With US brick-and-mortar retail experiencing more growth than online for the first time ever in 2021, how can physical retail continue to make up for the massive losses it incurred in 2020?
The answer is to close the gap between the two by adopting an omnichannel strategy. Omnichannel offers a unified user experience across a range of channels or endpoints, making sure everything from SMS to online web stores are in synch. This can feel almost futuristic, especially when enhanced by Hyper-personalization that incorporates elements like AI and automation. So where does traditional brick-and-mortar factor in?
Pros Vs Cons of Brick-and-Mortar Retail
It’s easy to assume brick-and-mortar retail is losing some footing to digital but that may not be the case. Quite the opposite. In fact, many large online-only brands like Amazon and Gymshark have begun pursuing physical retail in earnest. Even the Metaverse has a physical store now. With infinite resources, especially in Amazon’s case, what advantages does brick-and-mortar still have that can’t be fully replicated online?
What do brick-and-mortar stores still have to offer?
“In department stores, so much kitchen equipment is bought indiscriminately by people who just come in for men's underwear.” - Julia Child
- The human factor: Interaction with staff and other customers, no matter how fleeting, enhances any experience. Community is an under-discussed element of retail and is often sorely missing from online retail, with many customers actually establishing communities themselves. This human interaction pays dividends, a third of consumers still say they don’t trust businesses that only have an online presence
- Experience: There’s a reason major brands are putting an emphasis on using Augmented Reality to replicate seeing what a product looks like in person. 59% of customers still consider the ability to “feel, touch and try a product” the number one appeal of in-store retail.
- Discoverability: Websites can suggest items based on previous customer purchases. Sometimes this is effective and sometimes this means Amazon reminding you it’s been a week since you bought your last toaster before venturing that you might enjoy another one. Meanwhile, walking through a store exposes you to products you have never seen before, ones that you may not have even considered the shop sells. Online tends to be quite closely focused, even suggestions tend to offer variations of products the customer is already looking for. The shop floor, on the other hand, fosters much more curiosity.
- Immediacy: A close second to seeing a product in real life, customers have rated the ability to pick up an item and own it minutes later as the second most appealing thing about physical retail.
- Delivery: Speaking of delivery, it may not be the default method of delivery for brick-and-mortar retail but many global brands like Ikea are expanding the storage of chain locations can actually result in speedier delivery than many online retailers. Walmart used this to its advantage by launching two hour home delivery in 2020.
Brick-and-mortar still has a lot to offer but there are still some clear advantages to shopping online.
- History: One of the biggest issues with in-person retail is that every time you enter a store, you are effectively a stranger. Though you may be a fan of the brand, nothing reacts to your preferences or tailors the store experience for you. Context is only developed on the customer side.
- Return on investment: The disconnect only gets more pronounced when you visit a store regularly. You may have learned where your favorite items are, when items are discounted and which self-checkout is always broken but the store has retained no information about you. A good loyalty program goes a long way in addressing this imbalance but even retaining information like shipping address, payment details and wishlists is far more intuitive online.
- Context: In-person shopping can only provide so much detail about a product before it becomes unwieldy. You may be able to see it in real life but you often don’t get a whole lot else to go on. It’s possible to reach out to store staff but often they’re so busy they understandably can’t offer detailed advice. Customers are now so accustomed to the more informed experience of shopping online that 80% of people use their mobile phones inside of a stores to either look up product reviews and compare prices.
- Convenience: Flawed as it can be, online shopping’s proposition of buying something at a store that never closes without ever leaving your house is hard to beat. It’s the main reason its popularity exploded in 2020.
- Flexibility: Part of why chain retail is possible is down to rigidly standardized processes, often dictated by the demands of running a physical space. Online retailers can afford to let you pre-order an unreleased item or out-of-stock item and dispatch it to you immediately when they get it. They never close. They often let you pick your time and date for delivery, albeit usually for a fee. Logistically, this is impossible for most physical retail.
- Dedicated Support: Increasing demands on in-store employees of businesses of all sizes means that it’s very difficult to get a query addressed in person. Often, customers have to move to a second channel online or on their phones to get support. Online retail usually has a lot more flexibility and is enhanced by chatbots.
Omnichannel: The Global Cornershop
“ People don't care how much you know until they know how much you care” ― Theodore Roosevelt
You’ll notice several of the aspects that make brick-and-mortar a less appealing retail channel could equally be unfavorable comparisons between chain stores and local stores where staff and customers get to know each other and build up a rapport. Large brands can combat this using hyper-personalization. Using a combination of AI, real-time data and automation to process all available customer data, hyper-personalization crafts an experience unique to each customer.
This information includes location, age, buying habits but also encompasses more specialized information like what they search for on a brand’s website versus what they buy, what discounts they usually redeem, when they use the site, what kind of support calls they’ve made, how often they visit a site without buying, what they’ve returned etc.
