By Florence Wright, Head of Digital Insights, Edge Retail Insight, Edge by Ascential
We are now in the final stretch of sadly another surreal and for many businesses, devastating, holiday season. Q4 was always going to be a challenge against a backdrop of rising inflation and unprecedented supply chain disruption, but then for the cranberry sauce on the turkey – a new and very unwelcome coronavirus outbreak.
Still, despite everything, there are retailers who are upbeat. In a trading statement earlier this month, Ocado said customer orders had been up 9% year-on-year in the 13 weeks to 28 November, which was driven by a significant increase (22%) in active customers. The management team said it anticipates their “best ever Christmas”.
We will see soon enough, but Ocado, a pureplay e-commerce grocer which has for years been investing in robotics innovation, automated micro fulfilment centres and last-mile delivery, is one business in a strong position to take advantage of the new era of shopping, where innovator retailers and brands have raised the roof on customer expectations.
With the pandemic now certain to ebb and flow for a while yet and digital adoption for many daily activities mainstream across demographics, the future for retailers and brands is quite simply omnichannel – the ability to show up for their customers across touchpoints and cater for their desires, even when they don’t know exactly what they are.
Can you please your channel-agnostic customer?
The accelerated shift to online and digital commerce fuelled by the pandemic has been well reported and even before this latest Omicron scare, there was ample evidence that consumers are not returning to pre-pandemic behaviours. Forecasts from Edge by Ascential show that global e-commerce sales are expected to account for almost 40% of global chain retail sales by 2026.
At the same time, customer expectations in terms of the in-store experience have also moved up a notch. Today, shoppers are seeking a more frictionless, digitally-oriented and exciting in-store experience and forward-thinking retailers are trying to accommodate. This year we have seen a growing number of checkout-less and “scan-as-you-go” stores that reduce the inconvenience of queues as well as the bigger role of technology at the shopper-end and of course at the distribution-and-delivery end.
Amazon’s hi-tech hair salon and 4-star stores are leading examples of how retailers will be expected to incorporate technologies to offer hyped-up customer experiences in-store – as well as using data and analytics from online browsing and shopping to inform curations, assortments and other reasons to leave the house.
The path to purchase is no longer linear. Customers are using multiple digital touchpoints, from social apps to games to retailer websites and delivery intermediaries.
To compete in this complex landscape, brands must create a seamless online-to-offline (O2O) customer experience and embrace every channel at their disposal. Seizing the omnichannel potential and giving customers what they want when they want it – whether that is online, offline or a combination of the two – is the greatest solution in bringing brands closer to target customers – and developing this to bring further engagement and loyalty in the long-term.
Win online to succeed offline
Online shoppers have high expectations when it comes to assortment and availability. The shopper will go online for convenience, saving time and effort, expecting greater variety and availability than the high street. As rapid delivery also becomes more of a table stakes offering for retailers, it is vital for brands to ensure a consistent presence on the digital shelf.
Certain store-based retailers have tackled the availability issue by allocating store space for online picking. Tesco for example recently partnered with Gorillas to install micro-fulfilment centres (MFCs) inside its larger stores to support a rapid grocery delivery service, promising delivery timelines of up to 10 minutes.
More partnerships of this type are to be expected. We anticipate up to one-third of store space in larger stores being resourced for online fulfilment in the future.
Availability and fulfilment agility should be key criteria for brands when partnering with retail partners. In a world where online and offline assortment and strategy are increasingly linked, e-commerce growth will be a factor in earning in-store placement.
In the end, the brands that have a place in both digital and physical baskets will be preferred because retailers can confidently allocate store inventory space to products needed across online and in-store orders.
As in-store curation reflects online trends and metrics, brands must prioritise online content and visibility
Convenience is not the only driver behind shoppers turning to e-commerce. The ability to browse and compare products via reviews and ratings across categories and retailer platforms puts customers more in control than ever before to choose the best value products. As more data is generated online, we expect omnichannel retailers to increasingly leverage this – such as online ratings and reviews, or trending items – to help curate assortments in-store.
Amazon 4-Star, which arrived in the UK a few months ago – the first international branches – pioneers the use of data and performance metrics based on e-commerce sales to influence in-store product ranges. Assortments available at the ‘4-star’ store are uniquely curated based on new, trending and best-selling items on Amazon’s website.
The takeaway here is that brands that perform well online will have more influence on in-store assortments and curation in the future.
Embrace all digital touchpoints to strengthen the customer relationship
Retailers will increasingly incorporate digital elements and touchpoints in-store to create more personalised experiences and foster product discovery. For instance, Nike can be considered a leader in terms of this omnichannel shopping journey – offering digital services and experiences in its stores based around the mobile app. Nike’s House of Innovation format allows visitors to add garments via QR codes to a virtual dressing room list and then head to a fitting room where their items will be waiting, or schedule one-on-one apparel consultations.
Retailers and brands are also recognising the opportunity to tap into emerging digital channels to foster product discovery and shopper engagement, particularly around key seasonal events. Global cosmetics brand L’Oréal Paris recently partnered with social media app TikTok for its ‘Called OnTrend’, live stream shopping event. Alongside a host of live entertainment from key influencers, the event is designed to make online shopping fun, and included products from L’Oréal, which also rewarded viewers that tuned in with offers and exclusive discounts.
Emerging digital channels such as gaming will gain momentum in the upcoming years as well, with activity in the beauty category one to watch as beauty brands look to gaming to foster creativity, product try-ons and discovery amongst shoppers. It is paramount for brands to test and learn with these emerging digital channels and touchpoints to gain early learnings and support their retail customers in creating more seamless omnichannel shopping journeys.
Conclusion
This holiday season will be the opportunity for brands to test their omnichannel strategy, replicating the strategies that their retailer partners have already set out: to provide shoppers with a seamless and unique shopping experience, regardless of the channel they are using.
It is notable that retailers are now also setting tangible targets to support their omnichannel strategies, with Carrefour recently announcing plans to turn 30% of its customers into omnichannel shoppers by 2026, up from 11% today. Ultimately, brands that connect physical and online assortments, media, content and activations will stand a better chance of long-term growth and success in 2022 and beyond.
