Current high street challenges seem like a clear case of cause and effect. Last year, an average of 14 shops closed each day across the UK, while e-commerce revenues hit almost £96bn — with one particular player taking a £10.9bn share: Amazon.
The digital giant has certainly shown mastery of today’s consumer needs. Its one-click ordering, attractive prices, huge choice, easy returns, free Prime shipping and countless authentic reviews align well with rising demand for convenience, trust, and speed.
But the troubles facing physical stores aren’t solely down to the battle against the internet goliaths. It’s a well-versed topic among those in the industry, but the convergence of online and bricks and mortar commerce is real. And as the retail landscape continues to evolve along with consumer habits (as it always has done), the lines between online and offline become increasingly blurred. Survival in the new shopping era – the ‘Age of Amazon’, if you will – is down to more than just mastering the basics (as many brands have done to date). It’s about delivering an exceptional customer-centric experience, and that requires a focus on three key areas.
Leveraging digital opportunities
Although the digital shift hasn’t entirely taken over the retail industry, online sales are growing rapidly: set to account for 53% of purchases by 2028. This means retailers can no longer afford to ignore the importance of embracing and facilitating online shopping.
It may seem rudimentary, but the ability to find brands and purchase products digitally is a fundamental necessity. Aside from Amazon or Google, the first stop for online shoppers is a brand’s website (17.2%). While the vast majority of traditional retailers do have a digital face, many are falling short of delivering the same seamless experience that ‘born digital’ players offer. Compared to Amazon, some elements of a brand’s online presence often fall by the way-side – be that website functionality, how browsing pans out on different devices or screen sizes, or simply how clear product information is when accessing it digitally. All present unnecessary barriers-to-purchase for consumers that want a simple and convenient shopping experience – barriers that simply don’t exist with most pure-play online competitors.
That’s not to say traditional retailers can’t compete. Brands must focus on experience, quality and value across all of their digital properties. Given the tendency for consumers to switch between channels, flexibility and consistency is crucial as they flit from desktop to mobile to tablet. Without investing time and money to master the basics of e-commerce, retailers are falling at the first hurdle (and will continue to do so).
Leveraging bricks and mortar appeal
High street closures aren’t entirely due to the rise of e-commerce. Traditional shops still have a powerful hold for consumers — with 85% preferring to physically purchase products in store — and still present many unique advantages. Alongside the satisfaction of instantly taking away new items (82%), nearly four-fifths (78%) of consumers want to see and touch a product prior to purchase.
The problem is many aren’t realising the full potential of the in-store experience. To compete with the ease of online shopping, retailers must make their physical shops worth visiting, and this means delivering memorable experiences that build positive bonds. This is where the convergence of online and offline retail comes into its own.
Take European fashion retailer, Mango, for example, which rolled out digital dressing rooms in key stores in Barcelona and New York. Interactive mirrors enable shoppers to scan items in the fitting room and contact shop floor staff to request different sizes and colours; the mirrors even offer fashion advice by suggesting items that will complete your look. Starbucks too has embraced the blurred lines of on and offline shopping, with its ‘My Starbucks Barista’ app that lets caffeine-deprived customers send orders to their nearest branch with a single click – simultaneously making the lives of customers and staff easier by speeding up in-store service.
In actual fact, the appeal of bricks-and-mortar stores is so strong that it’s drawing digital players offline. Even Amazon has ventured into the ‘real world’ with its “Just Walk Out” Amazon Go stores – a concept that must be working with plans afoot to open more stores in both the US and UK this year. If traditional retailers can get their digital approach right, their legacy on the high street (and the premier locations they occupy) will become an invaluable advantage against the internet giants.
Utilising data-based marketing
Modern consumers don’t distinguish between online and offline; they see all channels as part of one interwoven experience and expect to use whichever platform is most convenient for them. Consequently, there is a need for retailers to adopt a more varied approach. In addition to enabling choice by providing digital and real-world purchase options, they must ensure cross-channel experiences are optimised to ensure maximum personal resonance.
Actionable insights based on accurate marketing effectiveness measurement are central elements of achieving this goal. To ensure marketing and advertising communications always strike the right chord, retailers need a precise view of which tactics and channels work for individuals. This requires a move beyond conventional measurement approaches such as last-touch attribution — which gives all credit for conversions to the final consumer touchpoint — towards more accurate and actionable evaluation methods.
For instance, multi-touch attribution and marketing mix modelling, whether used individually or in tandem, can provide retailers with a more holistic view of performance. With marketing mix modelling fuelling long-term planning and spend allocation, and multi-touch attribution enabling tactical optimisations to messages, offers, frequency and more while campaigns are still in flight, retailers can take a smarter, more focused approach to marketing activities.
Ultimately, the industry needs to rediscover its original objective: pinpointing and delivering what shoppers want. The main driver behind the success of goliaths such as Amazon isn’t necessarily digital might; it’s a persistent emphasis on catering to ever changing shopping needs and habits. If retailers are to survive the multi-channel age, they must also adapt. Smooth online and offline experiences, varied engagement, and detailed understanding of where marketing efforts should be centred has become critical, not just desirable.
Sandra Loeffler, regional vice president Nielsen Marketing Effectiveness