There’s a retail time bomb ticking, and it’s called digital commerce.
We’re constantly reading stories such as mobile shopping’s exponential rise, and the penetration of ecommerce into emerging markets. However, behind these headlines is a silent threat: the growth of online shopping is beginning to slow down.
In fact, if predictions by Gartner are correct, digital commerce will continue to lose pace through to 2017, by which time it will only count for around 20% of multichannel retailers’ overall revenue.
This essentially means that retailers will not be able to drive their business growth on ecommerce alone. Instead, however, they will have to find new ways to extract customer value from the digital sphere.
One very interesting further insight by Gartner is the impact that technology is playing on in-store sales. While mobile commerce has significantly matured as a channel in its own right – 45% of all UK online retail traffic now comes from smartphones and tablets – it’s also having a positive impact on bricks-and-mortar outlets.
Store sales have risen 22% under the influence of ecommerce traffic, showing physical retail’s metamorphosis from a pure sales channel to a multi-faceted touch point; the store is now a showroom, a sales centre, and a multi-channel fulfilment centre.
The challenge for retailers is to maximise the potential of these new opportunities within the bricks-and-mortar environment. For example, while smartphones might ultimately drive customers into the store, how many merchants use that same mobile technology to engage with them at the point of purchase? The proportion is fairly low.
What we are seeing, though, is a difference in adoption rates between start-up companies and established retailers. The newer businesses, born in the omnichannel era, are making an active effort to engage potential customers using all the tools at their disposal. Their older rivals, however, are facing the challenge of moving outmoded, siloed models into the 21st century to mirror the needs of today’s technology-driven shoppers.
All brands understand that a customer-centric model is the root of success, it’s just that these companies, who might have a long and successful history, are having to reconfigure their entire approach to create the ease of commerce across channels that consumers have come to expect.
The temptation can be to put off evolution in the interim in a bid to ride the next digital wave, but the truth is, retailers will extract much greater customer value if they focus on creating a connected, satisfying cross-channel shopping experience.
After all, meeting varying customer needs online, offline and across the two requires technological flexibility – the very same thing required for adapting to emerging sales channels.
By Kamal Karmakar, CEO of Citixsys.
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