Creative thinking that delivers results

05 Oct

Integrating in-store and online key to retailer success

Category: eCommerce
Written by: Ian Turner
ecommerce, online marketing, digital marketing, showrooming, webrooming

Much has been written about the demise of some very big name retailers in recent months in the US. From Sears to Macys to Radio Shack and Payless Shoes, these retailers and many more have faced significant financial challenges that have resulted in the closure of hundreds of stores.

Why did this happen in spite of a very hot US economy? Clearly the failure to deal with the “Amazon” factor is a big part of this – a failure to offer a viable online offering. As well, an inability to integrate their in-store and online channels could also be to blame. So what can other retailers learn from these situations?

A history lesson

When the internet came to me in the 1990’s and retailers started to create websites for their businesses, the mindset was very much that the retail, in-store channel should still be the predominant one for sales and transactions and that the online world should act primarily as a source for basic information with a very limited assortment of products for sale, if any.

In essence, many retailers looked at their online ecommerce presence as being a ‘competitor’ to their traditional channel. They were very apprehensive to negatively impact their profit margins by giving customers any price savings from purchasing products from this low-cost, no service online channel; they simply didn’t see any reason to do so! This may seem completely bizarre to consumers today but this was very much the case 20 years ago.

The ecommerce movement gains momentum

As we entered the 21st century, online sales grew by double digits year-over-year as more and more time-starved shoppers turned to the online world as a way to simplify their lives. And as companies like Amazon pushed the envelope on the pricing and shipping cost side, more and more retailers were forced to adjust their pricing strategies to pass on their ecommerce costs savings to the consumer.

Sadly, this evolution was slow to materialize as too many businesses tried to hold onto their ecommerce profit margins. This greed provided the perfect opportunity for companies like Amazon to gain a stranglehold in the market and to dominate it. Retailers have had to play catch up ever since!

How traditional retailers can get a leg up on Amazon

A recent trend in consumer shopping has been the concept of “showrooming”, which refers to the act of comparison shopping in-store for products before ultimately buying them online, often at a lower price. Canadian ecommerce star Shopify has an excellent article on showrooming and its related topic webrooming (researching products online and buying in-store) for those interested in learning more.

The challenge for bricks and mortar stores is to either turn the showroomers into webroomers, or to persuade showroomers that they don’t have to go online to get the best price and thus don’t have to leave their stores. As noted above, consistent pricing both in-store and online is one way to combat this particular situation. Another – and one that’s rarely seen – is to better integrate the online environment within retail stores.

What does this latter concept actually mean?  It involves providing more of an “omni-channel” strategy where additional online resources are available in stores (i.e. online terminals and kiosks) to allow shoppers to easily find additional product information (such as videos, tutorials, testimonials and product reviews) to enhance the purchase decision.

This approach also offers customers the unique ability to purchase custom-made products in-store with the help of technology and resources that isn’t possible online. An example of this is the new digital concept store Canadian retailer Sportchek opened in Toronto in 2013. It offers clients the ability to design and purchase their ideal running shoe after running on a treadmill that is able to come up with the ideal specifications based on their running style and sport.

Price guarantees (including online only stores) are another step in the right direction. While no one wants to compete on price alone, retailers need to understand that this policy is needed more than ever if they want to hold onto their customers and prevent them from buying elsewhere. Those that embrace this while also providing a superior customer experience will be the true winners here.

In the end, retail executives need to appreciate that consumers have become more sophisticated and knowledgeable when it comes to their purchase decisions and are willing to invest the time to ensure they are getting the best value for their hard-earned money. By providing tools that will enable their customers to make ‘informed decisions’, retailers can earn the confidence and trust they’re striving to achieve.  

It's time that businesses recognize that in order to remain competitive, relevant, and most importantly, profitable, they have to keep up with the constant evolution that technology has created for us. Contact us today if you’d like help developing the ecommerce strategy for your business.