A return to the store?

New research has revealed that a business' online sales decline following the opening of a new retail location.

Bricks and mortar stores certainly have a role in today’s omni-channel world say Brian Hume, CEO Martec International, and Robin Coles, Microsoft Technologies Enablement Lead, HSO.

Since the beginning of the year, messages about UK consumer confidence have been mixed. Any upturns in spending have turned out to be on essentials such as food and fuel. This isn’t the news the retail industry wants or needs right now.

However, nothing about the future is clear-cut – as retailers know only too well. A few years ago we thought the retail store would be irrelevant by now as online spending grew. However, increasingly it’s become an integral component in the new omni-channel experience. As a result, the   retail world is becoming ever more complex, and the goal of improving the customer journey is turning out to be even more difficult than first thought.  

For example, once we thought that physical stores would turn into showrooms where customers could touch and feel the products, but then go home and buy them online. But now, customers are just as likely to browse online and go out to the store to buy – or to collect their purchase. In fact, click and collect has done much to bring life back into the retail store.   

In-store customers, even those collecting goods ordered online, provide an opportunity to increase transaction value, something that is more difficult in pure online sales. Clothes retailer New Look says that 25% of click and collect customers make additional purchases in store. Good customer service will ensure that the shopper will buy more than planned, but will feel pleased with the experience and will come back and shop again. 

Evidence also shows that when a store closes in any given area, online sales decline too – and when a store opens, the reverse happens. It seems that customers like to have access to all channels – and to keep all their options open.   

But, aside from the freedom to choose how they shop, what do customers want from a brand? For a clue, it’s worth looking at the key reason for Amazon’s success. What has made it probably the most successful online retailer? For most of its customers, it’s not its prices or its breadth. They keep returning because it keeps its promises on delivery. First and foremost, customers want reliability. 

We’re back to the concept of service. As it’s difficult to translate service into the digital world without a budget similar to that of Amazon, retail stores are a way to consolidate trust in the brand. But this still leaves retailers with the difficulty of providing a solid and reliable brand experience across multiple channels. 

In many cases, the problem still lies with outdated technology. If a retailer doesn’t take care of their back office operations, they risk not being able to deliver on their promise and misplacing the customer’s trust. Yet, ERP systems, for example, are often up to 14 years old and have only survived through continual enhancement. But this constant patching and customization means they represent a large investment and are difficult to replace.   

However, ultimately these systems have been designed to tackle problems from the past and unless upgraded, they are probably not up to addressing today’s challenges. Historically ERP systems looked after logistics, distribution, product management and finance; the customer module did not exist. But if you look at the main enterprise resources retailers actually own, it’s their stock and their customer information. 

This is why many retailers are taking the plunge and either replacing all of their legacy ERP systems or investing in improvements. New ERP systems enable a 360-degree view with real-time updates of both customer history and a single stock pool across the whole operation. The two are intrinsically linked; after all, one of the main reasons why a customer may go to a competitor is because the item they wanted is unavailable. In a recent survey by HSO, consumers were asked what would make them return to a retailer if they were frustrated by a product being out of stock online. The top two answers were “the delivery of great customer service” and “the guarantee of being able to get the item and size I want.” 

This shows that ERP can no longer be hidden in the back office. The more that can be opened up to different business areas, such as sales and customer service, using straightforward user interfaces and new integration patterns through the cloud, the more retailers will be able to deliver on their promise. 

So it’s down once again to a single view of stock and a single view of the customer – and both easily accessible to staff via mobile or tablet, whether they are in the fitting rooms, warehouse or on the shop floor. But it’s also going to take a change of mindset; a transformation of the traditional bricks and mortar store replacing wrapping and sales points with kiosks for online browsing and beacons for checking a customer’s buying history and directing them to relevant areas accordingly.   

Although often quick to embrace creative trends, the retail industry has been slower than others in appointing chief information and technology officers (CIOs and CTOs) into the executive board. More technology experts in high places will allow for a mind shift, with someone at the top empowering the business and creative minds to think freely without worrying about the complexities of the technology that will be needed to facilitate their vision.   

The new symbiotic relationship between online and in-store shows that shopping isn’t evolving in a straight line. Preparing for the unexpected is probably the most sensible strategy – and investing in technology with flexibility, scalability and versatility the best possible tactic. 

Brian Hume, CEO Martec International, and Robin Coles, Microsoft Technologies Enablement Lead, HSO 

Image Credit: Pressmaster / Shutterstock


 

ABOUT THE AUTHOR

Brian founded Martec on 1st July 1987. His goal was to develop a retail consulting business providing services to retailers and technology vendors in the UK

ABOUT THE AUTHOR

Robin Coles is the product and technology lead at HSO.