Omnichannel. It's one of the hottest topics in retail. It's seamless retailing in real-time. It's making sure that the brand experience coming out of a retailer is exemplary no matter how a consumer chooses to engage — on the e-commerce site, through an app for the tablet or smartphone, within the brick-and-mortar location or any two of those venues simultaneously.
All of this necessitates a new approach to retailing, one that successfully integrates what were at one time seen as separate business units within a retail organization — e-commerce/web site, pharmacy operations, retail operations, data warehousing, supply chain/distribution centers. The systems and data supporting each of those departments now need to be homogenous, transparent and accessible in real time, in many cases to both the retailer and the consumer.
"The fastest way to demonstrate that you're not an omnichannel retailer is to have a different price on the shelf than what you have online," noted Nikki Baird, managing partner at Retail Systems Research.
For years, this implied that retailers had to leave money on the table by matching prices or running showroomers out of the store. But in the age of the omnichannel consumer, true omnichannel retailers capture a greater share of wallet.
"For those who offer an omnichannel shopping experience to the consumer, the consumer actually spends more with that retailer," observed Lisa Feigen Dugal, PwC's U.S. retail and consumer sector advisory leader. "Omnichannel provides the consumer with even more option than they've ever had before both for buying and researching. The retailers who are going to be successful the quickest are really those who can understand their consumer. Start with the voice of a customer and work backward, and create that experience across all the channels and build that loyalty so that loyalty isn't [tied] to a card. The loyalty is [tied] to the brand." With that in mind, DSN has identified five trending strategies retailers are employing today.
Most recently Duane Reade, part of the Walgreens family of companies, partnered with a mobile game developer Ingress, which blends the physical and virtual world to create a one-of-a-kind gaming experience.
"Customer engagement strategies via location-based gaming has elevated to new levels, and Duane Reade understands that," stated Calvin Peters, PR/online manager for Duane Reade. "Strategically engaging gamification experiences that utilize LBS platforms are becoming increasingly relevant as mobile concentration within the retail space continues to expand. It's important for us to be where our consumers are, including the virtual world."
It's the ultimate offer an online retailer can make: Order it online in the morning, and it will arrive at your doorstep that afternoon. But it's a risky, cost-intensive offer to make.
In an attempt to match Amazon's same-day delivery offer — which the company expects to expand in 2013 — many retailers are turning to out-of-the-box solutions. Toys "R" Us, Macy's and Target have all worked with eBay to deliver merchandise the same day. And Google has started piloting local delivery services with several chains.
The other same-day solution is click and collect. This is where homogenizing back-end systems comes into play. Because in order for this to work, retailers have to present their in-store inventory in real time to consumers. "Web pickup … lets you shop your local store online and then pick up in the store in as little as an hour," explained Sona Chawla, Walgreens president of e-commerce. "We did that for pharmacy, [and] we did that for photo; now we're doing it for daily living and our daily living retail products."
"Our location strategy allows us to be the most convenient retailer in communities, and we certainly need to leverage that as part of our overall strategy to combat the concerns associated with showrooming," Joe Magnacca, Walgreens EVP and president of daily living products and solutions, noted recently. According to an IBM study, showrooming consumers represent only 6% of all buyers. The study found that 48% of showrooming consumers use the store to research products before purchase; almost 25% intended to purchase, but didn't due to high pricing or poor service; and 1-in-3 used their tablets to price-check and find product information. One strategy retailers are using is not to match pricing dollar for dollar on a particular SKU, but to instead offer a discount on the entire market-basket. "There is a growing recognition that there is also a value inherent to having 'it' right now," Nikki Baird, managing partner at Retail Systems Research, said.
Aisle411 recently showcased its mobile retail navigation service at a Las Vegas Walgreens for attendees of January's Consumer Electronics Show. Called "Indoor Location Geo-Fence Alerts," the solution enables retailers and vendor partners to deliver messaging on Android or iOS devices based on where the customer is in the store. "One of the most powerful assets brick-and-mortar retailers have is their physical store," said Nathan Pettyjohn, aisle411 CEO. "This truly extends the shopper experience into an endless aisle where the in-store and online purchasing experience is blurred."
Walgreens last year employed the Local-Response platform to communicate with consumers who walk into their locations and then tweet, make a status update on Facebook, post a photo on Instagram or check in to Foursquare. Consumers who checked-in on Foursquare were awarded a coupon for Halls lozenges. In addition, Walgreens tweeted as many as 5,000 messages: "Check out Halls' new cough drops in the cold aisle."
Similarly, Best Buy has been using eBay's price comparison app RedLaser to communicate with consumers in-store around specials and other information. The RedLaser app also can be used as a click-and-collect shopping tool.
Operating a physical location is a key component of omnichannel if a retailer is going to deliver on a consumer's whenever, however and wherever shopping experience.
Both eBay and Etsy are testing temporary stores. Piperlime, the Gap's once-online-only venture, opened a store in New York in the fall. Men's apparel retailer Bonobos, which also has its roots online, opened six Guideshops where consumers can try on a suit before purchasing.
"The cost of marketing a website and the cost of free shipping both ways was approximating a store expense," Bonobos CEO Andy Dunn told the New York Times. Dunn reported that Bonobos' in-store market-basket was two times larger than the shopping cart online, and its brick-and-mortar customers shop more often.