Omni channel retailing

One subject seems to dominate top retailer minds nowadays: Online. This is hardly surprising in a world where Ecommerce is growing so quickly that anytime soon its retail market share in the Western world will be double-digit and which could increase to 25 per cent by 2020, says retail and omni-channel expert Bonno van der Putten, Managing Director Monarch Equity for Europe. But how are still essentially store-based retailers coping with the challenges? At this September’s World Retail Congress in London, it was much heard that customers rather prefer to pay down debt than consume, says van der Putten and he states that young people sport top brand names on their trainers but have little hope of jobs. Van der Putten states that increasingly digital-savvy consumers are ruthlessly comparing prices via websites like mySupermarket and others, and half of the clicks on Tesco.com for example are price comparisons. This horror scenario for physical retailers is completed by the looming spectre of Amazon, van der Putten says. The world’s largest internet retailer has quadrupled revenues in only 5 years, and even some experts believe that it could outgrow Walmart by 2022. The Seattle-based giant is certainly taking money out of a flat business by widening its merchandise categories and international penetration. Next to this, Amazon’s low pricees, mainly by the fact that its average markup is only 15%, is substantially lower than other retailers. Critics of Amazon say the collection of sales tax (and the cost of shipping for non-Prime members) mitigates Amazon’s advantage over traditional retailers, but that is another discussion. But they don’t understand just how wide the gulf really is. (Think Grand Canyon and you’re close. The sum of these pressures inevitably creates winners and losers. It is indeeed that traditional retail channel distinctions are quickly melting away. Customers instead view their online and offline activities as part of an overall branded retail experience. Business intelligence and analytics will play a pivotal role in enabling a consistent, personalized and relevant experience that enhances both her experience and the brand. Sales at John Lewis for instance were boosted by an uplift in fashion purchases last week. Van der Putten says that fashion sales rose 12.7% in the week to October 13 as overall sales rose 8.6% to £68m. Menswear sales rose 19.5% while branded casualwear enjoyed a 36% uplift. However, sales slowed to 11.8% in the electricals and home technology category, which has seen consistently strong growth this year, due to some key launches in the near future including Windows 8 next week which meant shoppers held off buying laptops and PCs. But strongest of all, Online sales rose 23.2% on the same week last year. Retail industry expert bonno van der Putten said that “Last week was a slightly mixed week on trading at John Lewis, but overall they have still strong results. Sales revenue were up like for like 8.6% versus last year. The current cooler weather helps and encourages customers to buy winter clothing. Pretty much all outerwear categories were significantly up in sales volumes on last year.”, says van der Putten John Lewis said its Christmas assortment is “starting to gather momentum” and it has launched a Winterland Pop-up Shop in stores this week. Van der Putten outlines the key processes in implementing e-commerce and multichannel retail as follows: • Define the strategy, plan the operations, select the technologies, build the solutions • Drivers of e-commerce and market penetration are wealthy populations; internet/broadband penetrations; home shopping infrastructure; centralised retail; concentrated populations. • Of the UK’s 8%, e-commerce sales are dominated by store-based retailers at 59% (35% non food, 24% grocery), with 27% pureplay dotcoms and 14% for cataloguers. Interestingly, France is dominated by dotcoms and French cataloguers. • The UK non-food retail market will shift further towards multichannel retail over the next 10 years • Multichannel Retail is here to stay: electronics, home improvements, furniture and homewares will drive the web to store growth Furthermore van der Putten says that it is obvious that “You must continue to grow – if you shrink, you are gone”. “Retailers must target their audience”, van der Putten states and “give the company’s consumers a range of options to engage with, and focus on retention rather than acquisition” Reatilers must learn to move faster in a virtual world, van der Putten says. The younger generation doesn’t differentiate channels - 5% of apparel purchases are made online in Europe currently, and in five years it will grow to 40%. Bonno van der Putten says that the traditional purchasing process is being ripped apart. “Navigation 10 years ago was across a few sites, now there is an information explosion online with the web being the best business partner you can have”. Van der Putten thinks that there is a good chance that the mobile phone will become the new wallet. “By 2015 mobile web will surpass PC, with 1 in 5 mobiles currently sold being smart phones. Retailers’ focus now is around all things mobile and search-centric navigation”. Van der Putten states that 60% of retail sales nowadays are influenced by online research, with 30% of US consumers comparing prices in store.