Retail is not dead: The omnichannel revolution is just changing how it works

November 22, 2017 Brian Reno

Successful retailers and e-retailers will use online and in-store experiences to define the unique and successful brand differentiation

 

We’ve all heard the claims—Airbnb is killing the hotel industry. Netflix is ruining television. Retail is dead. While e-commerce giants like Amazon are impacting the retail industry, they are ultimately forcing retailers to think differently and accelerate the continual renewal and evolution of the retail experience.

Pure play e-retail and brick-and-mortar retail is going through a revolution to omnichannel delivery. Traditional retailers are introducing friction-free app-based ordering. Check out, delivery, and a robust online presence has become a staple function of every successful retailer. Walmart is now the No. 2 online retailer and is targeting Amazon’s lead with its established store network. 

The largest online retailer, Amazon, is investing in brick-and-mortar delivery channels like Whole Foods, Amazon Go, and Amazon Books to reach the last mile of convenience for consumers. Amazon crafts an experience for products that demand touch, taste, and feel to influence the buying decision and expand product categories it can successfully complete in.

Here’s the bottom line: experience matters. Think about personalized experiences you’ve received—in-store and online advisors that can anticipate needs and remember past preferences goes a long way.

Trust and repeat business is built upon recognition. The in-store experience that provides recognition and an empathetic relationship has the competitive edge.  

When retailers look to update their physical space and e-retailers seek to gain the physical advantage, they need to consider these five experience factors:

  1. Brands must create a memorable, repeatable experience both online and in-store.
  2. Customer connection requires empathy, space, and time to develop relationships.
  3. Engagement is a higher calling—great service personalities win in the physical space.
  4. Customer collaboration is valuable. Successful omnichannel retailers are constantly using social media and in-store observation to record customer preference insights and attitudes to fine tune their product and service mix.
  5. When you engage customers with superior online and physical experiences, you increase revenue, customer retention, and profits.

Historically, to fuel growth and market share, e-retail competed primarily on price and convenience to draw in customers for commoditized products, a model that has lower margins. In a survey of the top 20 retailers over the last five years, online sales grew from 10.5% of total sales in 2012 to 15.5% in 2016—but margins steadily declined, by 150 basis points to 9.0% in the year, according to Alix Partners.

E-retail is now adding mass customization to the mix, such as made-to-order digitally-measured clothing and select physical store locations to enhance the brand and create opportunities for brand experience. These strategies increase brand relationship and enhance profitability in the e-retail omnichannel world.

 
Photo 2_Retail.jpgSEE Eyewear’s philosophy of producing incredibly small quantities ensures customers receive one-of-a-kind styles.

 

At the same time, traditional retailers will adapt and add digital innovations to their physical channels, allowing them to be more competitive as they reduce their retail store footprint and reutilize larger stores as local distribution hubs for online sales.

Consumers have already adapted to the omnichannel model in almost every facet of life, including social interaction, music, travel, finance, news, and real estate. When you see large, national retailers closing, they generally are the brands that haven’t adapted to their customer needs.

To remain relevant, successful retailers and e-retailers will converge into omnichannel retailers, using online and in-store experiences to define the unique and successful brand differentiation.

About the Author

Brian Reno

Brian Reno is a leader in our national commercial architecture practice. He has more than 20 years of experience in strategic retail distribution planning, site evaluation and selection, architecture, retail concept development, interior design, site development, construction administration, and multi-site project management.

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