Why Businesses Must Embrace Omnichannel Retail
Businesses need to adopt omnichannel retail strategies to connect with customers, increase foot traffic, drive sales, and survive in the digital age.
The retail industry is constantly changing. Major retailers are recognizing that the industry has become very competitive, partly due to technological disruptions, demanding customers, and changing shopping behavior. Retailers that are unable to adapt and respond to these challenges now find it challenging to thrive and survive in the industry.
Those in the industry that are able to thrive are the ones that are strategically responding and adapting to digital forces by creating a better retail experience for their customers, building modern retail supply chains, and, most importantly, using omnichannel retail strategies. Omnichannel allows retailers to achieve more availability, drive sales and traffic, and integrate digital touchpoints.
An omnichannel retail strategy improves the customer experience and provides more channels for customer purchase––whether it is on mobile, web, or in stores. The availability of multiple purchasing channels leads to an increase in sales and traffic. In fact, omnichannel customers spend 15 to 30% more than single or multi-channel customers. A joint study by Google, Ipsos MediaCT, and Sterling Brands also found that 75% of consumers are more likely to visit a store if they come across local retail information on the web. By leveraging multiple channels, omnichannel retail not only increases revenue from online retail, but also drives significant traffic to stores, further increasing revenue.
Additionally, omnichannel retail allows consumers to start and complete purchases on different channels. A customer can now see that an item is available in store, and reserve it online to pick it up from the nearest store location. This constant information creates a better retail journey for customers, because retailers can build a relationship with their customer-base and are able to engage with them on a personal, immediate level through a variety of purchasing channels.
Another study – conducted by Harvard – found that omnichannel customers are also more likely to engage with a retailer’s channels, specifically their digital touchpoints. This includes using mobile applications, downloading coupons, and even engaging with price-checkers, self-serve kiosks, and other in store digital touchpoints. Similarly, the study, which examined 46,000 shoppers, concluded that omnichannel customers are more valuable than single-channel customers.
In order to thrive in the competitive retail industry, retailers must build omnichannel retail strategies that look beyond having an online- or store-only presence. Instead, they should provide an integrated and seamless shopping experience for their customers by maintaining a strong physical store presence (e.g. brick-and-mortar store) and leveraging multiple online channels (e.g. social media or text messages), devices (e.g. mobile or desktop), while – most importantly – leveraging the latest digital touchpoints (e.g. kiosks or smart shelf technologies).
Multiple types of digital touchpoints are entering and disrupting the retail industry. This includes interactive kiosks, smart shelf technologies, and self-serve tablets. According to a study by Forrester, digital touchpoints affect approximately 49% of total U.S. retail sales. Additionally, a Nielsen consumer survey found that stores with digital signs near checkout lines, for example, have witnessed increases in sales of up to 33%. This demonstrates that a successful omnichannel retail strategy does not end with establishing a store and online presence; rather, it begins when retailers supplement their strategies with the latest digital touchpoints and drive sales by catering content to customers at the right time and place.
Overall, the retail industry is a competitive space that is constantly changing and subject to multiple competitive pressures, technological and otherwise. The competition is stronger than ever, digital forces are changing how we shop, and consumer purchasing habits are more restrained. The retail environment is changing and players must find innovative ways to respond to digital forces, consumer behavioral patterns, and other challenges; and, as demonstrated, omnichannel retail is one effective solution.
How to Achieve Omnichannel Retail
Becoming a successful omnichannel retailer is challenging. It requires retailers to build multiple touchpoints, standardize their customer experience, integrate their online store presence with their physical one, and create a better retail experience for each customer––all in one place.
This is challenging to do, especially in an age where all this information lies in data silos. For example, a retailer may have an on-premise legacy system that needs to be integrated to a mobile application, as well as a CRM system, a social media platform management system, and so on. As a result, retailers are forced to combine various applications, systems, and processes. And as newer systems emerge, this integration challenge becomes more daunting.
This challenge might lend itself to a Service Oriented Architecture (SOA) approach. In this solution, the application logic is broken down into individual services, and later reused across multiple channels. However, SOA is heavyweight and lacks future-proof capabilities, which makes it a suboptimal solution for creating a successful omnichannel retail strategy.
This is why we recommend an API-led connectivity approach to integration, which takes the principles of SOA, and makes them more achievable with the modern API. This approach to integration unifies connectivity and orchestration services through reusable building blocks that are uncovered by APIs.
Through API-led connectivity, retailers can standardize their digital retail experience and link their online and physical presences through plug-and-play functionality by connecting various systems and applications––including websites, mobile applications, and ERPs easily. This allows retailers to bring online multiple experiences and applications in an agile, sustainable, reusable, and future-proof fashion.
Several businesses are already using API-led connectivity to further their omnichannel retail strategies. An example of this would be one of our customers in North America. This retailer has a business model of bricks-and-mortar stores that show goods that customers can rent instead of purchase. You pay a monthly fee to lease sofas, TVs, desks, and other furniture items. Due to technological innovations and changing consumer habits, however, this retailer needed to rethink their business model and incorporate elements of omnichannel retail.
Our customer realized that their revenue growth potential is limited by the number of brick-and-mortar stores they have, so they decided to enter into a number of different partnerships with other retailers. The partnership entailed installing integrated digital touchpoints – specifically digital kiosks and booths – in partner retail stores. This allowed our customer to employ an effective omnichannel strategy and those retailers also benefited from the partner’s services through the digital kiosk.
Ultimately, our customer was able to create an effective omnichannel retail strategy with an API-led connectivity approach to open up new purchasing channels––from customers buying items in the kiosks to actual purchase orders being generated on the back-end. They could now engage their customers in new and innovative ways.
Explore more stories on the benefits of using API-led connectivity to develop omnichannel strategies. You can also check out some of the tailored integration solutions that we provide for retailers and consumer goods companies.