Did that sound as “Are you ready to be crucified?” If it did then please accept my sincere apologies as the intent is exactly the reverse – to save you from being crucified. This may sound bizarre for some but if you are one of those brick-n-mortar retailers that have severely dented its sales due to the onslaught of the eCommerce giants then you know the sword is hanging on your head with a tag that says “Be crucified”. For those unaware, crucifixion means a form of slow and painful execution in which the victim is tied or nailed to a large wooden cross and left to hang until dead.
Worldwide, be it the US, Europe or the Asian countries, everywhere retailers have seen a spurt in the growth of online retailing and as a consequence steady decline of store shopping. In the US, last year on Thanksgiving Day sales were up by 14.3% as compared to the same day in 2013. And if you haven’t heard “100M$ in 10 hrs” that’s the revenue which Flipkart generated on its Big Billion Day. And if you had heard that you may probably also heard that Alibaba did 9.3B$ sales on 11/11 China’s Singles Day. Think of it as America’s biggest online retailer days weaved into one and set on an overdose of marijuana. That leaves the store owners dazed thinking what they should do to save themselves from such onslaughts. So the question is “To be or Not to be”. Last week, over a cup of coffee talking to a friendly multi-store retailer I tried answering this question for him. Giving them out here with the hope that it might be useful to some of you in similar business –
Keeping pace with your online rivals
For a retailer, its his/her dream to have multiple stores, larger displays, more store space but then escalating rentals, higher inventory and a sluggish economy have has made it expensive to expand store space. While their online rivals continue to grow flush with funding from venture capital and private equity funds, very few are backing up the brick-n-mortar economics.Better sense prevails. Same merchandise, same inventory and same price but now you have a new fast growing sales channel. Unless you get lured by the predatory pricing trap, you are ought to have better profitability by selling online. Below is an exhibit that shows rates of online penetration for different business – hope this helps.
Adidas’s opening of retail stores in Russia is a good example of a manufacturer going direct. At its own branded retail outlets and on its online platform, the sneaker maker can sell its whole line, especially high-end footwear, without having to negotiate for shelf space or relinquish percentage points of margin.
Also read: Predict Your Shoppers With Einstein
Leverage multi-channel marketing strategies
With the increasing marketing channels it means that you need to get in front of your customer anywhere they are that matters. Hence adopting multi-channel marketing campaigns are key in today’s market to rope in your customers and gradually grow it. The typical TV/Radio/Print channel continues to be the expensive marketing spends but getting on the online/social/mobile channels is driving most of the traffic to both the online and offline stores. Retailers need to build their audience across these channels. Adopt a multi-device marketing approach and ensure you can draw synergies between them to optimize your spend. Do make sure you de-silo your channels…Huh?. Basically, coordinate cross-promo efforts with integrated approach in which each channel compliments each other.
Adopt cross-channel integration
For most retailers adopting cross-channel integration is a necessity. Giving your customers a seamless shopping experience is no longer a ‘good to have’ feature but a ‘must have’. It clearly gives a competitive advantage over others. Best Buy is a classic example of adoption of cross-channel strategy has led to shutting their large format stores and giving rise to specialized outlets. The huge stores are turning out to be a disadvantage for traditional retailers over those that are able to provide superior and seamless customer experience across different formats. Besides the customer experience aspect, retailers should consider integrating their operations and logistics across channels. It is critical specially now when customers expect speedy deliveries and smooth processing of returns. Having a common technology back-end supporting a cross-channel customer interface is essential.
I had more to tell my friendly retailer but my coffee was over so I kept it short to 3 key points that can get him thinking. Too many thoughts can sometimes get to lose focus. However, to summarize the above views, customers are expecting the flexibility to shop across channels and devices. They want to shop when they are having a lunch break, while commuting to work, on a relaxed Sunday sipping their favorite brew (by now you can guess mine is coffee!) and obviously even while they are shopping inside a store. In short, wherever and whenever they can. For retailers that embrace the online channel, it is imperative for them to create a seamless experience across the online and offline channels and further integrate the operations to drive operational efficiency in their business.