GANDT Fireside Chat #004 | OmniChannel – Correlation between digitalization and brick-and-mortar retail

True to our motto “Working Out Loud”, we at GANDT Ventures exchange our thoughts and ideas on current news topics. The topics from around the world ranges from online marketing, digital retail to e-commerce. This helps us uncover opportunities that can be used for companies and our clients as part of our daily business.

But most of all, it is a lot of fun and a great way to share knowledge. Our podcast chats are available to anyone who is interested what Google, Facebook, Amazon and co. are up to.

The limits of digital commerce

In recent weeks, the topic of digitalization has once again come into focus in all areas of society. Due to the Corona crisis and the associated initial restrictions and closed shops, brick-and-mortar retail face challenges like never before.

In recent Fireside chats, we have addressed the necessity of an online presence for a retailer. But we do not neglect that brick-and-mortar retail also has its raison d’etre. Ideally, online and offline go hand in hand.

Being present online and running a functioning online shop is not the sole solution for every retailer.

In our second Fireside Chat, we mentioned the problems DHL and postal services in general face. Shipping partners reach their limits at this time of crisis, exacerbated by staff shortages.

The existing infrastructures in digital commerce are not able to intercept brick-and-mortar retail within such a short period of time.

In order to provide your own customers with impecable customer support, a balance must be struck between online and offline. Not because it is a more efficient, or better way to reach new potential customers, but because your existing clients expect it. In the last few years we have noticed that various “Pure-Online” players have been looking for the way towards brick-and-mortar retail. Pop-up stores are just one of the first indicators that online retailer have started to explore traditional real estate as a viable sales and distribution method. The main focus here is the combination of online and offline retail to a 24-hour omnipresent service and offer.

OmniChannel Commerce as a Solution

By using an omnichannel strategy, all areas of retail are connected to each other. This allows you as a retailer to pick up the conversation with your customer at any time and place. It does not matter whether the customer researches on the smartphone and then buys in the stationary shop or makes an online order in the store. The integration of online and stationary retail services must be seamless to the customer

Customer behavior has already started to change before the Covid-19 pandemic that forced companies to use digital marketing measures. Customers themselves, are increasingly flexible in their means of purchase and communication with your retail store.

There is no doubt that, due to the pandemic, there is now a significant boost to digitization efforts within the broader retail-space. It can also be assumed that the changing buying behavior of customers, even after the crisis, will be partially maintained.

Regardless of the increased consumption of digital media, many companies still generate the majority of sales in brick-and-mortar stores.

The opportunity from a OmniChannel Strategy

In the past few years, there have also been positive growth figures in brick-and-mortar retail – looking at total sales regardless of the industry, albeit much less than online retail.

The problem is precisely this low growth: while the online business is growing at a high speed, this is only very moderately the case in brick-and-mortar retail. Stationary retail is a more established and mature market and intricate part of many people’s daily lives. Yet, this behavior is changing more rapidly than most retailer might think.

By enabling customers to communicate with your retail store with any of its desired tools (be it online, through social media, email or in store), integrated customer relationship management solutions pave the way to the future of retail.

Therefore, despite the current large losses that brick-and-mortar retailers face, the focus should not be shifted exclusively towards online business. It is important to note that traditional retailers must continue to play their strengths. It is key that they learn to integrate their core values and ways of working into new communication tools too, though.

Of course, in the current situation, where people are supposed to stay at home and have to limit their social contacts to the bare minimum, this can only be implemented to a limited extent. There will be a period after this crisis. Shops are already being allowed to reopen in most areas under strict hygiene checks and conditions. Hence, this is the perfect time to start working on an omnichannel approach.

Importance of local search results Branded vs Nonbranded | “Uberall Report April 2020”

If we look at the study published by Uberall, an online marketing company based in Berlin, in April 2020, another balancing act that companies have to deal with in order to reach their customers is illustrated.

The first step into a brick-and-mortar store generally does not start by entering the store floor, but with a local search on the Internet.

In its study, Uberall found that small and medium sizes businesses (SME) are found by so-called “unbranded” search results, in 80% of the cases.

