The buzz for years has been around the imminent demise of brick-and-mortar stores, making room for online shopping experiences. Yet, the reports of the death of in-person commerce, to quote Mark Twain, have been greatly exaggerated.
Even the massive shift to e-Commerce driven by COVID-19 and the associated lockdowns haven’t ended the reign of physical stores. It’s true that e-Commerce continues to climb, with Forrester analysts predicting that online shopping will own more than 25% of retail sales by 2024.
It’s important, though, to look at what that statistic leaves unsaid — that 75% of retail purchases will continue to be made at brick-and-mortar locations. Of course, that doesn’t guarantee a store’s success. Just ask Barnes & Noble or Forever 21.
The light at the end of the tunnel exists, but only for those retailers who are willing to adapt. As DMI Senior Client Partner, Pablo Pazmino said, “The pandemic has taught retailers that, while e-Commerce is important, a physical store presence can be leveraged for supply chain and customer service purposes.”
So, if brick-and-mortar stores aren’t going away, and e-Commerce is only set to grow, what does the future of retail business look like? And how can today’s merchants future-proof their stores?
Retail Stores Must Adapt to Modern Shopping Expectations
To be successful in retail, merchants will need to rethink both the relationship between online and offline shopping and even take a hard look at how they serve customers.
Combining Retail Business Channels
If retailers have a blind spot, it’s the space between online and offline retail channels. Many stores continue to see these two channels as separate entities, both logically and operationally.
The problem is that that’s not how customers view retail brands. Instead, consumers see all touchpoints — including websites, brick-and-mortar, and even mobile apps and social media buying — as a single entity. Stores need to adapt to see their business the way consumers do.
Why? Because when these are treated operationally like different stores, consumers have no reason to keep the thread going between their online and offline activities. If the brand has a conceptual break between its physical locations and online presence, then it becomes easier for a consumer to break these up as well. That distinction — whether conscious or subconscious — makes things like showrooming in one location and buying from another brand online much easier.
Identifying the strengths of each of the channels and playing those up and off of one another makes it easier for consumers to carry a purchase from offline to online. Let your physical locations do what they do best, like supporting their customer’s need to look, see, and experience products, or interact with experts. At the same time, online channels should shine in their own ways, like offering the convenience of having merchandise delivered or being able to place an order from anywhere at any time.
Combining these channels means supporting online shopping through offline locations. But it can also mean bringing online experiences into brick-and-mortar stores. For instance, introducing kiosks that customers can log into and receive personalized content, or using local services to push coupons and deals to a shopper’s mobile devices further collapses the distance between your channels.
Rethinking Customer Experience
Whether e-Commerce displaces brick-and-mortar stores in the far future is yet to be seen, but one thing is certain: e-Commerce has changed consumer expectations around shopping. For the savvy retailer, this is good news. It’s possible that changing the way you think about shopping within your stores and online can lead to better customer experiences.
For instance, online men’s retailer Bonobos launched brick-and-mortar locations, strategically located, to bring in new customers. Men could visit these locations, shop, try on clothes, and make purchases. However, everything purchased would be sent directly to their homes.
Data on their ideal customer avatar revealed that men prefer not to carry shopping bags. This new approach allowed the store to overcome the objections of their customer at making a purchase from multiple angles. The consumer knew the items would fit and look good, but didn’t have to deal with the hassle of carrying around their purchases afterward — and the data proved correct. In addition to attracting new customers, the average order from one of Bonobos’s stores is twice that of online-only purchases for the retailer.
There were also advantages, operationally, for the brand. Their store footprint could be smaller, and they didn’t suffer from having stock available in one location, but not another. Cost savings on logistics as well made up for the required changes to their internal processes and infrastructure. And it allowed them to focus more on the customer experience.
Retail has become a fast-paced industry, and consumer demands are constantly evolving. When, where, and how people shop has changed, and retailers need to keep up or fall to the wayside.
Even before the pandemic, larger retailers had begun to add new modes to their shopping flows. Target, Kohl’s, and Walmart, among other retailers, had launched Buy Online Pick-up In Store (BOPIS) programs, combining the convenience of online shopping without waiting for items to ship.
When consumers stopped going into stores and lockdowns forced many locations to close, these retailers were able to pivot their BOPIS model to accommodate consumers and were able to quickly add services like delivery.
There was a mad race to catch up for stores without an existing connection between stores and e-Commerce. Without an underlying infrastructure that was able to handle rapid shifts in business operations, many of these retailers were forced to fall back on their online components alone.
What Traditional Retailers Must Do to Be Future-Ready
The common factor that pulls each of these future-proofing strategies together is digital transformation. Leveraging technology to tear down internal silos, support innovation, surface new opportunities, and rapidly adopt new processes is the key to ensuring success in retail going forward.
There are two deterrents, however, that keep modern retailers from initiating the changes that would enable that transformation. The first is existing, legacy technology and infrastructure design that prevents the kind of agility and cross-functional sharing that’s required. The second is an all-or-nothing mindset – the thought that the only way to move from legacy systems and infrastructure is all at once or not at all.
Neither should hold a retailer back from digitally transforming their organization, especially their eCommerce systems. The path begins with understanding what’s working for you and what isn’t, and identifying the systems and processes that support the elements that work.
