It’s been a few years since “omnichannel” became retail’s biggest buzzword, yet it seems that some traditional retailers still need convincing that this strategy is all it’s cracked up to be.
With that said, let’s set the stage. This all started as traditional retailers began to feel the heat of increasing competition and declining traffic to brick and mortar stores. Most retailers acknowledged early on that they couldn’t ignore the rising tide of digital and eCommerce.
However, some retailers that have attempted to adopt an omnichannel strategy are discouraged, because they’re not yet seeing the ROI. This lack of success isn’t because omnichannel is the wrong approach – it’s because omnichannel is hard, and it takes time to master, especially for retailers that have been laser-focused on in-store operations for decades.
In my next post, I’ll hone in on what makes omnichannel retailing so hard and offer some tips for how to best adopt this approach. Today, I want to focus on why I’m so sure that omnichannel is right for the majority of retailers.
The entire premise of omnichannel retailing rests on the idea that customers demand a “seamless experience” across all channels, and providing this can actually give brick and mortar retailers a leg up over pure eCommerce competitors with no physical store assets to leverage. Through this competitive advantage, and because omnichannel customers have been described as more valuable than single-channel shoppers, those brick and mortar shops should profit financially.
A recent study by Harvard Business Review provided evidence that omnichannel retailing does, indeed, correlate with higher-value customers. They worked with a large retailer with hundreds of physical locations in the U.S. to track the purchases and behavior of 46,000 customers over a 14-month period. While 20% of these customers engaged with the retailer in-store-only, a whopping 73% leveraged multiple channels (making them “omnichannel customers”). These channels included in-store digital tools, mobile apps, websites and eCommerce platforms for research.
HBR found that omnichannel customers spent 4% more than single-channel customers each time they shopped in-store, and that number rose to 10% for purchases made online. Additionally, for each additional channel a customer leveraged, they spent more on their purchase.
So, what’s behind the link between purchase behavior and multi-channel usage? Research. HBR found that online research (either on the retailer’s own website or on competitor sites) led to 13% higher spending. To top it all off, omnichannel customers were also the most loyal – they recommended the company to friends and family more than other customers, and they visited the store 23% more over a 6-month period.
Of course, there’s no evidence to say that every business would see the same results, but I’d be willing to bet that with the right strategy and rollout plan, your organization would experience similar positive trends from implementing an omnichannel approach.