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Guest View: Future is Bricks + Clicks

Anand J Mehta | May 2, 2013
Traditional retailers are recognising Omni-channel as the future

This is not an article about traditional retailers and the challenge presented to them by online retailers.

We are all aware of the statistics that identify the exponential growth of online sales but the fact remains that even in the most mature markets they account for below 10 percent of aggregate sales. The profitability and scalability of this business model is another separate discussion in itself - it is clearly evident to me in my discussion with leading retailers that most companies are pausing to evaluate the differences between fashionable concepts and functional business models.

Financial results of online retailing aside; an equal force in driving this cause has been the impact of  smartphone penetration in all countries globally. eCommerce is clearly being replaced by mobile commerce (mCommerce), largely due to the fact that mCommerce is complimentary in harnessing the power of "Clicks", which results in transactions within the "Bricks".

The shopping journey can be divided into three parts - discovery, selection and transaction. Savvy retailers are aware of the discovery and selection components being increasingly initiated online / on mobile and are using this omni-channel engagement hook to ensure that the final and most critical component - transaction - is executed in store, where retailers invest their rental, salary and advertising dollars day in and day out.

The reality of mCommerce is that online and in store strategies are no longer mutually exclusive, however, if structured right, completely complimentary.

In the past, technology enabled and streamlined the back-end infrastructure of a retailer, but today, it has emerged as the key front-end enabler of connectivity with customers. The scale is transformative and is compelling retailers to either evolve or perish.

The relationship that a retailer had with the customer has come full circle. It all started off as a personal relationship between a local merchant and customer. This relationship was founded on trust and offered the expectation that the merchant would, over a period of time, know a customer's likes and dislikes, help them with what they needed and educate them about new items on the shelf. This relationship then underwent depersonalisation and grew into organised retailing.

Organised retailing is about the scale of operation and the use of technology extensively to make shopping a lot more "self-service". While retailing was getting organised, a whole new revolution of wireless connectivity through smartphones was underway and transforming the way customers connect and make informed choices. Today, smartphones have enabled a whole generation of consumers to be 'always on'.  They have fused the virtual with the physical world, delivering ubiquitous connectivity with the Internet and permanently changing consumer's purchasing behaviour.

Consumers have come to rely more on their mobile devices than their desktops/laptops for their shopping needs. In fact, social media and mobile devices have shifted power in the retail industry from suppliers and retailers to well-connected shoppers.


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