Omnichannel is the way ahead

Omnichannel is the way ahead, as consumer and retailer behaviour during the COVID-19 pandemic has demonstrated that online and physical sales channels form a highly competitive single retail market, according to GlobalData research.

The research found that shopping habits in the US and Europe shifted dramatically because of disruption caused by the pandemic, driving rapid adoption and growth in buy online, pick up in-store services.

However, the findings reveal that transactions made through online channels (desktop and mobile point of transaction) did not exceed 30% of total retail sales at the peak of lockdown in any country covered by the study – and many of those sales were supported by physical stores, with click-and-collect retail sales soaring. The report also explores how buying behaviour has evolved since lockdowns have ended and reveal that the sales penetration of the online channel is falling as consumers return to stores and make greater use of fast-growing multichannel services.

Read the report

Explaining why omnichannel is the way ahead, Neil Saunders, GlobalData’s lead retail analyst, said, “Despite claims that the growth of online shopping is leading to a ‘retail apocalypse,’ the reality is that many retailers across all sectors are thriving because they are innovating with multichannel to provide a convenient shopping experience for consumers. A very significant proportion of sales that are attributed to the online channel are, in fact, multichannel sales that rely on both stores and online for success. On average, one-third of online non-food purchases – where a customer actually transacts online – are in fact reliant on physical stores for product selection, pick-up or return.”

Saunders said the report also dispels the notion that retail can be neatly divided between online and offline shopping channels, but that consumers shop simultaneously across channels.

“The concept of separate channels has always been somewhat meaningless, but the pandemic is making it even more so. For any given purchase, shoppers are increasingly using a mix of channels and are swapping between them based on their needs. In the US, for example, stores are now supporting a greater proportion of online channel sales than they were at the start of the pandemic – mostly because retailers have quickly introduced things like curbside collection, leading to soaring online growth at big-box retailers,” Saunders added.

Across all countries, a majority of shoppers say that they will make greater use of multichannel services even as things return to normal. Meanwhile, a majority of retail executives are planning to invest more in the multichannel parts of their business, such as curbside collection and fulfilment from stores.

“The idea that there is a battle between online and physical retail is outdated. There is only one retail battlefield and the fight is between all the players in it – and those that have strong multichannel options with both an established store network and online presence now have the advantage,” Saunders concluded.

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