Is Online Shopping Disrupting Bigbox Retail?
Feb 23, 2016
CFO of Nordstrom, Michael Koppel, recently said:
E-commerce now represents over 20% of our sales, a notable increase from 8% five years ago.
So keeping up with the Amazons’ of this world honestly means adopting more data centric and omnichannel standards that cater to digital native consumers. Matching the consumer with the best products in real time (cross selling predictive analytics that Amazon is famous for) remains the elusive challenge and finding new ways of doing branding that matches the value system of Millennials is key.
- 12% increase of Online profits in the Case of Nordstrom amounts to more than a 2% a yearly increase.
Attempting to keep up with online retailers like Amazon is:
- New battles for online sales marketshare
- Better omnichannel tracking and customer experience optimization
- Requires Big Data optimization
- More advanced Business intelligence strategies
- Improved customer and product analytics that lead to actionable insights
- Integrating machine learning and machine intelligence that can “learn” about your customers
- Predictive analytics cross-selling and hyper product-customer matching
New Breed of Customer
Keeping up with how consumers shop requires investment in customer experience over the omnichannels spectrum and the customer engagement & branding loyalty spectrum.
The dominant trend in retail has to be, yes:
- How to cater to the the Millennial consumer, who are becoming the dominant force in retail sales.
- How to optimize click and brick and brick and click shopping behaviours.
- How to creative a new kind of branding that is responsive to new touch points (social media, video content, UGC, CSR, interactive content and consumer generated content that’s more trust-worthy to these consumers in general).
- How can brands connect more emotionally with their customers? I’ve written about new models of customer centric branding & loyalty.
- How to engage brand disloyal Millennial consumers in terms of loyalty and high-value relationships via the emotional spectrum of ignorance, neutrality,trust, reciprocity and commitment as a brand.
- How to create content that’s educational, inspiring, shareable and relates to peer audiences (“influencer”) of B2B customers.
For Millennials who are digital natives and savvy shoppers, online channels are about a competition for attention and convenience.
Retail brands need to compete against online-native companies like Amazon, and learn the game. Retail executives that are slow to adapt, are feeling the pain.
If American big-box retail is looking sluggish there are signs of the times. With Walmart announcing at the start of 2016, that they will close over 100 stores, it’s getting real.
- Sales and earnings are down
- Posts for labor and rent are climbing
This downturn hasn’t been lost on Starbucks CEO Howard Schultz. In a quarterly-earnings call on Friday, Schultz laid out his thoughts on the current and future prospects for retail business.
I think we said three years ago publicly that we began to envision that there would be a seismic change in consumer behavior, and that seismic change was due in large part to e-commerce and smartphone shopping
For smaller and independent retail brands, if mobile shopping is will only continue to increase as digital natives mature and have families, SMS over Email may inevitably become the channel of choice.
SMS notifications that will appear first on wearable devices. Linked with IoT sensors and brands getting our attention in video games, and augmented reality settings.
Amazon, a bellwether for online shopping, has begun to catch up to, and is expected to pass, major retailers in terms of revenue over the past few years. Even some of the big-box CEOs have started admitting the importance of mobile shopping.
- Analytics is the key to reach mobile shoppers, in particular predictive analytics integrated with marketing automation.
- Digital natives spend a majority of their time, life and attention: online.
- Physical retailers need to adapt with cloud POS and loyalty marketing that’s connected with this future.
- Retails need to be more pro-active about adapting to the future (e.g. wearable devices, IoT, analytics, machine intelligence integration, augmented reality, etc…)
The Battle is On
Even as the first cohort of iGen graduate college, shopping will be further disrupted. While some retail brands struggle to cater to Millennials, the good ones are already working on how best to cater to the generation after.
We’ve known for years that younger shoppers would be taking over the market, and they have a penchant for online shopping. But not just online commerce, but searching online and picking up in store. Making the link between online search and brick-and-mortar stores is the key.
In just seven years, shoppers have shifted from making one monthly purchase on average online, to 6.5. Meanwhile, purchases at brick-and-mortar stores dropped from 7 visits to just under 5.
This means big-box retail need to adapt, and independent retailers and ecommerce business have a valuable windows of opportunity to fight back to attract the new kind of consumer. I actively blog on retail topics that illustrate how customer experience is merging with data augmentation.
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