Traditional retail on life support, but omnichannel can help breathe new life

Until the Australian Bureau of Statistics begins publishing monthly online retail sales figures in November this year, understanding the real size and growth trajectory of online retail in this country will continue to be difficult to gauge accurately.

According to PwC and Frost & Sullivan, Australian online shopping expenditure will grow from $16 billion last year to $26.9 billion by 2016.

Offline, what we can see with our own eyes on any high street or shopping mall in the country is that trading for retailers remains tough. Discounting continues to be the only strategy, especially for bricks and mortar retailers that have ignored ecommerce and building an online presence.

The death of traditional retail

If you listen to Marc Andreessen, the creator of Netscape, who is now partner of venture capital company Andreessen Horowitz, and an outspoken purveyor of online wisdom, the death of traditional retail stores is nigh. He believes that ecommerce stores will be the only way we shop in the future.

Of course this sort of thing makes for a great headline but it is something of a considerable over-simplification. There’s no doubt that traditional retail continues to hurt, but the consumer switch to mobile everything has, curiously enough, breathed new life into bricks and mortar businesses.

After all, channels blur when consumers use their smartphones to price-check merchandise when they’re actually in the store. Consumers jump from their smartphones, to tablets, to desktops to the physical store depending on the time of day to satisfy their immediate needs. They want a consistent experience.

Clearly the traditional bricks and mortar retail business model doesn’t add up any more, but for an omni-channel player, the future looks bright. ecommerce today is a very different beast than it was only two or three years ago.

These days it’s about providing a fully-integrated customer experience that works across multiple customer touchpoints. It’s about delivering a connected and consistent retail and brand experience across all the places where the customers are – online as well as the bricks and mortar presence.

Using an omni-channel approach you can track customers across multiple channels, and deliver a 360-degree brand experience, not one that changes with the channel. Adding an option to buy online and pick up at a store strengthens the value of the bricks and mortar presence.

Just look at the humble US pharmacy Walgreens which now appears on a list of the 10 most innovative healthcare companies as a result of their ecommerce, mobile, online and in-store prescription experience.

10% of its business in online sales

After dragging its heels on ecommerce for something like a decade, David Jones is racing to bring its grand plans to fruition. The goal is to deliver about 10% of its business from online sales, up from less than 1% today.

To mirror the stellar performances of overseas retailers such as Nordstrom or John Lewis, David Jones has been fervently upgrading its online presence for both desktop and mobile users. The retailer has doubled the number of its online customers and has tripled its online sales.

David Robinson, head of omni-channel strategy for David Jones told the Australian Financial Review in November last year that the group has completed “six years’ worth of work in six months” on its ecommerce system.  My own experience at Christmas suggests it was unfortunately the six years work just prior to getting the system working.

But that’s another story.

Omni-channel strategy

As further signs of the company’s shift into the omni-channel space, earlier this month David Jones launched its first retail iPad app, and to build engagement and interest in its Autumn/Winter collection used online tools and technologies to stream its new season designer showcase to its biggest fans.

Live footage of the Sydney catwalk show featuring Miranda Kerr, was streamed to selected card holders at special events at the retailer’s Melbourne, Perth, Brisbane and Adelaide stores.

Other customers could log on to the David Jones’ website from their computers, tablets and smartphones to enjoy an online front-row-seat experience and backstage pass. You could tweet your questions on fashion to host Jason Dundas, download music from the show and vote for your favourite designs.

In addition you could capture and share images through social networking sites and add the garment of your desire to your shopping wishlist, check the price and see when it would be available in stores. Alas the technology was not ready for you to actually buy it directly online through David Jones’ online store. There’s obviously much work to be done.

Returning to Marc Andreessen’s assertion that traditional retail is dead, I would proffer a different point of view. While I agree that the traditional retail model is unsupportable, I am a big supporter of the omni-channel approach where the bricks and mortar stores plays an important part as one of the many connection points between the retailer and the customer.

 

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Simon van Wyk
BY Simon van Wyk ON 20 February 2013
Founder, HotHouse Interactive. Tweet him @Hot_House