Omnichannel priorities shift as eComm’s exponential growth slows

THE WORLD of retail is constantly evolving to keep up with changing consumer habits. Today, shoppers engage with retailers across multiple channels, creating numerous touchpoints throughout their lives. In addition to traditional shopping, customers seek added experiences and gamification, and some even interact with retailers in the digital sphere of the metaverse.

The outbreak of Covid-19 accelerated the need for digital transformation in the retail industry. Retailers had to pivot their approach in order to survive, resulting in a significant increase in online sales. According to ONS data, online sales doubled between 2012 and 2020, reaching 19% in February 2020 before the first lockdown. Within a year, digital sales doubled again, hitting 38% in January 2021. However, these numbers have since softened, dropping to 26% in January 2023.

As we navigate the post-pandemic landscape, the previous exponential growth rate of online sales has started to slow. Over the past year, several pure-play retailers such as Made.com, Missguided, and Eve have collapsed. ASOS reported a loss, while Amazon and Zalando issued warnings, citing challenges such as a drop in demand and the increasing cost of managing returns. Despite this, online shopping still continues to grow, even if the rate of growth is slowing, and there will always be a place for store-based commerce.

In 2022, the UK experienced a resurgence of footfall, demonstrating the enduring appeal of in-person shopping. Even e-commerce success stories such as Gymshark recognised this, opening their first physical store in London. In a world where consumer preferences and habits continue to evolve rapidly, retailers who can effectively balance their online and offline presence are poised for success.

We are seeing a rise of the omnichannel experience. A consumer can browse in one store, then go to purchase online (sometimes finding the best price where available elsewhere), but then pick up from another store. In fact, 60% of consumers say they conduct online research before making a major purchase. McKinsey reports that omnichannel customers shop 1.7 times more than single channel shoppers, and they also tend to spend more. More retailers are starting to take advantage of this change in interaction by evolving their websites and launching click and collect options, combining the convenience of online shopping with encouraging customers into physical stores. BearingPoint’s latest Digital Leaders Study found that 42% of companies offered click and collect services, with 21% offering click-and-collect services on the same day (implying order fulfilment from store stock). We’re seeing this trend amongst retailers, with Primark – who are notoriously store focused – launching its website last year and the trial of click and collect in November causing their website to crash, such was the demand for the service. 

Many retailers are evolving the role of the store to provide increased customer experience with hybrid spaces, including beauty bars, cafes, gaming rooms and studios for gym classes, giving consumers additional reasons to visit stores; it’s no longer just about shopping, it’s about building a community space. During BearingPoint’s recent Innovation Store Tour of London, we visited GymShark’s Regent Street store which combines its three pillars of retail, community and lifting with a ‘sweat room’ for exercise classes, ‘pro bench’ advice bar and a Joe and the Juice outlet. Across other retailers we saw exciting tech innovation such as interactive digital displays, autonomous check outs and magic mirrors. We saw a great example of a seamless omnichannel experiences at Zara’s Battersea Power Station store; through the app customers can browse items and locate stock in stores, book fitting rooms, place an order and collect in 120 minutes and use the app in collaboration with autonomous, unmanned, check outs to pay and de-tag. Customers can also autonomously collect deliveries by scanning a QR code to activate a collection point serviced by its own automated back-of-store warehouse mini-load system.

Omnichannel retailing has emerged as a solution to meet the growing demand for consumer choice and flexibility. For retailers, it presents an opportunity to enhance customer satisfaction, expand their market share, and foster customer loyalty. However, achieving a truly seamless and integrated customer journey across all channels requires a single view of stock, which can be a challenge for retailers with legacy systems that risk data inconsistencies.

Embracing omnichannel retailing can help retailers reach a broader audience and tap into new customer segments, leading to increased sales opportunities. Moreover, omnichannel retailing enables retailers to offer a personalised shopping experience, tailored to each customer's preferences and behaviours. By leveraging data insights, retailers can deliver targeted marketing campaigns, provide real-time product recommendations, and optimise their inventory management. This level of personalisation not only enhances customer satisfaction but also strengthens brand loyalty and increases customer lifetime value. As the retail landscape continues to evolve, investing in omnichannel capabilities will be a key differentiator for retailers looking to succeed in the long term and a competitive differentiator for high street retailers in their fight against pure plays.

Helena Jaconelli, senior consultant at BearingPoint in the Customer & Growth Service line with a Consumer Goods and Retail focus

For more information, visit www.bearingpoint.com