The era of retailers operating independent offline and online channels is long past

April 7, 2014 | By RetailME Bureau

The key forces affecting traditional brick-and-mortar retailers today are rising e-commerce and m-commerce, growing smartphone penetration, increasing influence of social media, brands selling directly to customers, consumers becoming more cost conscious, customers becoming blind to advertising, and increase in prime retail rents and operating expenses.

“What we see in retail today is the ‘third wave of retail’, following the first two waves – mass production and mass distribution and marketing. Consumers want an experience – anytime, anywhere on their own terms, and at the best prices – not just stuff or products anymore. A brick-and-mortar experience alone is not sufficient to attract and retain loyal customers,” says Steve S Odak, CEO, iMarketVend.

Retailers can no longer strategise and operate their stores, websites and mobile shopping channels independently, he warns. Consumers expect a seamless, integrated experience and the ability to buy what they want, whenever they want. The implication is clear – brick-and-mortar and e-commerce do not need to have a rocky love affair.

In markets such as the US and UK, retailers are trying more to integrate brick-and-mortar with e-commerce and m-commerce to provide a seamless brand experience across all channels. According to Forrester research, web-influenced sales accounted for $1.13 trillion in the US in 2011, a figure predicted to grow to $1.55 trillion by 2015. They are expected to account for 44% of retail sales globally by 2015.

A seamless experience provided by multi-touch points gives rise to ‘click-to-brick’ buying behaviour. Around 30-to-40% of smartphone users purchase in-store after researching products on their phones. Customers these days tend to start search on one touch-point and complete the purchase on another. Of particular interest to retailers is the fact that 45% of shoppers tend to purchase extra items once they enter a store.

However, retailers in the Middle East have been slow to capitalise on this trend and extend their presence to online platforms. This is ironical because a study by Google reveals that smartphone penetration is higher in the UAE and Saudi Arabia than the US and UK. People in these countries lead in mobile apps usage and also use their smartphones more frequently for search, email and social media.

Branded online solution a better bet than online mall

For retailers who decide to enter e-commerce, the first step is to choose the right platform for their online business – launch their own branded solution or opt for a presence in an online mall.

“My recommendation to retailers is to sell through online malls to acquire new customers and gain incremental revenue, but to also launch private-branded e-commerce sites and mobile apps to maximise value from existing customers and build customer loyalty,” says Odak.

He sees a branded e-commerce solution offering several advantages over an online mall, such as generating customer data for better branding and personalisation of offers through customer engagement analytics. This builds stronger customer loyalty and trust, leading to higher customer retention.

“If retailers want full control of their brands and customers, the best route would be a branded solution. Take the example of American retailer Best Buy. It decided branding was more important, so it did not sell on or any other online marketplace, preferring to compete with them through techniques such as price matching,” says Odak.

Focused marketing and CRM integration is the way

He feels consumers respond better to one-to-one marketing than to mass marketing because they are interested in specific products and expect a great experience. If retailers can offer multiple touch-points that are convenient, communicate with customers in a timely and relevant manner, and deliver a seamless experience across all touchpoints, they can expect increased customer engagement with their brands, increased foot traffic and incremental revenue.

Online multi-touchpoint marketing can use various channels, including social media campaigns, search engine marketing, email marketing and mobile marketing. But one size does not fit all, so segmentation of the customer base is important. Segmentation can be based on purchase behaviour, gender, products, average order value, lifetime value and touchpoint preference.

“A small but crucial part of online campaigns that most retailers ignore is ‘call to action’. That’s when their messages don’t prompt online users to click on their banners or visit their websites,” cautions Odak.

His advice to retailers: Focus on segments that respond better to a specific campaign. Keep messages and campaigns relevant for the customer. Market to one segment at a time and use CRM integration. You can then maximise your ROI from marketing campaigns by allocating higher budgets to the higher performing ones.

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