Consumers expect a seamless shopping experience, the best prices, and the best options in delivery. As these demands become more deliberate, the need for retailers to appeal to each consumer directly in a personalized and connected fashion grows and has become a must in the retail ecosystem.
In order to achieve the “ideal” consumer experience, retailers need to utilize the full spectrum of online, mobile, and in-store capabilities. According to a Harvard Business Review 2017 study, retailers’ omnichannel customers are more valuable on multiple counts, spending an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers; every additional channel they used, the shoppers spent more money in the store. For example, customers who used 4+ channels spent 9% more in the store, on average, when compared to those who used just one channel.
For established retailers, omnichannel retail is not an easy achievement. The pace at which consumer technology and online competitors have grown has exponentially outpaced traditional retailers. As the traditional brick and mortar stores begin to shift to omnichannel organizations, it becomes much more difficult due to internal issues including data mismanagement, supply chain operations, change management, process and organization management, and a lack of a long term strategy.
As of the start of 2017, there are already examples of traditional and iconic retailers that are feeling the pressure of securing and building a more fluid omnichannel organization. For example, Macy’s plans to close 68 stores in 2017 and a total of 100 over the next few years, representing 15% of its store base. This is in response to the declining store sales against big online retailers. In November and December same store sales were down 2.1%. Sears announced the sale of the Craftsman brand for $900 million and is closing 150 stores. Sears has also been cutting spending and selling off real estate to fund its operations, but its existing locations continue to struggle as shoppers spend more online and at other chains such as Wal-Mart. In November and December same store sales were down 13%.
Sears and Macy’s represent some of the oldest traditional US retailers but have been behind the curve with adjusting to consumer trends. As more closures are expected over the next few years, retailers like these must create an agile, ominchannel organization.
Becoming an omnichannel retailer is easier said than done. Creating the correct organizational environment takes strategy, leadership, knowledge and understanding of the ever changing consumer and technology ecosystem.
For more information on the future of retail, you can read our whitepaper, Sagence's Data-driven, Omnichannel Approach to Retail.
Sagence works with industry-leading retailers providing data-driven, strategic, end-to-end data management services. To learn more about Sagence’s perspective on the future of the retail industry, please visit the Retail section of our website or contact us.