Indian brands need to up the game in omni-channel

Indian brands need to up the game in omni-channel

Indian brands need to up the game in omni-channel


(This article was originally published in the Economic Times – link )

Just like traditional advertising and brick and mortar, returns on digital investment are often elusive and unpredictable. This has left marketers to blindly allocate budgets to trending areas such as mobile, advertising, social media, etc in the fear of lagging behind. Pure play brick and mortar has been struggling in the last couple of years as evident from the dip in profit incurred by retail giants such as Future Group, Shopper Stop and Spencer Retail. The situation is no different for e-commerce giants as well as Amazon, Flipkart and Paytm contributed to 70% of total loss of Rs. 10, 670 crore in FY’16.

The return on Omni-channel investments, however, are already proving to be a pathway to returns. Shoppers who return an item they bought online, generally exit the store with a basket size of more than 100% of their original purchase. Most purchases brought into the store for a return are exchanged, and consumers pick up incremental items during the process. These behaviours are rarely seen in online stores.

Investing in omni-channel is a no-brainer for brands that have recognized these potential gains. But how brands are investing in omni-channel is holding them back. Most brands think of omni-channel investments as an extension of their e-commerce business, which is not the right approach. Stores – once disregarded as cost centres – have renewed importance in retailer strategies. It looks like consumers are discovering product online, trying them on and inspecting them in-store, researching them on a mobile phone, and purchasing at the store or online. A successful omni-channel strategy drives consumer from clicks to bricks, and back again.

Omni-channel is not just a method for fledging department stores to re-invent themselves and fight against the burgeoning marketplace dominance. On the contrary, physical stores are still in vogue and even pure play e-commerce players are understanding its true value. The immense success of Myntra’s Roadster is a classic example of this phenomenon.

Most brands and retailers believe that they are on the right path for a perfect omni-channel strategy by ticking all three boxes of online, in-store and mobile e-commerce. However, if each of these channels is being operated largely independent of the others – for example under a head of e-commerce, offline and mobile, each with individual KRAs – then it is likely that these brands are simply delivering a multi-channel strategy and not an omni-channel one. Quoting Doug McMillon, CEO, Walmart, “I want us to stop talking about digital and physical retail as if they’re two separate things. The customer doesn’t think of it that way, and we can’t either”.

Digitally innovative retailers, struggling to maintain margins now that consumers expect free next day delivery, are realizing that fulfilment cost are dramatically reduced if you persuade your customers to buy online but collect in-person from a store. The added bonus of this approach is that basket size often increases, as customers purchase additional items when collecting their order-in-store. Interestingly, 35% of shoppers who buy items online have used click and collect retail to pick up their purchases, and that proportion will increase to more than 75% of shoppers by 2017, says retail researcher Planet Retail.

Whereas click & collect is one of the popular trends in omni-channel, one of the hot investment in the past one year was the launch of real-time visibility of in-store inventory, especially in the luxury sector where stores may only stock a handful of each item. Adidas, Reebok and Max recently equipped their store with ‘Endless Aisle’ technology with iPads where shoppers can browse and order for items that are not in stock at the physical stores.

However, the focus on only the website and the store is simply a bi-channel strategy. With one-third of all online purchases now taking place on mobile devices and smaller screens consuming two-thirds of our digital time, mobile is the secret ingredient for true omni-channel success.

Forward thinking brands, do not think mobile as an extension of their website into a smaller screen. Instead, it has the potential to enhance the whole online and in-store experience. With India’s app store download predicted to reach 20.1 billion by 2020, mobile is potentially a greatest game changer in modern retail. The popularity of virtual assistants like Apple’s Siri, Alexa, Cortana, etc. and inexplicably high engagement drawn by social media has led the way for the introduction of AI on social messaging platform. Globally, luxury apparel brands like Burberry, Tomy Hilfiger, etc. are using chatbots to drive user engagement and improve customer engagement. Amazon’s ambition to open retail stores under Amazon Go brand provides an indication of mobile’s future as an in-store technology: by eliminating the store checkout completely.

Scot Cook, Co-Founder, Intruitv once said “A brand is no longer what we tell the consumer it is, it is what consumers tell each other it is”. The increasing penetration of digital channels has meant that customers are speaking more about your brands than you yourself. Retail today demands a more constructive engagement with these customers to stand out among the clutter. Retailers also need to realize that there are far more effective ways to engage with customers than broadcasting one single message for everyone to consume. For example, how often the discounting announcements made by supermarkets relevant for you. The misconstrued assumption of retailers about buying preferences of consumers often leads to monotonous and highly in-effective deals that die the moment it’s taken out of the shelves. High end British grocery chain Waitrose once launched something called a ‘Pick your own offers scheme’. Customers who are signed up to the company’s ‘myWaitrose’ loyalty scheme can pick ten products to save 20% on every time they shop. There are few excluded products, but instantly the scheme feels personal. Cashing in on interactivity can play a critical role in greater customer engagement.

Global retailers are already experimenting with technologies similar to what was seen in the 2002 sci-fi movie Minority Report, in which Tom Cruise walks into a Gap store and is recognized from a retina scan (smartphone now) and asked about the assorted tank tops he bought the last time. What we are talking about is super personalization.

However, Indian retailers are still just reacting to online retailers. They are far from ready to unleash the power of analytics, the internet or to use their physical locations as an added advantage over the ecommerce portals.

In a mobile-first world, there’s a big opportunity for retailers to stand out by removing the internal silos that create barriers between different channels and instead double down on creating a truly exceptional omni-channel shopping experience for their customers.

Planning to up the omni channel game for your business? We can help.

avishek bm
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