Innovative Retail Technologies

MAR-APR 2017

Innovative Retail Technologies (formerly Integrated Solutions For Retailers) is the premier source for innovative yet pragmatic technology solutions in the retail industry.

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RETAILERS' OMNI-CHANNEL BLIND SPOT: DIGITAL THE DEATH OF THE SINGLE-CHANNEL SHOPPER by Nikki Baird and Brian Kilcourse, Managing Par tners, RSR Mar-Apr 2017 10 to 16%. And looking at the results by revenue band, it is only those retailers with less than $250 million in revenue who have made no progress — 32% of those retailers report that they don't know or can't tell versus 10 to14% of their peers in other revenue bands. Only the smallest retailers still struggle. Growing Urgenc y It is a critical step forward for retailers to make inroads into understanding whether multichannel shoppers produce more profitable results or not. If one is going to invest in an omni- channel strategy, it would help to know if there is at least some opportunity to gain a return on that investment as a result. Certainly, the financial markets appear to be increasingly pessimistic about omni-channel's return on investment. But it appears that this new progress is being driven not by Wall Street, but by a growing sense of internal urgency. It is easy to ignore or downplay the role of the multichannel shopper when e-commerce sales are 5% or less of your business. But as that channel grows — and as it becomes the largest source of growth for the business — the profitability behind multichannel shopping becomes more and more important. In the past, RSR has talked about the evolution of shoppers and retailers' response to that evolution as a race, and one that retailers have been losing. However, retailers themselves report that the race is really just beginning — while 61% of respondents report that single-channel shoppers make up less than 50% of their shopper base, that is still a lot of single-channel shoppers out there. However, when we asked retailers to estimate the percentage of single-channel shoppers they expect to see in three years, the answers become more dramatic. Fully 40% of respondents believe that less than 25% of their shoppers will be single -channel shoppers in three years. O ne year ago, in RSR's last benchmark of retailers' omni- channel strategies, we found retailers in something of a funk. They reported that they were no longer seeing as significantly profitable results from omni-channel shoppers as they had in the past. They had made little progress on synchronizing their omni-channel processes and continued to be plagued by a lack of understanding of rapidly evolving consumer behavior. What's more, they had difficulty just achieving order and inventory visibility internally and, therefore, couldn't even begin to try to attain one view of the customer. Their pessimism was understandable. Amazon seemed unstoppable, the cost of stores was poised to increase as more states moved to raise the minimum wage, and consumers seemed less interested in the store experience than ever. Since then, Walmart has announced a billion-dollar investment in e-commerce, and Macy's CEO, the leading retail spokesperson for omni-channel strategy, is stepping down. This year, however, rather than a continuation of this pessimism, we find retailers in a different state of mind — a more positive one, but with some caveats. For example, the percentage of respondents who report that multichannel shoppers produce significantly more profitable results than single-channel shoppers is back on the rise. What is most remarkable about these figures, however, is the precipitous drop in the percentage of respondents who report they don't know or can't tell the resulting profitability of multichannel shopper activity relative to single-channel shopper activity. Almost since the inception of RSR's benchmark in 2007, approximately one-third of retailers have reported that they don't know if multichannel shoppers produce more profitable results or not — that is an eight-year run of consistency. This year, however, the number has fallen by 40%, from 27% Omni- Channel Retailing 2017

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