With all the hype in recent years on digital & e-commerce space, one would infer the majority of retail sales would be done via online platforms.
The recent Digital 2019 report put out by We Are Social & Hootsuite, however, provides valuable insights to the contrary. Furthermore, the aggressive incursion of e-commerce titans like Amazon and Alibaba into the brick & mortar space has further convoluted the retail plot.
In Singapore, although 73% of internet users have made a procurement online in the past month (global average: 75%), this figure still represents only 4% of total retail spend here.
A separate report by CIMB notes that online retail is expected to account for only 10.3% of total retail sales in Singapore by 2022.
Farther north, China’s online retail is flourishing, but it still accounts for less than 20 percent of the nation’s overall consumption, according to its Ministry of Commerce.
Offline is the new online?
In fact, offline is the new online for China’s e-commerce giants, with Alibaba and JD.com aggressively turning to offline for growth.
Alibaba’s physical push came in July 2017 when it rolled out Hema, a supermarket store that features cashierless checkouts and a robotic restaurant. This new ‘phygital’ concept has
rapidly expanded across China’s megacities in 80 locations, with a target to reach 2 thousand stores in 3 to 5 years.
Joining the brick and mortar bandwagon is JD.com, Alibaba’s biggest e-commerce rival, with its 7Fresh digital-first grocery supermarkets. It also announced plans to open 1000 franchised-based convenience stores per day across China and hit a million within 5 years!
No surprise that Amazon has been growing its offline footprint.
The company that commands around half of total U.S. e-commerce consumer spend now occupies 20.1 million sq ft of brick-and-mortar space after acquiring Whole Foods and growing Amazon Book Stores and Amazon Go automated convenience stores.
Back home, Love, Bonito, has opened its third and largest offline store in Funan, bringing the brand’s physical stores in the region to 19.
It may seem ironic that the e-retailers credited with the demise of traditional retail brands are expanding their physical footprints.
Marketing futurists singing the requiem for brick-and-mortar might have to swallow their nuggets of retail foreboding.
E-retailers are evidently cognizant of the power of digital data they already own or want to acquire. They are simply leveraging their digital data and customers for their physical stores and vice versa to expand their market share.
This approach, of course, only works if the brand has already built up an online reputation and can drive traffic to their physical stores.
E-commerce changes the future of retail stores, not replace them.
The e-commerce titans are doing with brick-and-mortar what they do best: disrupt.
JD’s shops are not replicating traditional retailers’ in-store experience. Instead, JD is rethinking and reducing the friction points in the customer shopping journey.
JD’s technology, powered by predictive analytics using big data, will keep offline stores stocked with recommended categories and suggested amounts of products, while localizing the selection depending on consumer buying preferences in each location.
A lot of current and fresh data can be collected from grocery stores, as buying groceries is a recurring and habitual shopping behaviour.
JD is leveraging an omnichannel, multi-touch point strategy for both customer acquisition and customer retention.
Bringing digital to the real world
Omnichannel retail refers to a multichannel method of making sales. It aims to provide customers with an easy and effortless purchasing experience, one that allows the client to shop easily from any place, be it their laptop, smartphone, tablet, or at a brick and mortar store.
An integrated, seamless shopping experience online and offline seems like a logical all-encompassing strategy. But many companies on either side still struggle to get the balance right.
The new retail revolution on the store front is powered by technologies such as digital payment, AI, Wifi, sensors and location-based services while blockchain technology will improve logistic and supply chain.
Software and analytics tools can now track and collect data when people share content across all digital platforms: social networks, email, text and instant messaging.
Valuable first-hand data can also be amassed from a retailer’s owned assets: website, app, social and branded content, eDMs as well as physical stores.
Importantly, data collected needs to be actionable, harnessed to fuel highly effective pinpoint targeting of customers and real-time programmatic media buying.
Go digital, or go home.
Digital disruption of retail is not all bad news for stores. On the contrary, it presents new opportunities for them to engage and retain consumers throughout their journeys.
In Singapore, while many retailers have gone the online route, they also recognise that the brick-and-mortar outlets will remain a key channel to reach customers, especially in a small market like Singapore.
Extending their relationships with customers to before and after their visit, both online and offline through compelling content to create deeper bonds with them through social media and proprietary sites and apps, as well as loyalty programs.
When Sears filed for bankruptcy recently, the post mortem was largely focused on the iconic retailer’s failure to effectively integrate its online presence with physical stores.
Ultimately, if physical retailers are not disrupting their existing modus operandi, they will spiral down the path of Borders, Toys ‘R’ Us and J.Crew.
Closing the gap between your digital spend and ROI:
Every so often, I hear marketers lamenting about the growing disconnect between their digital spend – and its performance.
Simply creating promotional activity (which is largely used to convert customers), is not sustainable in the long-term, so service innovation, content creation and niche targeting will increasingly come to the fore.
It’s time for retailers, businesses, brands and even media buyers, to take a broader and more ROI-focused approach.
How do you close the gap between your digital spend and ROI?
How can you integrate both your online and offline sales channels with our proprietary lead management and sales automation software?
For SMEs and traditional businesses far removed from the monied stratosphere of Series A funding, VCs and angel investors, our affordable end-to-end strategy can provide more efficient and effective connections with your customers to drive ROI.
Have a cuppa (or pint!) on Q-Activ to discuss how we can shape your digital future!
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