Future of Retail — Omnichannel

issue 03

The Centre for Retail Research predicts that by the

end of the decade ecommerce will account for 20% of UK retail sales. Presently they are estimated at 15 – 16%. This change in consumer buying habits has impacted

the high street, changed the nature of our shopping experience and triggered a fundamental shift in the structure of the supply chains that serve the retail sector. The rise of the pure-play online retailer may have

undermined the asset value and viability of the traditional bricks-and-mortar estate, but leading brands have fought back by using their high street presence to stunning effect. Retail outlets may be fewer in number, but their function, form and appeal have been transformed, creating more varied experiences for shoppers. In-store cafes are now commonplace and retail assistants with tablets to hand are becoming more interactive on the sales floor, checking for customers if an item is in stock, and if it’s not, offering to order it for home delivery or pick-up from store. No longer are high street retailers compelled to cram

pack products into these ‘customer experience’ spaces. Mobile technology in combination with slick supply chains, designed to cater for small orders, can now offer customers a vast array of product, available next-day or even same-day. The store has become the place to experience the product, perhaps before ordering in the shop, at home or even on the way home. Fast, low- cost delivery, backed-up by a highly responsive supply chain, has become the enabler for a whole range of possibilities. In some instances, particularly in the fashion sector,

shops are now being used as forward stocking points for fulfilling same-day deliveries, creating competitive advantage through faster response times. A dress ordered online could be in-hand and ready to wear in just a few hours. In addition, the return of items that may have been

ordered online are now commonly accepted at a local store, offering convenience for the consumer and presenting an opportunity for a new sale. The handling of returns, in general, is a hugely important operation to get right; with return rates of 40% common in the fashion sector, margins can be easily eroded through poorly thought-out processes. In the same way as bricks-and-mortar retailers have

adapted, there is now a blurring of what is omnichannel and what is pure-play. A number of once pure-play online retailers are now moving onto the high street. Fashion retailer Missguided opened its first store in Westfield, West London earlier this year and now has

a number of concessions, both here in the UK and internationally. Amazon too, a leading proponent of disruptive behaviour, is about to create a stir in the market with the trial of Amazon Go next year. Shoppers will be able to visit an Amazon Go retail outlet, choose items from the shelves and pay via their smartphone on the way out without all the hassle of long checkout queues. Customers now expect to interact with a retail brand

across multiple channels and, importantly, they demand consistency of service and price. Failure to perform on one channel can have dire consequences for the brand as a whole, so getting it right across all channels is now absolutely critical. Integrating order management across the many facets of a retail organisation has become a primary focus for most omnichannel businesses. With the wide adoption of smartphones, consumers

are now capable of researching the market on the go, in store, searching out the best deals. To capture sales, retailers have to be responsive and savvy, enabling staff to offer deals on the sales floor. According to the Centre for Retail Research, “many retailers already report that up to 70-80% of website browsing occurs through consumers using mobile devices, both smartphones and tablets”. Interestingly, the same report suggests that in 2015 only 20% of online spending in Europe occurred using mobiles (28.6% in the UK), but that the major growth in online sales is the result of higher sales via mobiles (+88% in Europe) with only 6% of online growth being made using PCs and laptops. Information has become the new battleground. Big

data analytics is playing an increasingly important role in omnichannel retailers’ plans to acquire a 360-degree view of their customers. Social media listening tools search out trends and predictive analytics are used to best-guess consumers’ next big purchases. But all this information needs to be shared across platforms to create a cohesive and accurate view of customers and their buying habits. Clever retailers are tapping into this information to create targeted marketing messages, driving much higher conversion rates. Part of this messaging is being exploited in the

growth of big retail events, such as Black Friday - which has now evolved to cover several days in a bid to take the pressure off stressed supply chains. The costs associated with these large spikes in demand have forced many retailers to find ways of cleverly managing demand. How are retail businesses going to meet the multitude of complex and highly diverse challenges heading their

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