Omnichannel integration: it’s all you need for Christmas
By Xian Wang, VP, Edge Retail Insight, Edge by Ascential
Black Friday is behind us and the next few weeks represents the final furlong to lock in the seasonal spending spike that can make or break a retailer’s business.
Challenges abound; a new Covid-19 variant outbreak adding to existing supply chain strains and an inflationary outlook.
Still, there are forecasts that holiday spend could still be very festive indeed as friends and family look forward to seeing each other and exchanging gifts after a difficult 18 months and cancelled Christmas last year.
E-commerce boomed during the height of the pandemic and as has been widely reported, spending last Q4 was pretty much all online. In the UK, ecommerce growth in 2020 jumped almost 50% according to Edge by Ascential data, many times the increase it would have been without the Covid-19 crisis and national lockdowns.
While sales shifted online, forward thinking high street and big box retailers took giant strides to adopt technologies, like machine learning, artificial intelligence, computer vision and robotics to reach their customers - no longer out and about, but at home, spending large parts of the day on mobiles, laptops, tablets and social media.
E-commerce platforms, like Amazon - already trailblazing in retail technology and the customer experience - continued to push the envelope, allocating huge investment in fulfilment capability, expanding further into bricks, and developing its already very successful advertising business further.
So, while online spend may well taper off this holiday season compared to the strange and hopefully unrepeatable Q4 in 2020, shopper behaviour has changed for good, enabled by the new services and options that have become available to them by the retail innovators.
This means this Christmas, customer expectations are at an all time high, spoiled by the proliferation of last mile solutions, in-store technology to aid convenience and engagement and sophisticated virtual experiences online.
Shoppers want what they want when they want it - whether that is online, offline or a combination of the two.
This holiday season will be the first real test of the new retail landscape.
While the high streets are open (for now at least), the retailers that succeed this golden quarter will have invested in the technology, partnerships and capability that supports a perfectly blended O2O shopping experience that has become the new benchmark of customer experience.
Digital first - but don’t neglect the store
Data from Edge by Ascential forecasts that e-commerce will account for 40% of global chain retail sales by 2026 - 38% in the UK.
E-commerce now has a significant role in meeting a variety of consumer needs and missions, from big basket weekly shops to regular replenishment on certain items and special occasion purchases.
Even last minute buys can now be accommodated by various operators offering same day delivery and even faster in grocery. Today’s customers know that there are a host of ultra-rapid grocery delivery startups that will be able to get those items to them quicker than they can warm up the oven.
Getting your online strategy right will be paramount. Even if shoppers end up buying in-store, most will be starting their path to purchase online, whether that is via a website or app.
The online ‘digital shelf’ will therefore be a key battleground for retailers and brands to win. Success on the digital shelf is achieved through three key factors: availability, traffic and conversion.
Brands should be regularly monitoring availability levels across their online portfolios, aiming for a 98% in stock rate across priority products. Availability is also about having the right products in place for the e-commerce channel.
The two remaining metrics have different variables that brands need to understand and customise on a platform by platform basis, from content, to ratings and reviews. Driving these metrics will support favourable search rankings on core retail platforms.
Bricks and clicks: the new store experience
Stores will continue to play a big part in the shopping experience for years to come, but the store of the future will look very different than in December 2021, though there are increasing signs of the direction of travel.
In a retail era defined by speed to market, retailers are judged on their ability to provide consumers with convenient, frictionless experiences.
In the grocery sector, retailers have placed significant investment in the checkoutless store concept that increases speed by cutting out queues, with Sainsbury’s the latest to launch one in the UK, following in the footsteps of other industry giants such as Tesco and Amazon.
With same-day delivery now a table-stakes offering, retailers will use their physical stores as delivery intermediary fulfilment centres. At Edge by Ascential, we estimate that up to a third of physical store space could eventually be dedicated to online fulfilment as the need for operational efficiency has never been more acute.
With the lines between online and offline blurring every day, we identify four key characteristics that will define success for retailers’ stores of the future both online and offline, in 2022 and beyond.
Experiential - The shopping experience must stir excitement in order to drive digital traffic and in-store footfall. Online, this can be executed through virtual try-ons, live streaming and gamification in the shopper journey.
In-store, shop-in-shop concepts add extra value to the customer, like Asda’s exclusive partnership with specialist toy retailer The Entertainer, with five Asda stores featuring branded concessions and exclusive products.
Amazon has pioneered the clicks and bricks approach, integrating groundbreaking technology into its Fresh grocery and ‘4-Star’ stores and hair salon, which it opened in London earlier this year.
Social - Humans have a basic need to connect - and with e-commerce making shopping so convenient, there has to be a deeper reason to venture into a physical shop, especially with alternative work arrangements creating less need to leave the house.
Creating unique spaces for shoppers to connect and interact will help drive long-term loyalty.
This could include in-store dining areas and foodservice solutions, such as Morrison’s Market Kitchen, which combines a supermarket assortment with fresh-food takeaway options, or Albert Heijn ‘to go’ format in the Netherlands, where stores double as office locations.
Frictionless - Momentum behind frictionless store initiatives has accelerated significantly since the pandemic, and this will be a long-term trend as retailers seek greater integration between their online and offline networks to provide simpler, faster and more seamless experiences.
Checkoutless stores - as adopted by the likes of Sainsbury’s and Amazon - reduce the inconvenience of queues and facilitate a more contactless experience.
Curated - In order to drive momentum in-store and offline, retailers should prioritise differentiating assortments to foster product discovery. This can be via exclusive partnerships or curating tailored ranges based on mission or consumer, such as cause-related and sustainable ranges.
To differentiate, the store will increasingly become a physical portal into brands and product experiences - becoming places where consumers can be inspired, learn, co-work, socialise and experiment with new products and these will work hand-in-glove with a retailer’s digital presence.
This holiday season will be the litmus test of which retailers have truly shifted spend, priorities and operations to become digital first omnichannel businesses and which are still talking about it.
A flawless omnichannel strategy will be what separates flourishing retailers from the rest of the pack and stand a better chance of long-term growth and success in 2022 and beyond.