In order to reach the consumer, shops should therefore not only focus their marketing efforts on promoting their own brand name. The key insights is that most consumers search for more generic (non-branded) keywords when they use their phones or Google to find a nearby place to eat or a particular type of store. They would rather search for “Sushi Nearby” than “Ma Jing Sushi Take Out”.

Even global brands, which are known to everyone, are found in over 40% by such generic search terms in the local search. There is, therefore, no question that it is helpful if a local brand name is established. Nevertheless, the business should also be represented in the searches without brand names.

This local reference also applies in the fashion retail industry

This local reference is from our experience not only limited to the gastronomy industry. Even in the fashion retail industry, we have seen a positive correlation between the online searches for a brand and stationary stores.

The development of a locally established brand can therefor prove worthwhile both in brick-and-mortar retail and online sales.

In addition to investing in targeted marketing activities, a local approach should be part of the customer approach. Fact is that local marketing activities can help the business acquire valuable customers.

Industries Insights – Losers and winners in The Last Three Months in Switzerland

It should also be borne in mind that not every industry suffers from the current COVID-19 situation – or vice versa: not every industry can currently see a high level of growth.

Industries whose products were often bought online before the Covid-19 crisis are now likely to face a smaller problem than others.

If we look at the growth figures of the last three months in Switzerland shared by Patrick Kessler, President of the Swiss Mail Order Association, this industry-dependent correlation can be seen.

Products from the multimedia or leisure segment are breaking new growth records in Swiss Online Retail. On the other hand, the fashion industry is one of the big losers of the Corona crisis when it comes to online sales in Switzerland. Here we see that sales are declining, although the new collections should be released at this very moment and under normal conditions an increase in overall sales should be expected.

Another loser of the Corona crisis is the luxury industry Although the major players in the market, such as the Swiss luxury watches and jewelry retailer Bucherer, have already made the step into the digital business some time ago, the industry is having to accept a stagnation of its growth.

Click & Collect as a sales strategy & part of the OmniChannel set-up

Click & Collect is certainly not a brand new sales strategy, but thanks to the coronavirus, it is currently experiencing high days. This is mainly due to the fact that goods traditionally purchased in stationary stores are now bought online.

Even in the consumer goods brand industry (FMCG), Rewe and dm are working on implementing this sales method.

The Federal Association of E-Commerce and Mail Order Germany (bevh) has called for a uniform regulation that allows brick-and-mortar retailers to hand over goods using the contactless “Click & Collect” procedure.

To protect the health of customers and employees, Click & Collect offers a way to reconcile brick-and-mortar retail with the digital business.

We see online growing more and more into a lead generation network that can support brick-and-mortar retail. Offering the customer an alternative by buying online and picking it up in the store can be a model in which online is used to support offline.

Offline trading – an option for start-ups and young brands

Brick-and-mortar retail can also be a lucrative option for companies that are still in their infancy.

Creating an online shop is easier than ever thanks to various full-service providers. In contrast to an offline shop, the online shop offers the possibility to reach customers anywhere and at any time. As a result, the group of potential customers is expanding many times over.

However, there are also good reasons for an offline presence. Conducting digital marketing in a comprehensive style can quickly exceed the resources available to a young company. Especially due to the large number of competing companies, budgets are increasing. Reaching the attention of users can be expensive.

Therefore, offline can be an option for start-ups and young brands to establish themselves locally and seek direct contact with customers. Another advantage is the possibility to receive live feedback directly and to implement optimizations.

Optimization measures in the digital business, on the other hand, usually have to be determined by the user behavior – are my bounce rates so high because my product does not appeal to the user or is it due to the performance of my website?

This means that each founder has to weigh up individually whether a stationary business can lead to success in his industry and location.

Stationary stores are far from dead, if you approach it properly and consider an omnichannel approach.

From our point of view, the role of brick-and-mortar retail is slowly changing, but there is also an obvious overlap between online and offline. Exploiting this and bridging the gap between online and offline will play an important role in the future.

Agenda | GANDT Fireside Chat Video #004