IRUK retailers, suggests Jonathan Wright, are hard at work creating state-of-the-art multichannel businesses, but many aren’t there yet.
For a retailer to consider itself a truly multichannel operation, it’s no longer enough to run ecommerce operations and high street stores as separate businesses. Rather, retailers need to think about the whole business, about how channels intersect. They need to be able to offer, for example, click-and-collect services, the facility for customers to return internet purchases via the high street and, where appropriate, more sophisticated services such as nominated-time deliveries that utilise stock held in the store rather than in the warehouse. Of course, all this has long been obvious to retail professionals, but recognising the business landscape is changing is one thing, acting on this information is quite another. Binding together channels is a tough challenge. So how well are British retailers doing here?
In July 2017, InternetRetailing Knowledge Partner Ampersand conducted research that looked at the intersection of ecommerce and the bricks-and-mortar store. The research encompassed 33 of the largest multichannel retailers from the IRUK Top500, including Elite retailers such as Boots , John Lewis and Marks & Spencer . Retailers visited individual stores in retail parks, shopping centres and high streets.
Below we summarise some of the key findings of the research:
• Wi-fi: a little more than a third of the retailers offered branded in-store wi-fi. Of these 12 retailers, eight offered free and open access, while four required customers to register.
• Digital receipts: a little more than half of the retailers (18) offered receipts via email.
• Till-less payment: less than 10% of the retailers, just three, offered mobile payment in the store. The others required customers to go up to the till.
What do these results tell us? The first point we would highlight is that this wasn’t research conducted in the West End of London, and thus potentially skewed by retailers trying out cutting-edge ideas and techniques in flagship stores. Rather, the research was conducted in Manchester and Liverpool. This, we might reasonably extrapolate, is a snapshot of multichannel retail practice within Britain’s smaller cities. It’s also, we would argue, a picture of an industry in transition. In particular, the number of retailers offering wi-fi will almost certainly be higher next year, and we would also suggest that fewer retailers will ask customers to sign in. This can be a fiddly and time-consuming process via a smartphone, and we would question whether the loss of goodwill this can cause is worth the easier recognition of customers.
"We would expect the percentage of retailers offering digital receipts via email to increase. If nothing else, it’s a simple way to marry up in-store and ecommerce purchases"
Similarly with offering digital receipts, we would expect the percentage of retailers offering this service to increase. If nothing else, it’s a simple way to marry up in-store and ecommerce purchases, although it may be that customers will grow more wary of giving out an email address unless there’s a tangible benefit beyond not having to take possession of a paper receipt. Turning to till-less payment, this figure is fascinating. It may initially seem to suggest that few retailers are following Apple’s example and freeing up staff from behind-the-counter duties, but we suspect that may be an over-simplification.
Another reading of what’s happening here is that multichannel retailers want to free up their in-store staff to serve customers on the floor, but there are practical difficulties. The first of these is around only being able to do so much, and initiatives such as rolling out click and collect or mobile offerings eat up financial resources and manpower hours. A second point is that a natural time to introduce till-less payments is when introducing a new point-of-sale system. Otherwise, costs and technical difficulties can quickly escalate.
Returns and collections
Ampersand also considered how retailers handle returns and collections in the store. Just two retailers, the research found, had a dedicated returns desk – and one of these was B&Q , where the nature of the business probably means processing returns efficiently is especially important. With collections, retailers seem to be adopting a variety of approaches. Around a quarter of retailers, eight in total, had dedicated areas to handle collections. Others handle collections from main or secondary tills. Seven retailers had dedicated collection points located less than 10m from then main entrance.
As to what these figures suggest about emerging best practice, we’re less clear. Is it, for instance, better to help customers to nip in and pick up click-and-collect items quickly? Or is it better if the store is set up so that customers have to tarry at least a little and look around? Overall, we would suggest convenience should ultimately trump enforced browsing when dealing with today’s time-poor customers, but there are arguments against this approach that at least need considering.
A final point we would make is that this research needs to be seen in the context of our wider analysis of how well retailers are implementing multichannel strategies. Here we would highlight two figures. The median number of distinct channels of communication amongst IRUK Top500 retailers to their customers is five.
Less impressively, as yet a little more than half (55%) offer click-and-collect services. One way to view these figures is to suggest that, while it’s relatively easy to reach out to customers, it’s much harder to design and implement efficient services at scale that reach out to these same customers. Among even leading British retailers, work to bind together different channels goes on.
The Amazon challenge
One of the key developments within retail over the past couple of years has been Amazon’s move from pureplay to multichannel retailer. While it’s still early days here, the company has been steadily opening physical bookstores in the US. Its Amazon Go store concept envisages customers grabbing what they want and walking out with the goods, with items paid for via an app. Its recent $13.7bn purchase of high-end supermarket chain Whole Foods Market hugely increased Amazon’s bricks-and-mortar footprint. Taken together, these initiatives suggest not just a pureplay expanding its operations into the real world, but a company that may potentially shake up the way business is done on the high street. In part, this will be about utilising technology.
The Amazon Go concept, if it can be rolled out at scale, will put pressure on competitors to match the stores for sheer convenience. Yet many competitors are still struggling, especially in their bricks-and-mortar operations, with legacy systems that are difficult to update. In addition, we’ve already seen evidence that Amazon’s sheer heft will enable it to offer keen prices. In August 2017, Amazon announced it was lowering prices on best-selling grocery staples such as organic bananas, salmon, eggs, minced beef and apples at its Whole Food stores. In London and parts of the south-east of England, Whole Foods’ own-brand goods will be made available via Amazon Fresh, Prime Pantry and Prime Now. These announcements immediately caused a drop in the share prices of leading UK supermarkets. This is just the beginning.
Amazon will continue to try to muscle in on its competitors’ market share, utilising both its technological expertise and its size. The challenge for retailers is how to respond. A first step may be to revamp and update existing stores. In this context, it may soon be imperative for retailers to begin updating point-of-sale systems, offering fast wi-fi and using the store to help build offerings around customers. The alternative is to risk getting left behind as the world moves on.