of a clothing retailer that allows customers to browse online, make a selection, and then visit a physical store for a personalised fitting experience. This combination provides the convenience of digital-first, online shopping with the tactile engagement of traditional retail.
Immersing customers in personalised fitting sessions guided by expert staff. Discovering complementary accessories strategically placed to enhance considered purchases. Combine these offerings with exclusive in-store promotions and limited-time offers for a unique and rewarding experience.
Utilise cutting-edge displays to display product features and suggest curated upselling options. Try-before-you-buy stations enable customers to experience products firsthand, eliminating doubts and encouraging thoughtful purchases. Each visit focuses on creating an unforgettable experience, seamlessly blending the digital and physical realms for an elevated shopping journey.
Allocation and replenishment: efficiency across all channels
Proper allocation and replenishment lead to cost savings, improved customer satisfaction, and reduced waste. Distributing inventory effectively across the chain allows for inventory to be in the right place at the right time.
Retailers like Zara have mastered this strategy by constantly updating their inventory based on customer demand. Their efficient supply chain allows them to introduce new collections and restock popular items quickly. Optimised inventory can provide real-time insight, improving the sell-through rate. Returns can also be factored into this, requiring additional warehouse or shop floorspace an allocation and replenishment plan can be accounted for.
The global perspective
The strategies discussed are not limited to a specific region. In the US, as well as on a global scale, retailers face similar challenges and opportunities in a physical and online presence. The key is to adapt these strategies to the local market while considering any regional differences.
For instance, while BOPIS might work exceptionally well in the US, in some international markets, customers may prefer home delivery. Understanding these regional preferences is crucial when implementing these strategies on a global scale, all learnings and insights gained from data available to the retailer.
The future of retail belongs to those who can adapt to change and innovate in an online and physical presence, striking a balance with both. Embracing omnichannel retailing, leveraging technology for enhanced customer experiences, offering a wider range of products and services with a commitment to sustainability, exploring the concept of hybrid retail, and optimising allocation and replenishment are strategies that can help retailers profit.
In a world where physical and online platforms are both essential, the winners will be those who strike the right balance to navigate the future of retail. Grab every opportunity to improve margins with the evolving tools available and rationalise the decision process.
This article is part of our 2024 "Crystal Ball" Trend Predictions report. Download the report here and discover more exciting topics we'll be exploring throughout the year!
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