Only 6 out of 10 retailers in Europe have a clear omnichannel strategy. The impact of e-commerce on the retail business

Transcription

1 Only 6 out of 10 retailers in Europe have a clear omnichannel strategy. The impact of e-commerce on the retail business

2 Online web store 62% 31% Online web store tablet / smartphone Physical store 82% 25 % Printed catalogue 4 % 21 % Other Mobile app mobile A web Online mobile Catalogue Mobile app Other Physical store Online webstore 31% 23% 9% 9% 91% 52% 29% 10% 17% 5% 78% 76% 32% 32% 25% 7% 79% 48% 40% 27% 30% 3% 78% 70% 21% 23% 14% 1% 87% 63% 2

3 Introduction In October 2016, SD Worx Europe conducted a research regarding the The impact of e-commerce on the retail business. We highlighted in this paper the most important key findings from our research results. Retail is rapidly changing and is facing major challenges when it comes to the implementation and integration of multiple sales and service channels, the omnichannel approach. The current business model based mainly on space as a principal competitor advantage must give way to new competitor advantages. We see that even though many retailers have implemented e-commerce and various online sales channels, they still lack the knowledge and conviction to reformulate their business strategy - including omnichannel, to make their business future proof. In this paper we highlight the most important steps to take when defining your omnichannel strategy. 3

4 The Research The impact of e-commerce on the retail business - International research in Belgium, the Netherlands, France, the UK and Germany - Online panel research - Sample source used: SSI for all countries (except for Belgium) based on customer databases from SD worx and an open link on the website. - Data gathered in October Data is weighed per turnover of wholesale & retail in each country (source Eurostat) - Sample consists of 473 interviews. - Main target audience: Managers working in Retail 4

5 Content Introduction 3 The research 4 The impact of e-commerce on the retail business 9 Preface by Peter Van Ostaeyen 10 Keyfinding 1 Implementation of e-commerce 11 Keyfinding 2 E-commerce has a positive impact on sales 13 Keyfinding 3 Physical retail is still important but not as we know it 13 Keyfinding 4 It s now or never 13 Keyfinding 5 Mobile an important device in omnichannel 14 Define your omnichannel strategy 13 Conclusion 14 Additional resources 14 5

6 Preface by Peter Van Ostaeyen Business Development Manager Retail SD worx At SD Worx we are well aware of the major challenges that retailers are facing in today s market and business climate, when it comes to intro-ducing and integrating multiple purchase and service channels as a complement to the physical channels. Nowadays this is mostly referred to as being omnichannel, often described as a seamless crossing from one channel to another. At its core, omnichannel is defined as a multichannel sales approach that provides the customer with an integrated shopping experience. It doesn t matter whether the customer is shopping online on a desktop or mobile device, or in a bricks-and-mortar store: his shopping experience should be seamless. It is important to distinguish an omnichannel user experience from a multichannel user experience. Essentially, it comes down to the depth of the integration. It is clear for most retailers that the online and offline stores should grow towards each other. However, this is easier said than done as the customer is continuously evolving. You as a retailer need to follow these evolutions. Each touch point should add value. In the physical store, the instore experience and the sharing of knowledge and advice are as irreplaceable as efficiency and accessibility is online. There is plenty of communication and information available regarding physical versus digital. The terms omnichannel and multichannel are frequently used and confused, and many retailers wonder: Are online stores really killing brick-and-mortar? We decided to ask retailers whether they are experiencing the impact of e-commerce on their business. What difficulties are they facing? What is the attitude towards e-commerce? How do they make use of multiple purchase channels and do they have an omnichannel strategy? 6

7 Key finding 1 Implementation of e-commerce 2 out of 3 retailers use e-commerce today. The implementation is recent, 7 out of 10 retailers implemented e-commerce over the last 5 years. Shoppers are not using one single channel and neither should you as a retailer. Because of this, you should consider e-commerce as an ally and not as a threat. More importantly, however, you should keep on focusing on your customers. You should be there for your customers no matter where they are or what device they re using. You should also provide an excellent experience as your shoppers switch from one channel to the next. There is a clear gap between retailers and customers when it comes to embracing new technology and multichannel approach. If a customer chooses a channel and you are not present in it, you will miss out - and no retailer can afford to miss out today. Our research found that fashion retailers are on top of the list of retailers who state that they have e-commerce and multiple channels, while DIY retailers, are lagging due to more logistical challenges. The customer, on the other hand, is using online more and more and their spending is increasing. Customers often shop cross-border and the high standards from larger international e-commerce actors are transferred as expectations towards smaller retailers. They expect your multiple channels to be omnichannel. Many retailers are trying to close the gap, but it is not always easy when systems and organisations are designed for the more traditional brick-and-mortar world. Bottom line Keep focusing on the needs and the expectations of your customers while creating and embracing the omnichannel approach. 7

