Bricks and clicks: Balancing digital and physical to win the retail game
- 20 April, 2017 11:15
Shoppers are becoming more digitally savvy and ecommerce is disrupting the retail game, but while some Aussie bricks-and-mortar retailers are facing a meltdown, others who are embracing tech are fast-tracking their competitive reign.
We speak to digital marketing and retail experts to discover what the new digitally-enabled retail phenomena coined ‘bricks and clicks’ really means for the retail sector.
“Some successful bricks-and-mortar retailers are seeing larger profits and growing sales due to their adoption of technology to embrace the customer experience and their swift adaptation to new forms of customer promotion, engagement and conversation,” the Marketing Consulting Company’s founder Fleur Filmer, tells CMO. “While consumers are increasingly purchasing online, they will still generally use online for price comparison, reviews, to gather information about the product and source price and time sensitive promotions as well as to engage with the brand and its values.
“Regardless of our extraordinary and exponential adoption of technology, the fact remains that humans in general are tactile and like to touch and see the product before purchase.”
Retailers like Zara and H&M don’t even have an ecommerce arm yet are using the ‘bricks-and-clicks’ model to remain competitive and agile.
“Digital technology can be harnessed anywhere throughout the supply chain to provide insights into what customers want, increase efficiencies, and remain agile,” Experience design studio Hatchd’s director, Kristen Vang, explains. “Zara, for example, offers no ecommerce functionality in Australia, and very little globally. Yet the company is expanding its retail locations while posting solid profits. This is because the key to Zara’s competitive advantage is in its agility to respond to customer needs, which is driven by the use of technology and data insights throughout the supply chain.”
Weathering the Amazon storm
Amazon has now confirmed it is coming to Australia, which has many in the industry shaking in their efforts. But several experts remain confident traditional bricks-and-mortar retailers can weather the storm.
Those that have done so globally are the ones focused on offering shoppers a great experience as well as great products, research consultancy, The Leading Edge’s head of marketing, Katharine Milner, says.
“To survive in today’s competitive landscape, retailers that don’t differentiate on product offering, range or customer experience are going to have to compete on price alone, which will become a race to the bottom," she says . "If you ignore how customers experience your brand, you are basically choosing to compete on price and product range alone.
Research conducted by The Leading Edge revealed shoppers want convenience, and those that provide a convenient experience are currently growing their sales and market share, from Kmart to The Iconic.
“For example, Cotton On, Target and Kmart are up-styling and filling a niche in kids clothes in a cheap, fuss-free and convenient way,” she says. “So consider how you can provide a more convenient shopping experience, either in-store or through digital channels.
“This could mean making it easier for shoppers to find their size, alerting them to upcoming sales or offering to save their card details to remove barriers to purchase. These tactics are channel agnostic and focus on the customer experience, rather than taking a digital verses bricks-and-mortar attitude.”
The tactile customer experience
Head of APAC for customer feedback software, TruRating, Sophie Jillings, is another that believes bricks-and-mortar will continue to dominate the retail landscape for some time, due to the innate human desire to look and feel, the sensory tangible experience of shopping. Those that survive and thrive, however, will be those that embrace digital to optimise the customer experience.
“In Australia, the 2016 NAB Online Retail Sales Index showed online sales make up just 6.76 per cent of total sales,” she claims. “I think the traditional retail space is here to stay, it’s just much more likely to contain new digital interfaces - for example, virtual 3D displays of clothing on your body type, to drive enhanced customer engagement and personalised experiences.
“Realistically, success for retailers today means embracing the multichannel environment - operating with bricks and mortar stores as well as online. Rather than considering online as a threat, consider it an opportunity to showcase your brand and goods effectively to your increasingly digitalised audience, ensuring it is a seamless extension of your store footprint and is woven into a holistic shopping experience for your customers.”
CEO of the Winning Group and founder of Appliances Online, John Winning, agrees. He stresses traditional and bricks-and-mortar retailers need to continue to evolve, but that doesn't necessarily mean that they have to completely become digital.
“We have a very successful business that still to this day, despite having a digital presence, is not an ecommerce business,” he said. “If you understand who your customer base is, have a good tangible product and listen to your customers about where they want you to take that product and how they want you to evolve it to suit their changing needs as a consumer, then success will follow.
“Look at the business you've got, work out if there is a technology play that is relevant and if you can't work it out yourself, talk to your customers.”
While appliance retailers like Dick Smith started crumbling into administration, Winning, which was founded just over 10 years ago with a laptop, rented truck and 1300 number diverted to a mobile phone, has now grown into four separate business entities employing more than 500 staff across Australia. The Australian retail entity includes traditional bricks-and-mortar retailer Winning Appliances, pureplay online retailer, Appliances Online, clearance outlet, Electro Seconds, and national installation and logistics company, Handy Crew.
Winning attributes his business growth to keeping focused internally on staying agile and relevant to his customers, while continuing to test, learn and evolve.
“I use the term 'putting your blinkers on' - you think of a horse that starts in the gates and has blinkers on and as it runs the race it doesn't look left or right it just really focuses on getting itself to the finish line as fast as possible and that's what we do,” he says. “We constantly look internally rather than externally, I think that the more you look externally the more of a distraction you get and those that are confident and know what they're doing should be able to look internally within their own business and continue to evolve in the right direction and watch the customers flow in.
