Playtime is over: retailers must get serious about Omni-channel
One of the world’s largest retail chains of Toy stores made headlines recently as the North American arm of its global operation filed for bankruptcy. While the news came as a surprise to many, the business in question did not fail because consumers had stopped buying toys. Given that global sales of Toys and games were actually up 3% in the first half of 2017, is the traditional brick ‘n’ mortar retail model still relevant in today’s Omni-channel world?
The reality facing many retailers is that we as consumers simply do not shop like we used to. In 2016, an estimated 1.61 billion people worldwide purchase goods online. In addition, that same year, global e-commerce sales amounted to 1.9 trillion U.S. dollars and projections show a growth of up to 4.06 trillion U.S. dollars by 2020. However, retailers must not close up shop on their physical stores just yet. After all, if the physical retail environment was indeed dead, why else would the likes of Amazon look to enhance their business with physical channels?
Although the traditional brick ‘n’ mortar retail model seems to be in trouble, physical retail stores will always remain a valuable channel for consumers. However, in order to establish an effective omni-channel operation, retailers must take steps to reinvigorate the in-store shopping experience as well as better integrate physical stores with web-stores.
Omni-channel is all about intimacy…
While there is no doubt that consumer habits are migrating towards internet shopping, shopping patterns have not changed completely. After all, online sales of toys still only account for 22% of the total demand in 2016. Given that the majority of purchases were made in-store, it seems consumers have not abandoned physical stores just yet. However, as consumer continue to shift towards the Omni-channel retail model, the role of physical stores will evolve beyond recognition.
As highlighted by the Entrepreneur, most customers are now hybrid shoppers: when it comes to making a purchasing decision, we rely on both online and offline channels. While online channels provide total transparency over pricing allowing consumers to compare a number of different competitors, retail stores provide intimacy whereby the customer can truly interact with the product before they make a decision.
Take for instance the “Fur Real Roarin’ Tyler”: the interactive teddy that is anticipated to be one of this year’s best-selling Christmas presents. Although the online retail environment will provide a clear indication of price, even if the description of the product clearly states that the toy is “soft & cuddly,” you are unlikely to be convinced of this until you actually go to a store and experience it for yourself.
As a result, retailers must ensure that their operations reflect this purchasing behavior. After all, cluttered stores, filled to the brim with the wrong stock will never win over customers!
… But convenience will always be king!
Although the need to provide an intimate shopping experience cannot be understated, customer loyalty ultimately depends upon a retailer’s ability to provide convenience.
After all, imagine if you were in a toy shop and the product you want is out of stock. Or worse still, imagine you were trying to make the same purchase online via the retailer’s online webstore: what would you do?
Although you may accept an alternative product, the reality for retailers is that failure to provide customers with the products they want, as and when they want them, is the fastest way to lose their business.
Regardless of the channel in question, we as customers expect the purchasing process to be as easy as possible. Given that out of stocks are the absolute enemy of customer satisfaction, retailers must revise their ordering and replenishment strategies to guarantee consistently high levels of availability.
Long Live Multi-channel retailing
Despite the recent struggles of other businesses, retailers must not be deterred: physical locations will always provide a valuable connection to the end consumer. However, in order to exploit the full potential from both physical and online channels, retailers must establish an effective Omni-channel operation that fully integrates all channels around the needs of the customer. Through enhancing supply chain processes to offer a more refined in-store assortment while simultaneously improving availability across all locations, retailers can offer customers the perfect balance between intimacy and convenience.