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9 Key finding 2 E-commerce has a positive impact on sales E-commerce has a positive impact on sales. 7 out of 10 retailers believe this impact will keep on growing. Our research shows that larger retailers with multi-country presence achieve a bigger increase of their e-commerce turnover than the smaller and local retailers. On average the retailers estimate that e-commerce represents 40% of their total turnover. This could be an indication that there is a discrepancy between perception and reality. That the retailers consider online sales to be more impactful then it really is. However, figures from both the US and the EU show an increase in online sales during the months of November and December, including top periods such as Black Friday and the Christmas period. In Europe, the overall increase for 2016 was 10,8% and during the end of year period the increase reached almost 25%. Big online players in the Netherlands and Belgium like Coolblue and bol.com broke sales records with peaks of 1 package per second during the 2016 Christmas season. According to the Dutch research agency Strabo the online turnover share is likely to be between 5 to 10%. This means that 90% percent of all purchases still take place in-store. This is also confirmed by A.T. Kearney s Omnichannel Shopping Preference study: 90% of all retail sales are transacted in stores and 95% of all retail sales are captured by retailers with a brick- and-mortar presence. Bottom line Giving your customers the possibility to buy without having any limitations by time or distance will positively impact your sales. 9

10 How do you create an attractive online experience when you only know in-store? 10

11 Key finding 3 Physical retail is still important but not as we know it A majority of the retailers are convinced that the combination of online and physical stores is needed to remain successful. Today retailers are daily confronted with trend reports and statements communicating that online stores are killing the traditional brick-and mortar stores. Marketing Daily states in an article that about 90% of the customers still want to shop in a store and their primary reason is that they want to touch and feel the products. Offline stores are still an important part of the customer`s shopping journey, but not as we know it. The current business model mainly based on space as a principal competitor advantage must give way to new competitor advantages. Today the customer is driving the development. Convenience and personalized experiences are key. Today s customers, empowered by technology, can leave you at any moment. They use a big variety of digital touch points and therefore retailers not only have to rethink their customer engagement and experiences: they should add value to every phase of the customer journey as the customer expects a seamless experience. This demands a different mindset and the question is: will the retailers manage this on time? It s not enough to say that you should be both online and in-store. The question is: how do you create an attractive online experience when you only know in-store? How do you create a new attractive in-store experience that is appropriate taking into consideration that a majority of the customers have shopped online where prices are often lower, where there is no waiting time and you can shop 24/7? This is where the work of the transformation starts, because what was valid yesterday does not apply to the future in terms of the experience that you offer. Retailers must react as store roles change; some stores may embody the brand, while other stores may serve an experimental role and pickup destination. Bottom line Further improve brick-and-mortar while increasing your presence in other channels. Smart retailers know this. Amazon s investment in pop-up stores and Amazon GO are examples of this. 11

12 Key finding 4 It s now or never E- commerce and omnichannel will be-come more and more important and are needed to survive more than 60% believes that retailers who are not investing will experience difficulties. Our research shows that multi-country retailers and larger retailers are ahead in using a combination of online and offline channels. Many smaller retailers are, however, struggling and do not always have the means or the knowledge to make a turnaround by starting up new sales and purchasing channels to meet the demands of the customer. Nevertheless, large retailers like Action and Primark are operating without any online sales channels. Primark has historically steered clear of e-commerce as they consider the price points of their clothing and products too low, so it doesn t make sense. Action has the same reasoning. They are stating that with an average sales basket of 1,72 implementing online sales channels is not a priority. Another factor and big advantage for Action is proximity, almost every village in The Netherlands and Belgium has an Action shop. Bottom line Retailers who want to transform must meet and service their customers with more accessibility, a wider range and higher efficiency, embracing multiple channels and devices and use them to connect with customers in every part of the customer journey. To win you should deliver value but more importantly you have to excel in creating unique customer experiences. 12

13 Key finding 5 Mobile, an important device in omnichannel Our research shows that 31% of the respondents have their web store accessible via mobile use. 21% of the respondents offer a mobile application. The importance of mobile is growing. Not only as yet another sales channel: it is now a key part of the entire customer journey. According to Nielsen and Google s Mobile Path to Purchase study, customers spend more than 15 hours a week researching on their smartphone. Not necessarily to buy but mainly to shop around. Mobile devices are also used by many customers to improve their in-store experience, it is used to read reviews, order out of stock items, comparing prices, and even buying the product online if the checkout queues are too long. Ever more customers are using the mobile device as a payment device and Channels Advisor suggests that Brits are more at ease than other nationalities when it comes to mobile purchases. Bottom line Mobile should play a part in everything you do. Knowing that the possibility of using their mobile is key to most customers and that it improves their experience with your brand, it is vital to think and embrace mobile as a key part of the customer journey. 13

