Imagine you are sitting at your desk twenty minutes before it’s time to go home on a Friday evening. You have a big weekend trip planned and you can’t focus on anything else. You count down the minutes until you can go home and pack when you suddenly remember it’s your roommate’s birthday on Sunday. You haven’t bought her anything. You quickly do an online search for the nearest gift store so you can stop in on the way home. When you arrive and can’t find anything your roommate would like, you pull out your phone and search for something on the store’s online shop. You find the perfect gift, check the option to have it wrapped, and select two-day delivery so your roommate will get it straight to her door on her birthday. You can then continue home and look forward to your trip without having to worry about disappointing your friend.
Imagine you are coming back from a weeklong road trip to an empty fridge at home. The long drive has put you in no mood to go shopping. So you grab your phone, open your local grocery store’s app, select what you need to make a quick meal, and pick up your groceries, packed and paid for, on the way home.
Imagine you are online shopping for a new digital camera. You use Amazon to make comparisons and finally decide on a model you are happy with. Just before ordering, you decide to search other retailers to see if there is a better price available. You find out a local retailer is having a big sale on digital cameras, so you go to the store to see your choice in person. The picture quality is not what you hoped, but you test more cameras and purchase one for the same price as your first choice online.
Even if these scenarios don’t sound like situations you’d find yourself, chances are you still know someone who has taken advantage of the increase in omnichannel retailing.
What is omnichannel retailing?
Omnichannel retailing has many variations depending on product and industry, but it is mainly concerned with companies involving themselves more intimately with their customers. This means reaching across multiple advertising streams – such as TV, Internet, and mobile – to allow consumers a more complete shopping experience that can begin in one place and end in another.
Jim Crawford, chief experience officer for Chute Gerdeman, describes four key steps for omnichannel retailing: inspire the user; provide assistance; make the experience convenient; and establish a history with each customer. In a world where time is becoming more and more valuable, shoppers appreciate an experience where the retailer they are frequenting has made efforts to ensure their shopping is as quick and smooth as possible.
The Millennial Shopper
As millennials become young adults contributing heavily to the economy, their purchase habits are becoming more important for retailers. While technology has advanced quickly in the past few decades, so too have shopping habits changed to accommodate new ways of doing business. 87% of millennials reported using two or three different tech devices every day and mobile app usage has increased by 58% in 2015 alone. Not only are smartphone and tablet users increasing their productivity and catching up on news on their devices, they’re also doing more mobile shopping: in 2015 retailers reported more than a two times increase in checkout rates thanks to integration with mobile payment service Apple Pay.
Social media has become increasingly popular in recent years and retailers should take note: millennials think a company’s social media presence is important. Social media networks provide channels for young adults to seek advice from their friends and peers, which is a key factor when it comes to making purchase decisions. Whether it’s a quick Facebook comment suggesting brands for a new phone or a blogger promoting cookware on a recipe found through Pinterest, millennials look for advice on what to buy from someone reliable they can trust, especially since they also doubt the authenticity of advertising.
Having studied or worked through a global economic crisis, Generation Y has become very conscious of its spending habits. A survey of millennials found that the price of a product or service influences their purchase decisions more than the quality, the brand, or its availability. Shoppers also have so many resources when it comes to comparison-shopping that it is easy for them to be sensitive to price changes.
Finally, rather than enjoying an old-fashioned buyer-seller dynamic, today’s young adults demand more from the retailers they patronize. While almost half of millennials want to contribute to future products and services, they also demand transparency on the part of the company. While millennials are typically assumed to show little loyalty to a company, surveys consistently show that they are inclined to support their favourite brands as long as those brands actively promote their own values and engage in charitable endeavours.
What does this mean for retailers?
Technology has opened a world of information that is easy for anyone to access. While there will always be a segment of the population comfortable with making purchase decisions with little research, a growing number of powerful shoppers will use available resources to make their buying experiences more favourable. Instead of competing with these resources, companies need to embrace technology to offer their customers a stronger buyer-seller relationship.
This is where omnichannel retailing comes in. Everything is connected.
While no specific retailers were mentioned in the three scenarios at the beginning of this post, there are plenty of companies who offer the services described. Brick-and-mortar stores, including grocery stores, have seen the value of expanding their online services despite traditional shopping habits. Meanwhile, online retailers have entertained the notion of opening physical locations as another means of reaching their customers. For example, Amazon’s recently launched bookstore in Seattle does not display prices, but rather barcodes that customers scan using their phone’s camera and the Amazon app. While the physical location allows shoppers to interact with the products, the use of technology gives Amazon easy access to customer data to give recommendations, just as would happen if the buyer were shopping online.
Most retailers haven’t gone so extreme with their omnichannel methods. However, even a simple online transaction that allows in-store pickup shows how useful the integration of channels can be. For three straight years, nearly two-thirds of retail executives in the United States and United Kingdom considered implementing an omnichannel strategy to be advantageous for their customer service. In 2015 68% of these executives considered their sales to have improved as a result of this strategy, perhaps indicating that customers were more comfortable with their shopping experiences and willing to either spend more or more often.
How can omnichannel methods benefit the changing retail market?
Millennials are gaining more purchasing power as they graduate, pay off debt, and begin to hold steady jobs. Now is the time for retailers to adopt an omnichannel strategy to have the best chance to build and maintain relationships with these customers.
First, companies should endeavour to be more active on social media. Not only are outlets like Facebook and Twitter great for delivering messages to a wide audience quickly, they also allow customers to give feedback easily. Being able to respond to bugs and concerns instantly gives companies the opportunity to solve problems faster and keep up meaningful relationships with their users by showing their dedication to customer satisfaction – which also reflects the transparency shoppers want in their retailers. Social media platforms are ideal for showcasing charitable events and social causes supported by the company, providing millennials a closer look at how the world benefits from their loyalty.
Since Gen Y places emphasis on the advice of others before purchasing a product, it should be easier for potential shoppers to access diverse opinions. Many online retailers have long since added user reviews to product pages, an advantage they have over brick-and-mortar stores where comparisons may take much longer. According to Lynn Dornblaser, Director of Innovation & Insight at Mintel, QR codes on products will become more popular, providing customers with promotions and downloads on their phones either in-store or at home. This creates another platform where retailers can interact with their customers personally by providing inspiration and advice.
Strong relationships with customers are beneficial for retailers as well, not just limited to the customer lifetime value that accompanies brand loyalty. Despite their budget-conscious shopping habits, millennials were shown to pass on instant discounts in favour of a higher-value rebate offered by a retailer. By providing shoppers with enough relevant information and options to suit their lifestyle, companies can ensure customers see the value in a purchase decision beyond simple numbers.
Omnichannel retailing may sound like a daunting task, but at its core it is about customer satisfaction. Retailers are still providing a service – customers have simply gained the ability to have their needs fulfilled in diverse ways.
Playing across multiple channels is not only going to be something advantageous going forward, it’s going to be required for any retailer no matter what their size.
— Warren Shoulberg, Editorial Director at Gifts and Dec