Omnichannel: The Unlikely Savior of Physical Retail
With vaccine rollouts accelerating across the United States and beyond, post-COVID surveys have emerged. Looking forward has turned to looking back as marketers examine how the pandemic accelerated e-commerce adoption and growth. Without a doubt, successive lockdowns had a tremendous short-term impact on e-commerce sales. According to SearchNode, 50 percent of companies saw online sales grow by over 100 percent. E-commerce instantly jumped five years ahead, reaching the levels projected for 2025 in 2020. However, will this evolution become long term? Will e-commerce become the prevailing channel for brands beyond 2021?
Over the past year, billions of shoppers discovered the benefits of e-commerce. Websites are always open and have a wide choice of available products regardless of location, often for a cheaper price. But e-commerce has its pain points, too. Grappling with everything from long shipping delays to unclear product information, shoppers start to miss the instantaneity, humanity and tactility of in-person shopping.
How can shoppers have the best of both worlds? Omnichannel. Pure e-commerce and physical retail need one another to survive. According to McKinsey’s recent B2B Pulse survey, “omnichannel is now the standard, not the exception. Even as in-person engagement has reemerged since August 2020, buyers have made clear that they prefer a cross-channel mix, choosing in-person, remote, and digital self-serve interactions in equal measure.”
Physical retail has the potential to become stronger than effort — so long as brands integrate it as part of a broader, seamless shopping experience that functions well across devices and channels. Pure e-commerce players understood this long before the COVID crisis, with a number of retailers creating their physical showrooms or pop-up stores to accompany online experiences. For example, Amazon.com tested concepts ranging from Amazon Books to Amazon Go to the 2017 buyout of Whole Foods in a $13.7 billion dollar acquisition. Other retailers have digitized the in-store experience, cultivating a new kind of brick-and-mortar. Sephora serves as one such example. Its stores function as digital playgrounds full of devices and screens, allowing the retailer's marketing team to track the full customer journey from online to in-store.
Omnichannel requires a significant investment, but the opportunity remains bigger than the challenge. According to a 2019 study by Aberdeen Group, brands that embrace robust omnichannel strategies (i.e., companies that apply a real cross-channel and cross-device customer experience plan) should experience a 9.5 percent increase in annual revenue compared to 3.4 percent for brands failing to tap into it as effectively (i.e., companies that only build siloed multichannel experiences). Marketing teams must balance a number of moving parts, jugging the entire process both online and offline. A study from Everest Group showed that one of the biggest challenges comes in the form of the human component, as it's often easier to evolve technology than change a person's mindset. Brands must invoke a complete cultural revolution internally by prioritizing the recruitment of digital-savvy and omnichannel experience experts. Offline and online retail teams must merge as well by training to operate together and consider the outcomes of all sales channels.
Clearly, physical retail isn't dead. However, stores will need to quickly adapt to the new omnichannel equation. The store of the future will not necessarily be stuffed with digital interactive screens, as pictured in many sci-fi movies, but it will surely be:
- smaller to fit in retail's new role, and will move from a transactional to an advisory role, providing valuable and precise advice to the customer rather than trying to sell everything as an e-commerce platform;
- more localized, proposing local products customers cannot find online; and
- more personalized, providing virtual reality displays to test products like we saw with Sephora, as well as keep track of shopper preferences in the same way an e-commerce website does.
This change of mindset in the role of physical retail is no longer an added bonus; it has transformed into a necessity for survival.
Related story: 2020 Top 100 Omnichannel Retailers