14 Define your omnichannel strategy 7 out of 10 retailers sell through different channels but only 6 out of 10 retailers actually, have an omnichannel strategy. Omnichannel remains a goal for the majority of retailers but a reality for very few. The future winners in retail will be the brands that can connect with the shopper on each touchpoint and provide a great experience, says Uwe Hennig, CEO of Detego. Omnichannel is not a trend that will disappear in a few months, it s highly demanded by customers everywhere. Our research shows that 6 out of 10 retailers participating in the research have a omnichannel strategy. This is a clear indication that several retailers are still struggling with the seamless integration of multiple purchase and service channels. Although 7 out of 10 retailers are selling through different channels, it seems that they are implementing additional channels without connecting it to their business strategy or an omnichannel strategy. According to Jorg Snoeck, a Belgian Retail Expert and publisher of the Retail Detail magazine, the current model is no longer valid: We are going from an Inside - Outside retail, to an Outside - Inside retail, since the customers decide where, how and when they buy. The customers come from the opposite direction. Therefore, the current model is no longer valid. 14

15 Why should customers consider you, how do you add value to their experience? 15

16 Recommendations to define a clear omnichannel strategy Become a believer All of our findings and research show that a seamless shopping experience across different channels is the key for success. Therefore, you should embrace this idea and become a true believer of omnichannel practice. It is the only way to create the right climate in your retail organisation to make this transformation happen. Know your customers Why should customers consider you, how do you add value to their experience? What channels do they prefer? Get to know them, analyse not only their behaviour but also try to find out what they really think and value. Based on this you must rethink how you deliver value, identify, plan and launch omnichannel services to fulfil customer needs. Retailers need to much more understand what is going in their stores and start to learn more about their customers. The new customer has high expectations and are much more demanding when it comes to efficiency and personalization. It is essential to collect and use data, and it is also crucial to use the right information and content where it is needed. This to deliver and provide a relevant and consistent customer experience. Customers today expect and want a personal approach, relevant information and services. Seek advice If it is hard to realise this, or if you lack knowledge and technological competence to understand this and implement this, seek advice. Surround yourself with competent believers who can show and lead the way to make it happen. Get a clear omnichannel strategy Omnichannel requires not only a change of mindset. Most retailers are currently investing in multichannel experience and offering different channels but they are not necessarily integrated. To manage this in a professional way together with the new customer expectations, you need to reformulate your business strategy integrating omnichannel to make it future proof. Define clear KPIs and objectives. Questions like: What value will you deliver, what is the optimal channel mix, what is the timing to execute, are important actions that need clear goals and timing. It is important that you know what you are trying to reach and that you can measure your progress. Try to make it transparent and understandable for the whole organisation, it is important to have everybody with you in this transformation process. 16

17 Bring your store closer to online We know that customers still value the in-store retail experience with the possibility to touch and feel, but they also want the convenience and the price benefit of e-commerce. One great opportunity for retailers to bring their store closer to online, is to make sure that both offline and online are supporting each other, by providing the optimal customer journey both on and offline. You can improve the in-store experience by bringing your website in-store, this allow shoppers to browse and consult your website while in-store. Installing ipads or other interactive screens in the store is for in-stance a good start. It is also a great way to display your latest offerings and news, an ex-cellent way of enhancing the instore experience These devices can also handle transactions and facilitate self-checkouts if needed. A smart way not to lose sale if the checkout queues are too long. Too long checkout queues can frustrate customers and make them leave the store without buying anything. It is important to understand showrooming and webrooming as a way of creating a more seamless experience. Showrooming was one of the big negative buzzwords some years ago, but with the introduction and a better understanding from retailers of omnichannel selling, web rooming is now a much more common behaviour from the customer. Actions like pick up delivery in store, in store WiFi, communities on social media, possibilities to write reviews has resulted in a higher engagement of the customer. Showrooming Showrooming is when customers come into the store to browse and test products, only to subsequently go home and actually complete their purchase online. Webrooming Webrooming is when customers do their product research online before going into the store for a final evaluation and purchase Since the early days of online shopping, more people have researched their shopping online than have actually bought there. 17

18 Don t wait, get started today! Conclusion Our study shows that more larger and multi-country retailers have multiple online channels but therefore not necessarily omnichannel. For the smaller retailers, it is getting more difficult especially if you don t have a unique offer or position. You will lose sale and customers if you do not find ways to transform and use multiple channels in an integrated way. Larger retailers have more resources to invest in catching-up with customers and their demands. However, as a small business owner, things can be a little more complicated but to start transforming your business towards the omnichannel approach is not a solution it is a must. Our advice is: Don t wait, get started today! 18

19 Additional resources 1 searchcio.techtarget.com/definition/omnichannel 2 econsultancy.com/blog/68587-black-friday-cyber-monday-2016-ecommerce-stats-bonanza 3 detail/e-commerce-stijgt-harder-dan-ooit-tijdens-eindejaarsperiode digiday.com/brands/discount-retailer-primark-evaded-e-commerce/ html

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