Hyper-personalization is the difference between acknowledging the customer and knowing the customer. When used as part of an effective omnichannel strategy, it makes brick-and-mortar retail far more appealing by adding the feeling of familiarity and shared context that is lost in large chains.
The customer’s point of view
When trying to innovate on customer experience, major stakeholders are aware (often painfully so!) of the limitations borne from how each tool you use communicates with the rest of your tech stack. They know the limitations of what they're dealing with and plan accordingly. The issue is customers don’t have this insight and will only interpret flaws in your execution as an eventuality you didn’t account for rather than a concession you had to make. A commitment to seeing your business through the eyes of a customer will give you so many opportunities for innovation, there are so many “just works” omnichannel features, many logistically straightforward to introduce, that businesses never implement due to poor internal organization.
Successful omnichannel approaches to reducing customer fiction can be both innovative and straightforward. The common thread is the focus on consistency and understanding the business from a customer's point of view. This will help you focus on useful services that will attract long-term customers, rather than novelty with an initial appeal that wears off fast.
Omnichannel doesn’t necessarily just mean everything at all times. It’s about gauging what’s appropriate. Convenience and features can be replicated and enhanced across multiple channels but that doesn’t mean the same applies to messaging. This is another important part of considering the customer. Just like there are some things you don’t want to find out about through a text, even though it’s more convenient than calling, there are also some information and vernacular that isn’t fitting for every situation. Similarly, just because a customer is available on every channel, doesn’t mean they should be getting bombarded with messages. Successful omnichannel integration should aim to give the customer the same kind of respect and consideration they’d get at a local store where they know the proprietors.
Regular customers get special treatment but that doesn’t just mean occasionally discounts and relevant suggestions. Offering rewards that only frequent customers can avail of rewards loyalty and strengthens the brand.
Once you begin to explore what motivates the kind of customer behaviors you want to encourage, you’ll be surprised at how many innovations there are beyond simply rewarding customers for money spent. Frequent customers could get notified of products early, get access to exclusive product lines or even be allowed to pay for items in installments (just like a corner shop will let someone who forgets their wallet pay the next time, knowing they’ll see you again).
For instance, Beauty brand Pacifica’s Girl Code program rewards customers for mentioning them on social media, creating positive word of mouth, and gives customers an extra reward on their birthday, encouraging them to stick around and prompting them to treat themselves. Experiential rewards tailored to a customer’s actual interests are great for building trust, a crucial element when encouraging customers to move between channels.
Blending omnichannel and brick-and-mortar: the best of both worlds
So how do we use omnichannel to bridge the gap between online and brick-and-mortar retail? Here are some examples of the best of both worlds:
- The Human Factor/Dedicated Support: A consistent omnichannel approach would give workers in-store instant access to a customer’s purchase and support history. Appointments could be automatically scheduled ahead of time. In-person support staff could be empowered to give personalized discounts to compensate for issues the customers encounter. Customers could even run through a preliminary support check with a chatbot beforehand so they could cut right to the chase and get the vital, in-person service they need.
- Experience/Context: As mentioned, some companies like Kohl’s have put considerable work into digitally recreating the in-store experience of seeing what an item would look like in real life, with the added benefit of the easy-available online context. There is similar scope for adding context to the in-store experience of seeing a product. Augmented reality could allow a customer to scan a product and immediately see how many are in stock, how other customers have rated the item and even specially-tailored suggested pairings with other products. The vast majority of customers look at their phones while shopping in a store, if a brand can win back control of that context it will make it far less vulnerable to comparison shopping. In-app promotions only redeemable in-store would be a fantastic way to encourage customers in this direction.
- Discoverability/Return On Investment: When wandering through a store, your phone could offer tips about where to go to find products that might interest you. If you tend to order a lot of a product, a personalized discount for buying in bulk and in-store would be a great way to avoid several rounds of shipping costs. All the information that the customer gives to the brand improves their experience while the brand can offer small incentives to improve operational efficiency.
- Immediacy/Convenience: Knowing what’s in stock beforehand, having your order prepared for pick-up and choosing substitutions if necessary all combine the best of both worlds. When a customer has their core order organized ahead of time, even set to recur on a regular schedule, but walks through the store to collect it, they can browse stress-free.
- Delivery/Flexibility: The location advantage of brick-and-mortar chains means delivery and distributions can happen a lot faster than relying on a third-party service. The flexibility of online lets you know what’s in stock, purchase whenever and even pick your time for delivery. Combine this, in-store pickup and a record of your preferred address, delivery options and time for delivery and you have a powerful combination of both value propositions.
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Talon.One’s promotion engine is the key to creating the hyper-personalized promotion experience that will bridge the gap between channels and encourage customer adventurousness. By using Talon.One’s rules builder, every piece of customer data you have can be leveraged to create in-depth, tailored promotions that reward customer engagement with a bespoke experience. Talon.One provides the power and scalability to ensure your customer’s experience stays consistent and you can keep delivering on the promise of an individual experience for each customer without running into any technical issues.
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