On the retail market, we notice that consumers and their habits are changing. The clients are more and more demanding, connected, well-informed and their expectations are diverse.
The mass consumption era is over and it is now necessary to follow the new buying path of customers that only go by Omnichannel.
According to this latest trends brands must adapt their organization to efficiently address these new commercial channels (plurality of point of contact, pushed merchandising, renewal of product range, interdependent distribution channels, multi-site storage…)
New consumption patterns
We can now identify two specific consumption patterns.
On one hand, the simple and practical purchase, automatic and where the delivery has to be quick and facilitated. On another hand, the committed purchase, the one that has meaning, that value proximity and expertise, and at the same time promote exchange and sharing to better consume. The buyer uses it as a claim of its “intelligence” and values.
Against those new consumption patterns, retailers should evolve their business model by adopting a centric customer strategy.
After the fear of digital commerce growth and the reluctance to jump into digital transformation, the retailers understood that the one that were announcing the death of the store were deeply wrong.
The physical point of sale is a strength and a true point of contact and exchange with the client. The online e-commerce is doing well in France, in 2014 according to Fevad, the sector was growing by 11.5%, in 2015 the growth was even higher with 14.3%, beating the initial forecast by 10%. The sales on internet accounted for 64.9 billion euros in turnover. In 2016 the sector reached 72 billion euros in turnover (+10%).
The number of actives e-commerce website is also growing by 9% a year. We can now count 195 450 websites against 178 500 at the third semester of 2015. The 200 000 e-commerce sites threshold has been crossed in 2016. The digital is no longer a threat but an amazing driver of growth, that if well designed will definitely impact the buying process with simple and fluid multichannel paths.
The consumer path
Now a purchase is more and more “omnichannel” and we can summarize the consumer path in three big steps.
Preparation of the visit
Before completing a purchase, the customers browse the web, inform himself, compare products and characteristics on brochures, consult users’ opinion, check availabilities in store and localization… Web, mobile or tablet the consumers don’t want to choose and the retailers must heavily invest and develop website and application where the path is the easiest and as fluid as possible, matching the customers habits. The m-commerce will pursue its growth in 2017 and become a must-have as time and place are no longer an issue, with a phone in every customer pocket, a brand can now catch the attention and foster visits in store.
According to a study published in March 2016 by RetailMeNot, leader in digital promotion and editor of the website “Ma Reduc”, and realized by CRR (center for Retail Research), one 1 euro spend in European E-commerce in 2016, 25 cents will come from the sell realized on mobile, which represent 65 billion euros of the total online expenses against 44.9 billion in 2015. In France, the m-commerce market has even doubled between 2015 and 2016 growing from 3.7 to 7 billion euros. In 2016, 1 online purchase out of 4 has been realized on a smartphone.
Moreover, to create a rich shopping experience that is close to real life, some retailers are testing chatbots, installed on messaging apps. They start to gain some ground in term of customer relationship, because it is just natural to recreate the communication as the one you would have with a seller in a shop to create a personalized conversation.
2. During the visit
The store is still the flagship of the click & mortar structure as the conversion rate is 20 times higher than online. When the client enters a store, he already knows everything there is to know and sometimes knows more than the seller itself. It is paramount for the point of sale to differentiate and offer a fulfilling experience to its customers and to become an experimentation place. For example, the smiirel box (the Facebook like counter), smart mirror, augmented reality
The point of sale must become a showroom, and showcase its products. Inside a technology should provide a service but also be discrete, intuitive and clear. In addition, the technology releases the seller of long and thankless task that have a small added value (RFID, in time stock…), this way the sellers have more time to deliver what’s really create value: the advice. The seller must be qualified, listening and bring a real service to the customer.
The technology is also a way to get to know how the customer evolve and buy in a store and to prevent many missed opportunities for retailers. The personalization and contextualization is a key challenge for the store: the customer recognition. Besides, the payment, black dot along the seamless customer travel is a key stake for retailers and editors this year.
3. After the visit.
The management of the supply chain has always been a major issue but its components have largely evolved in the past years. Beyond the cost reduction, the supply chain now must allow to answer new consumer’s needs (product lifecycle, cybercommerce, delivery time, personalization…). The same goes for the company that is looking for more agility, visibility on the future and collaboration between teams. The first focus point post-sell, the delivery and return management, is still a sticking point even though they are considered basic for consumers. If well managed they are non-negligible loyalty levers, that is why many improvement tests have been launch (drone delivery, 30 minutes return for Zalando with the Stuart Start-up…)
A second stake for retailers is to manage to reconcile store sales and online sales, the acknowledgement of the omnichannel customer must be at the center of the brand strategy.
It has become essential to collect data to model the customer journey, define KPIs… and analyze them to better understand the behavior and use of the clients and create efficient loyalty programs.
Moreover, the introduction of the Internet of Things offers new dialog opportunities between consumers and physical stores. We can imagine that a brand will be able to cross the data from any connected object to offer coupons on already looked online products. From the Amazon and its “Dash” button example, Darty has made a first step toward the reconciliation between classic distributors and connected objects. The Darty button is a simple button with famous red, black and white logo of the French company, except that this button is connected. Once pressed by the user, he will be called back by a Darty consultant for help with an electronic device. A system that also allows the brand to expand its after sales services – its signature look – and at the same time to address a younger audience, found of connected objects.
It is one of the keys to be able to offer an experience always more on point and personalized.
Physical commerce and digital experience are now deeply connected, the user experience has to be personalized, fluid and 360°. Many companies are planning to increase their investments in digital to direct customers towards point of sales. Budgets are here, ideas and project as well.
To go further with omnichannel and keep following the consumer behaviors, in-store payment could also move-aside and drive the concept of the experience location event further. The consumer would get out of the showroom without buying and would finalize his sales online or on mobile.