Imagine walking into your favorite clothing store but instead of putting on shirts, you’re able to see the various pieces you’d like to wear in an augmented reality mirror. Better yet, the system recommends the top shirts in their catalog based on your specific tastes and interests across their entire collection.
One week later you receive an email updating you about a recent apparel release that’s a perfect match for the shirt you purchased on your prior trip.
Is this the future of retail and omnichannel personalization?
Top retailers are competing to understand what drives their clients’ behavior from awareness to purchase. The proliferation of big data and high volume of omnichannel purchasing makes the type of technology described above achievable.
In short, omnichannel is becoming more critical now than ever.
Let’s take a look at four specific reasons why this is the case:
- Increasing consumer expectations
- Proliferation of consumer data
- Improved customer experience
- Competitive pressure
Increasing Consumer Expectations
Consumers are now able to receive products in a larger array and more quickly than they could even just a few years ago.
What was once seen as impossible for the retail industry (such as next day delivery) is now becoming the expectation, even as there’s constant pressure to improve.
Many large retailers are taking part in this shift. That’s why Target recently rolled out same day delivery:
“Our same-day options are growing much faster than our digital sales, specifically combined sales for in-store pickup, drive-up, and Shipt have more than doubled over the last year, accounting for nearly three-quarters of Target’s 34% digital comp in the second quarter. That means that nearly 1.5 percentage points of the company’s overall comp growth was driven by our same-day services.”
– Target COO John Mulligan
Walmart as well has launched a same day delivery service and Amazon–who has largely been responsible for this massive shift in consumer expectations–has talked for years about using drones to immediately deliver purchases.
The upshot is that if retailers want to meet ever increasing customer expectations, they will need omnichannel strategies that can deliver orders anytime, anywhere, and in any manner a customer wants.
Proliferation of Customer Data
While it’s true that no one is currently able to completely understand why a customer makes a purchase, retailers are now using historical analytics to help develop more accurate models. Retailers also have more data at their disposal than ever before, as consumer behavior data is gathered in more and more areas.
The more sources of consumer data a retailer can access, the greater the retailer can predict consumer behavior. Retailers can also make better strategic business decisions on the type of content and channel they would like to market on.
This means that retailers such as Amazon and Walmart are able to harness their massive amounts of consumer data to move from understanding purchasing behavior to predicting it.
A big realization for the retail industry has been consumers’ willingness to have their online and offline purchases tracked in return for better customer experience and loyalty perks:
With strong use of omnichannel tracking, online and in store purchases can be correlated with one another to provide a more detailed view of the consumer’s spending and product interest.
The chart above depicts the amount of potential omnichannel opportunities for a retailer to be involved in. The true impact on a retailer’s omnichannel presence and strategy comes in their ability to correlate all the related data in a unified manner.
When used efficiently, customer data drives better service and convenience, which in turn drive more traffic both online and in store. Omnichannel therefore has an exponential delivery potential based on the amount of consumer data it helps surface to retailers.
Improved Customer Experience
Omnichannel improves the customer experience by allowing them to not just select a product but choose where, when, and how they find, access, and purchase that product.
Gone are the days when a retailer could control how a consumer shopped. Instead, consumers have multiple options in store and out, in terms of channel, variety, and comparison shopping.
A typical customer journey now might involve finding out about a product from an online ad, deciding to go to a local brick and mortar location of that store, checking the retailer’s website for reviews while they’re in-store, and checking prices at competitor ecommerce sites and marketplaces. Finally, after all this, the customer decides to make their purchase.
If a retailer hasn’t carefully planned and executed their omnichannel strategy, they face the possibility of losing customers at each stage of this maze-like modern purchase journey.
That’s why successful retailers are those able to implement unified omnichannel experiences for their customers that provide the maximum amount of choice and the least number of roadblocks to purchase.
Here are some examples of retailers thinking outside of the box when it comes to investing in omnichannel strategies:
- Alibaba – Robot Restaurants and Automobile Vending Machines
- Adidas, Lacoste, Lowe’s, Anthropologie & Others – Augmented Reality
- Amazon – Cashless Store
Omnichannel initiatives are being prioritized by all major retailers, whether online or offline. From next day delivery, to clerkless stores, BOPIS, SFS, distributed inventory fulfillment, unified store and warehouse inventory feeds, augmented reality apps, and ever more flexible return options, retailers such as Amazon, Kohl’s, Target, and Walmart are investing huge amounts of money in turning their disparate channels into unified customer experiences.
It’s for this reason that many once pure-play companies such as Amazon and Wayfair, are now investing in brick and mortar shops, while physical retailers like Walmart and Kohl’s continue to expand their online presence.
There is a lot of competitive pressure for retailers to let customers buy product when, where, and how they like. This pressure will only grow more urgent as ecommerce eats up more and more of retail revenue.
Once ecommerce and physical retail reach parity, omnichannel will be the only viable way to do business.
The Take Away
Omnichannel should be a top priority for all retailers. Its importance will only continue to grow as changing consumer expectations, increasing amounts and quality of customer data, and fiercer competition transform the face of retail at an increasing pace for the foreseeable future.
As the industry undergoes this transition, retailers are under strong pressure to align themselves with the demands of the marketplace. The strategies a retailer decides to use will directly impact their consumers’ buying journey and how they interact with products.
We live in an unprecedented time where the potential for innovation in retail is at its highest. It will be intriguing see how retailers utilize their creativity to drive unique methodologies in the industry.