“Things that work” in this case refers to those elements of the business that serve the customer well, promotes agility and innovation, and helps the organization reach its goals. It’s likely that some, perhaps most, of your current technology needs to change. Ideally, you’ll want solutions that work well together, that are scalable, resilient, secure, replaceable and maintainable.
Achieving this perfect balance of flexibility and stability requires solutions that support all of those attributes. At DMI, we get to see under the hood of a lot of eCommerce systems as we help businesses from mid-sized, internet-born stores to large corporate retailers implement their solutions.
In the midst of that work we’ve found nothing better than leveraging MACH architecture to meet these goals. MACH — Microservices-based, API-first, Cloud-Native, and Headless — supports the business’s needs, even as they change, with a highly composable system and the ability to rapidly update, refine or change out components as business needs evolve and consumer demands change.
MACH overcomes the challenge of modernization as well as concerns over all-or-nothing system replacement. Regardless which solution you choose, however, it should be one that can support migration to new technologies and features over time. This allows your organization to change those things that need to be changed immediately, add in new features and functionality quickly, all without risking the disruption that massive, all-at-once change can wreck on the business.
Most importantly, however, is to recognize that there are experts, like DMI, that are available to help you future-proof your e-Commerce systems. A partner with extensive experience in e-Commerce modernization can do everything from helping you identify and prioritize the technology changes needed within your organization to meet your goals to planning, designing, and implementing those changes.
Find a Retail Partner & Platform for Future-Proof Growth
Adaptation is a crucial ability that helps a living thing survive and function better. When environments or circumstances change, the ability to adapt keeps things moving forward and productive.
An eCommerce business can function as a living thing and, similarly, is well served by the ability to adapt. The pandemic tested the adaptability and agility of many organizations and continues to push their adaptability and agility. It permanently altered consumer habits and expectations over the last few years. Many e-Commerce companies quickly adjusted to adapt. Some are still amid the adaptation.
The effect is that many e-Commerce businesses are now evaluating their existing systems to understand if their technology can keep up with the changes while at the same time rushing to evolve. Therefore, many understand that their platforms may be doing more harm than good and don’t have enough in-house resources to keep operations running while evaluating and implementing change.
If you’re considering new platforms and the partners needed to help you make the shift that your customers demand, here are some tips you’ll need to move forward effectively.
Tip 1: Know your company vision and roadmap inside and out.
“Know thyself.” It seems counterintuitive when you’re looking for someone outside of your organization to help, but the truth is that knowing where you’re headed and what you want out of your technology will make it easier to find the right platform and partner to help you strategize.
Step back and examine your purpose. Do you have executive visions and goals for your roadmap? Do you have guiding principles that you want to go back to that will drive your strategy as you evolve? If you do, those will be your foundation moving forward. If you don’t, now is the time to put those in place.
DMI frequently helps clients prepare that strategy upfront to make it easier to identify the gaps in their existing systems and what solutions they should implement to achieve those goals. We can help with vendor comparisons and decision-making guidance with that in place. It’s the kind of end-to-endless consulting we have the capacity for and sets clients up for success right from the start.
Tip 2: The solution you choose will drive partner selection.
The right partner will be able to execute well against the chosen solution. Therefore, the platform combined with your goals will inevitably drive partner selection.
Take Salesforce as an example. Salesforce can provide an all-in-one solution for organizations between Commerce Cloud, Service Cloud, Marketing Cloud including Pardot, and other features. However, if you already have some of this locked down — say, your marketing solution works well for your organization, as does your service solution — a comprehensive platform may not be optimal. Instead, you may be looking for commerce or sale solutions that can integrate into your existing ecosystem.
That could still mean elements of Salesforce are the correct answer, but it would also mean that the partner you choose would need to be able to address your platform needs differently. A partner familiar only with Salesforce configuration and setup may be acceptable for the first scenario but wouldn’t have the integration domain knowledge to implement the second successfully.
Tip 3: Find a partner who listens.
Good communication is the bedrock for most well-executed strategies. This quality is more nuanced than finding a partner who will hear what you need instead of driving you in a particular direction.
Successfully transitioning to a new or enhanced commerce solution requires an intuitive application that your internal and external users can use, fits your goals, and is scalable and sustainable. So, it’s beneficial to consider an agile and attentive partner experienced in guiding your business toward the right commerce solution.
Tip 4: When business and tech collide, go back to your guiding principles.
There was a time when the tension between the business and tech groups was a trope. It was something that existed for decades before the pandemic had begun to subside. However, we’ve seen this competitive and sometimes contentious relationship paradigm rear its head again in the COVID era.
Regardless of the reasons for this, a single, foolproof fix returns to the original goals and guiding principles. Those principles will help guide the next steps because they offer a destination for the ongoing work. When there is debate over who owns the platform or partner selection process, leverage those guidelines to form a solid ground for decision-making.
Are you interested in increasing your retail organization’s adaptability? At DMI, we’ve helped some of the most well-known retail brands make the move from rigid and brittle systems to flexible, innovative, and scalable solutions that support their needs today and tomorrow. DMI can help you, too. Contact us today to discuss how we can help your retail business be ready for the future — whatever that may be.