Online retailers, especially Amazon, have changed the retail landscape. In addition to pioneering e-commerce, for example, Amazon has raised the bar with 48-hour shipping, inventory selection, diversity and efficiency, and its best-in-class customer buying experience. But in today’s digital society, physical locations play a much bigger role than one would commonly believe. And though e-commerce most definitely plays a role in a robust retail strategy, it’s not all that matters.
For a sizable portion of the retail segment, consumers still want to see and touch items in person before committing to a purchase, especially when it comes to jewelry, appliances, toys, furniture, consumer electronics, and health and beauty items. These same consumers often begin their journey by researching products online. Our computers, tablets, and mobile devices have become part of everyday life, so it makes sense that people turn to them to seek reviews and pricing information. It’s important to remember that these same customers often take what they’ve learned to a physical store to make their purchase.
To stay competitive, you must understand the consumer journey so you can provide value, pertinent information, and services your customer wants. Not surprisingly, the most important first step is to know your customer and know them well. What are their behaviors and interests, and how can you use that information to craft a competitive business strategy?
Hesitation to spend
Industry research shows that today’s consumers demonstrate increased price sensitivity and decreased brand loyalty, and most are willing to trade down from a name brand to a store brand for cost savings. Two areas where this doesn’t apply are alcoholic beverages and personal care brands. Here, consumers are willing to pay a little more for their favorite beverage or face wash. This would suggest that consumers are willing to pay more for brands that connect with them on a personal level.
With consumers showing a higher propensity to trade down across retail categories, you must find a way to deliver value at a price that the consumer is willing to pay. In addition, think about what your company can do to differentiate your brand and make your messaging feel more personal to your customers so they want to purchase your product.
Easy shopping experience
Consumers don’t care about your profit centers. They view your brick-and-mortar shop and your online store as one and the same, and they want an easy shopping experience in either space. Consumers want to purchase an item and they want a convenient way to do so. If something is available on your website, they want to be able to pick it up in your store. Conversely, if something is available in your physical store, they want to be able to find it online. Behind the scenes, that means your business must have an omnichannel strategy that is integrated so that brick-and-mortar, online, and mobile speak to each other and appear seamless from the customer standpoint.
Target does this extremely well with its ship-to-store omnichannel strategy. Customers can order a product online and ask to pick it up in store. The store then prioritizes that item for the online purchaser over consumers who are shopping in store to provide a level of convenience. In addition, Target’s in-store associates have access to online mobile devices that allow them to help consumers purchase something online if it’s not available in the store.
To maximize revenues and drive brand loyalty, all retailers should develop omnichannel strategies, with focus placed on the touchpoint that adds the most value for their customers. Again, this starts with knowing your customers and their behavior. You can then adapt your business model to what your customer wants.
Industry studies show that by 2017, total offline sales in the United States were ten times larger than digital online sales. Yet digital sales are growing three times faster than offline sales. Though these numbers might suggest retailers should allocate the bulk of their resources to building online capabilities, successful retailers should in fact build an integrated shopping experience that aligns with their core customers’ decision journey.
Omnichannel is the solution. Although big companies, such as Starbucks and Target, already think this way, these strategies are important for retail companies of all sizes.
Here’s what you need to consider:
Customer. Define who your core customer is and what their shopping habits and motivations are.
Location. Define which goods and service you will and will not provide your customers online versus in store and define which locations will carry which goods.
Channel. Define which goods and services you will offer directly to consumers via wholesale and retail channels.
Processes. Design, automate, and execute consistent processes that enable the best customer service across all retail channels.
People. Organize your teams and measure their performance in alignment with a corporate culture that is customer-centric, innovative, and agile.
Systems. Invest in necessary digital front- and back-end innovations that are integrated to offer a seamless customer experience.
To successfully compete in this dynamic, hyper-competitive retail landscape, middle market retailers must create a customer-centric omnichannel strategy that defines who your core customer is, where your customer buys, and how you want to reach them, along with the people, process, and systems capabilities necessary to execute.