For bricks and mortar retailers, the encroachment of Amazon and its online ilk is akin to global warming … a catastrophic, inescapable, existential threat.
However, a recent study of 46,000 shoppers published by HBR is cause for more than just hope. It shows that omnichannel not only works, it may well be the panacea for retailers’ present woes.
Omnichannel strategies create a seamless shopping experience across physical stores and digital channels. They turn the albatross of bricks-and-mortar retailers – costly physical stores and distribution networks – into a potential competitive advantage that online retailers cannot match.
By providing digital enhancements to traditional in-store shoppers, omnichannel enables traditional retailers to enhance their customers’ shopping experience across all distribution channels.
Practice delivers on promise
HBR’s study shows that the promise of omnichannel is being delivered in practice. Working with a major US retailer with hundreds of retail stores across the country, they studied the shopping behavior of 46,000 customers who made purchases between June 2015 and August 2016.
A whopping 73% of these customers were found to be omnichannel customers, using multiple channels throughout their shopping journey. (Of the remaining 27%, 7% were online-only and 20% were store-only.)
HBR found that omnichannel customers enjoyed using combinations of the retailer’s various touchpoints. They used smartphone to compare prices and download coupons, and put in-store shopping aids like interactive catalogues and price-checkers to good use. Some bought online and picked-up in store. Others bought in-store but had their purchases shipped.
The more channels, the more sales
Better still, omnichannel customers were more valuable… They spent 4% more on average at every shopping occasion in the store, and 10% more online. In fact, every additional channel they used added incrementally more spend in the store.
Shoppers who conducted prior online research on the retailer’s own site – or the sites of other retailers – spent 13% more in-store than those who didn’t. This suggests that, rather than ad-hoc impulsive purchases topping up the income of retailers, prior searching beforehand leads customers to greater in-store purchases.
Spoils of the Loyals
As well as spending more, omnichannel shoppers were found to be more loyal. They recorded 23% more repeat shopping trips to the retailer’s stores in the six months following their prior omnichannel shopping, and were more likely to recommend the brand to family and friends.
HBR did flag one important caveat to their findings. While they proved that omnichannel shoppers were more valuable to retailers, the research didn’t take account of whether customers were already loyal and engaged with the retailer, or whether the richer omnichannel shopping experience caused that loyalty.
Still, it’s clear that the once-theoretical promise of omnichannel is yielding strong, positive results for beleaguered bricks-and-mortars. It drives core shoppers to engage more strongly – and more financially, and more loyally – with brands.