During the pandemic, the retail sector was hit hard. Today, recent data confirm that the positive recovery trend continues. Physical store sales return to growth while e-commerce peak slows down after 2020.
What did the “storm” of three years ago leave us with? It has brought about a radical change with retail operators increasing their “digital” investments. , as if to say, “past the storm I understood, digital served me in emergency, I understood some logics and now, that I return to the normalcy of the physical store, I empower it with digital.”
There is still an increasing figure on investment in digital, with the share of sales rising from 2 percent in 2020 to 2.5 percent in 2021.
In short,e-commerce continues to be the engine of growth but the store remains at the center of the customer’s shopping experience, the barriers between online and offline are thinning, and, as Floridi writes, we are entering the ‘onlife, or that experiential world where the consumer can inquire online and buy offline or vice versa.
This brings about a change in perception not only in the consumer but also in the retailer, in him the attention to the staff has grown, in fact it is from them, from the sales force that a new stimulus to make innovation can come.
The available retail data tell us that yes, investments in digital as a proportion of sales continue to increase but they tell us, above all, that they have changed in their nature: we are no longer faced with investments decided under emergency conditions in the face of an unexpected crisis (the pandemic), now these are more structured and reasoned investments. A new idea of commerce is emerging, there is an omnichannel vision, in some industries such as Food & Grocery there is investment in enhancing e-commerce but investment is being extended in all areas, from the backend to the frontend to enable a new idea of commerce, increasingly omnichannel.
This trend of increasing investment and quality of investment strategy choices should be maintained and leveraged for the result it is generating, which is an increasingly optimal shopping experience for the customer.
Here, a synergy must arise, a collaboration between physical and online retailers, this synergy produces the integrated and tailored consumer shopping experience. A fluid, increasingly personalized experience, one that allows him to move with ease between the online and offline worlds (said the hard way, we are at Floridi’s “offlife” world)
Where to invest: e-Commerce and beyond
The choice of large players when activating investments with a strategy that breaks down the barriers between offline and online are broken down as follows: 65 percent offer click & collect services; 37 percent offer the option of in-store return of online purchases; and finally, 30 percent make it possible to check online the availability of items in the store. Behind these service proposals to improve the customer experience are platforms that align inventories in real time; they stem from increasingly available SaaS solutions.
As mentioned above, this is all about making the customer experience ever smoother and easier, but also about optimizing internal operations.
In the organization that the retailer prepares, supported by new technologies, physical spaces take on a new role: the “store” is yes dedicated to the commercial transaction and the physical relational relationship with the customer but it also becomes a supporting asset for online activities, in it areas are organized dedicated to the preparation of e-commerce orders or become return points for online orders.
Digital skills in one process manage the customer relationship, both online and offline. Digital investments will enable on the backend side the integration of data and operations.
The data triggers communication initiatives with marketing actions and customized sales proposals on specific clusters of and individual customers; operations will be handled regardless of sales channel (on/offline) both in terms of integrated inventory management, order management, and finally fulfillment. With this logic, all structures (distribution hubs, warehouses, physical stores) come into play in terms of both delivery and return.
Retail sector investments tell us today that on the operations floor, interventions to digitize integrated inventory management cover 39 percent, for the order management scope 32 percent, and finally for order fulfillment we have 35 percent.
Challenges in the future of omnichannel retail
What we have described so far as an industry orientation leads us to summarize that retail operators face 5 main challenges in achieving “Omnichannel Retail.”
Of the first, Sales Channel Integration, we have already mentioned.
The second is Personalization of consumer relationship. Consumers are attracted and “pampered” by personalizing the business proposition to the maximum extent. Of the series, I know your likes and dislikes (digital data let me know your preferences) and therefore, I take care of you. By digitizing we have the customer’s preferences, history, online and offline behavior at our disposal. It would be really stupid to disregard this information. Here artificial intelligence and machine learning technologies will help us to increasingly refine personalization.
The third challenge is that of Convenience, the customer expects to easily and quickly close their shopping experience, does not want to wait in line, and wants quick delivery. So the concept of convenience expands is no longer just related to the price of the item but more to how good you, the retailer, are at putting it in my hands. Retailers will need to improve and enhance their logistics to the maximum extent, goal speed and efficiency of delivery. Here automation and predictive logistics technologies will be the solution.
The fourth challenge is that of Competition; if we think about it, we live in the age of the click. We have and want everything at the click of a mouse. Google has opened the doors of the informational instant-we don’t know a notion, a moment later we are informed. Similarly, Amazon and Alibaba have changed our purchasing behaviors; they have given instant availability to the commercial transaction as well. There are no longer physical and temporal barriers. No one in the last decade of the 1900s would have thought of entrusting DHL or FedEX with a package whose contents are worth a few dozen dollars. Today it takes place. So when we talk about competition, we are talking about competitive parameters that the big players have imposed on the market. So we must live up to yes with a competitive price, but in that competitive price there must also be the ability to compete in speed and efficiency with the big boys in the global market.
Fifth and final challenge, Sustainability. We talk about ecological sustainability. Consumers have a strong sensitivity to anything having to do with environmental impact. If I decide to buy fruits and vegetables on specialized platforms, packing them in a sea of plastic is not a great idea. They are nuances, but retailers also need to give the image of companies that reduce their environmental impact, they need to reduce their carbon footprint, they need to adopt sustainable sourcing practices. These are the trends and thus the needs of the consumer, who not only expects fresh fruit, but wants it delivered without having come in contact with chemical pollutants.
In conclusion, the future of omnichannel retail in Italy is characterized by major challenges, but also by opportunities for growth and development. Digital transformation is a long and complex journey; we need managers who know the digital levers to guide the innovation process.
We at Maia Management are this kind of manager, our outsourced services allow you to start right away, cut down on selection time, schedule individual innovation steps, if you think interrupt when you want. You pay a monthly fee for the time you need.
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