The retail industry is changing fast. Online and omni-channel encounters make up an increasing percentage of the retail experience, but as a panel recently discussed at the sixth annual Franklin County Retail Summit, it’s not doomsday for the brick-and-mortar just yet.
The Franklin County Retail Report revealed that e-commerce sales account for about 7.3 percent of retail sales, leaving 90 plus percent for the brick-and-mortar. But more than online or in-store sales, consumers are having increasing digital interaction with retailers – website visits, social media follows, etc.
“Omni channel isn’t just multi-channel, these are channels that have been thoroughly integrated that a consumer expects to shop across,” says Nita Rollins, director of cultural insights & thought leadership at Resource / Ammirati.
And the more a retailer embraces that, the better.
“Every possible measure of customer value improves if you can convert them to omni channel shopping,” she says.
Digitization has disrupted everything from manufacturing, to finance, to the way consumers shop. Rollins discusses how the last decade or so has seen a period of hyper innovation and hyper adoption from consumers when it comes to new retail formats – formats to which many retailers are playing catch-up.
Marcie Merriman, cultural anthropologist at Ernst & Young, explains that many retailers are left in the lurch, needing the bring their infrastructure up to speed. Just because a retailer has the desire to catch up to its consumers’ wants doesn’t mean they have the systems in place to do it.
“There’s a re-engineering, a massive re-engineering, that all retailers are going to have to take on in order to re-think and re-engineer how we’re serving a customer,” says DSW Transformation Team Director Dan Hinkel.
Omni-channel encounters like order online and pick up in store, or order online, have it delivered at home, then return in store, make for a complicated supply chain.
As much as a shopping experience can be completed online, Lee Peterson, EVP of brand strategy & design at WD partners, explains how brick-and-mortars are really the apex of the omni channel experience.
“The only place that all omni encounters can happen at the same time is in the store,” Peterson says. “When you’re in the store and you’re using your mobile, or you engage online, or you can buy online and pick up in store, the only place that that can all happen is in the store.”
Rollins cites another example that seems to show that brick-and-mortar retail is still in the game. Pure play retailers like Warby Parker, Birch Box, Bonobos, “They decided to forfeit the advantage that seems to come with being a single channel retailer and move into the physical space,” she says. “So the question is why that counter-intuitive move and why are so many of them making it if physical retail is actually dying?”
There is still a need for retailers to have a tangible expression of their brands.
“I still think physical stores have a critical role to play, but it just needs to be reconsidered,” Rollins says.
A theme apparent across many discussions of the Summit is that retailers now have to figure out what slightly different, localized purpose each location serves.
“What can we offer – exclusives, product stories, matching experience to those product stories, serving some other need – to help drive value to the customers,” Hinkel asks. “Bringing value to the physical store, there is an asset there that we can leverage.”
Peterson explains that with big box retailers there’s no interaction, no ambiance – they put products on shelves and people come to get them, and that e-commerce came along and offers the same thing. When customers actually make the effort to go to a store, “Now we need really good associates, now we need to train them,” Peterson says. “We have to make the stores something that people want to go to.”
Moderator Steve Morris of Assets Strategies Group provided a final example of why brick-and-mortar stores still have a role to play. A few years ago the firm completed a case study for a client that wanted to measure if there was a net negative to their e-commerce sales when they opened a physical location.
“It turned out it was just the opposite in the cases we looked at,” Morris says. “When they opened a store, their e-commerce sales went up, so the store was really one plus some percentage. The same thing happened when we looked at stores they had closed. They lost all the store volume and their e-commerce sales also went down.”
Stores can’t just measure store traffic or e-commerce traffic, but retail is becoming an increasingly interconnected web of on and offline experiences and influences.
For more from the Franklin County Retail Report click here.
Photo via Columbus Chamber Facebook page.