Embracing a (real) omnichannel strategy
When e-commerce began its rise to prominence, many grocers were doubtful that people would ever choose to buy their food online. At most, it was anticipated that online sales would make up a small portion of the mix — maybe 5% to 10% of consumers who wanted to shop from home for stock-up items only. As a result, online shopping was introduced to the grocery industry with a high degree of skepticism and little planning, with most brands treating dot com as “just another store” and mirroring strategies from their physical locations. Websites were built to sell the same products available on shelves, prices remained the same as those listed in brick-and-mortar stores, and digitized versions of traditional weekly print flyers/coupons were created to promote the same specials — essentially applying mass tactics in a digital personalized world.
The challenge with this approach was that e-commerce was never destined to be a small channel used by a select few grocery shoppers, nor a channel that is shopped in the same way as a physical store. Instead, it has become an increasingly important part of grocers’ sales, with customers from every demographic choosing to not only split their purchases between in-store and online but to increasingly integrate online into their entire path to purchase. Today, most (if not all consumers) are omnichannel shoppers, with 75% using mobile technology to access relevant product pricing and sale information no matter where they are. They switch between channels seamlessly based on anything from the nature of their schedule to the products they intend to buy and where they can find the best prices. As the new reality of the omnichannel shopper continues to grow, those retailers with a traditional, outdated approach will increasingly struggle to stay relevant.
Crafting an effective omnichannel strategy is not as simple as offering customers the ability to shop online or in-store or via mobile. Shoppers are buying online and in-store and via mobile. All of these channels need to work together seamlessly and with an understanding of the role of each channel in the shopper’s changing expectations. It’s not a simple task, but tracking the habits of multichannel shoppers’ online activity can help improve your customer experience, product assortment, pricing, and promotion tactics across every platform.
Here are a few keys to develop a successful omnichannel strategy.
It’s time to modernize your structure
Brick-and-mortar stores are not going away. Even savvy retail disruptors understand this, which is why Amazon went big with its acquisition of Whole Foods and recently unveiled its first Amazon Go store. The reality: Physical locations are just one piece of the new multichannel shopping process.
This poses a new challenge for traditional grocers who have structured independent silos, separating the store from online. The key to success is developing an integrated and cohesive strategy that puts the customer at the centre of your efforts and takes into account the role each channel plays for shoppers. How they behave when shopping online can tell you a lot about how they’re going to shop in-store, so it’s critical to create a structure that ensures your sales and marketing teams for both channels (as well as the teams handling your mobile efforts) are not just talking, but actively working and planning together to create a common customer strategy. There are benefits of learning from each channel, but you can only tap into them if you lay the groundwork for a truly omnichannel approach and ensure that your organizational structure focuses on the customer first.
E-commerce frees store restrictions, which creates new opportunities
E-commerce is not limited by some of the physical challenges of a brick-and-mortar store, which allows us to try new things with little risk before implementing them in-store once they’ve proven successful. Since the very beginning of commerce, limited shelf space has dictated how many products retailers can offer their customers at any given time. Because of the value of the limited shelf space available and the desire to offer customers a broad assortment, retailers invest heavily in analytics to understand things like true item value and substitution potential, which can help inform list and delist decisions and assist retailers in creating planograms that best appeal to the needs of customers.
Thanks to the elimination of fixed shelf space, e-commerce does not face the same challenge. This creates huge opportunities for retailers to test and optimize their assortments online and to gain key insights that can be brought to the store. For example, retailers can test the expansion or localization of their assortment by offering newly available items online and closely monitoring the impact on customers, from category expansion and growth to substitution or cannibalization. Take advantage of this by trialling products, expanding/reducing assortments and localizing via your e-commerce platform first, which can be done more quickly and without expensive and time-consuming shelf changes.
With sophisticated measurement and insights, you can identify which products are most valuable and introduce them to your brick-and-mortar location knowing they’re a sure thing. Given the trend toward smaller stores with a more limited assortment, online will become an increasingly critical channel to test and learn shoppers’ preferences. Certainly, Amazon is using insights from online shopping to inform what products make it to the shelves at Amazon Go.
Personalized, flexible pricing is a must
Most of today’s retail marketing is very product-focused, offering sales on specific items to encourage purchases and (hopefully) grow the category. The arrival of omnichannel shopping, and the valuable customer data that can be collected, allows you to move past that model to personalize your marketing and pricing experience across e-commerce, mobile and even in-store. Amazon does this online already, offering different customers individualized prices and promotions based on their purchase history, demographic or other factors. As consumers engage more with digital channels, their expectation of personalized offers is increasing and it’s not limited to digital channels. It’s a truly omnichannel expectation, and the companies that best meet this increasing need will win.
This creates both a huge opportunity and a significant challenge for traditional retailers. Personalization of marketing and merchandising strategies and tactics requires significant data and analytics capabilities and a change in both organizational structure and process. Today’s leading retailers have expanded beyond traditional product-based pricing strategies to offer individual pricing on every item, for every customer, on every visit. And while personalized pricing was pioneered online, it is migrating to the store too, thanks to the rising prominence of mobile and even with the introduction of digital in-store price tags.
We’re living in an omnichannel world, and if you don’t embrace that fact, you’re guaranteed to be left behind. Today’s competitive advantage is quickly becoming tomorrow’s table stakes. Organizational speed and learning are becoming the pillars of growth, which means there is a huge first-mover advantage for those who commit to a new approach. Making these changes requires serious commitment and equally serious investment, but the ROI on offer is far better than the problems that will arise from not taking action now.