“So at Winning Group we won’t really look at any of these businesses, including Dick Smith and we seem to find that our strategy works and we set that once a year. We kind of give it a cross check every 6 months and then once that strategy is set we just absolutely just go for it, we don't bother looking left or right or worrying what the competition is doing. I think that businesses that look at what the competition is doing are just scared and don't know what they should be doing themselves and I see that as a sign of weakness and believe the businesses that fall over generally are the ones that are looking outside and trying to be something else that someone else is doing."
Up next: Ensuring you don't lose sight of the customer with scale, plus knowing when to stop investing in tech
Don’t lose sight of the customer when you scale
For growing brands, experts agree retailers need to leverage technology to connect closely with their customers both offline and online - and this should not be lost when they start to scale.
“Just take a look what your smaller, more nimble competitors are doing both in a product offer perspective but also how they communicate to customers one-on-one via social media and the like rather than via mass media,” owner of online jewellery brand Lord Coconut, Mark Boldiston, says. “Customers like a connection to the store and the people behind the store. Billabong and Quicksilver had this down pat when they started out, linking closely to the surfers. But they lost the plot when they became too big and ceased speaking to their customers one-on-one.”
According to Boldiston, the rise of ecommerce is only a small reason why some of the larger retailers are being squeezed out of the game.
“Traditional retailers need to tell a compelling story, cease being on constant sale, invest in the sales staff more, personalise social media, stop underestimating the internationals, don't take customer loyalty for granted and just stop being everything to everyone,” he adds.
It’s not all about technology
In an era of rapid technological change, it’s tempting to look to technology first to enliven brand experiences, but don’t let the latest technology dictate how you tackle a problem, MD of experience design agency Imagination, Ant Gowthorp, says.
“My biggest piece of advice would be to seek out external expertise to help you better define and activate your brand purpose,” he says. “There are whole businesses made up of people who strategise, design and build brand experiences. They know how to ask their clients the right questions, take them on a journey of discovery, open their eyes to new possibilities and deliver them something that solves a strategic problem.
"Starting with the problem is the most important part. Begin with the problem, come up with an unbiased strategic or tactical solution, and then use technology to deliver that solution. There’s no sense starting with the tech because it will limit how you tackle the problem you’re trying to solve. You can bend technology to deliver a solution, but it gets tricky to bend a solution to fit the technology.”
MD of customer experience agency MullenLowe Profero, Chris Henderson, says there is much more to keeping a retailer alive than just providing a better online experience.
“To my knowledge, most of the retailers who’ve struggled recently had an ecommerce element as well as a bricks-and-mortar element,” he says. “When that’s the case, it’s worth reflecting on whether the overarching brand is meeting consumers' emotional needs.”
“You need to ask: Does the brand reflect their identity? What collective belonging does it represent? Is a higher purpose being communicated? A brand is the summation of its purpose, identity, products and services and the customer journey – if one of the elements contradicts the other there will be a negative impact to the business.”
Henderson suggests retailers start by truly understanding their customers in order to match their emotional wants with rational needs.
“Secondly, retailers should understand that a good customer experience is the result of dozens of touchpoints operating in-sync, as opposed to in silos,” he advises. “The cumulative sum of several tiny 'surprise and delights' will often drive more value than the big silver bullet, like an ecommerce platform.
“And technology and creativity can be toothless until you’ve nailed the first two points. Nearly every retailer has an ecommerce platform, and the news of some Australian retailers continuing to struggle should prove that simply offering what your competitors are also doing is not a guaranteed pathway to success.”
Going forward, Henderson suggests Australian brands should grab onto whatever customer data they have and begin developing it into business intelligence.
“Strong customer insights and good council from specialists can allow brands to tackle problems from the 'bottom up', rather than simply attacking a problem from a single perspective or 'top-down',” he adds. “This approach helps answer big questions like - do you have a problem with the user experience and conversion of your platform? Or is there a discrepancy between the objectives of your strategy and the needs of your consumers?”
Ultimately, when you understand your customers’ needs and expectations, you know what they want in their everyday interactions with you as a retailer, adds Holla Agency’s CX consultant, Alex Allwood.
“It's going back to the basics and I talk about basics in that it's understanding your customer,” Allwood says. “And that's about going out and seriously asking customers what they're thinking and feeling really interacting with the brand.
“But it's also putting initiatives in place so the broader organisation gets the customer understanding as well. And that means that you will have greater empathy across the business for the customer. And so designing for unmet needs is where your competitive advantage lies as well – like Amazon which is a great case study for businesses to refer back to as a truly customer-centric company.”
Author of Good to Great CX, Isabella Villani, points to the vital and indissoluble link between CX and EX (Employee Experience) in order to survive today’s competitive landscape.
“The Apples, Amazons and Facebooks of this world initially injected a lot of creativity into forging brands that offer customers a consistent, distinctive experience with a clear value proposition they can respond to,” she explains. “Then, they have sustained their distinctiveness by attracting, nurturing, training and retaining excellent staff.
“Companies everywhere are finding that link between CX and EX - you can’t have one without the other. Successful companies understand and embrace the importance of EX as the key foundation to enabling CX. The impact is exponential in a retail environment where the majority of staff are customer facing, and culture is more evident to customers.”