How can a retailer out-Amazon Amazon? By bringing the online shopping experience to a physical store.
Online sales comprise about 8 percent of all retail sales in the US. If we take into account that car purchases, gas stations, and grocery shopping together make up half of all retail in the US, and are not really suited to online selling, then online sales comprise 16% of the remaining retail business. And it is growing at a rate of 15% per year.
Some businesses have been completely destroyed by online retail. Remember Blockbuster video stores? Gone. Is there a future for brick and mortal retailers in a climate of rapidly growing internet sales? The answer is "it depends." While there are advantages to a physical marketplace where customers can view the goods being sold, many shoppers, especially millennials, prefer to shop without pesky salespeople badgering them and with the opportunity to customize products using digital menu options. Fortunately, there are ways to bridge this divide.
Omni channel marketing integrates brick-and-mortar locations with web, mobile apps, and customer facing displays such as digital signage, interactive kiosks, and tablets for in-store ordering. The use of omni channel marketing melds the online and physical shopping experience to give the best of both worlds for the customer and ultimately for the retailer.
Take Dick's Sporting Goods as a case in point. Dick's recently opted for an omni channel approach by sending weekly specials to a targeted geographic area near a physical store location, launching a stronger loyalty program app, and providing sales associates with mobile devices to help customers with online ordering in the store. Additionally, Dick's uses their physical location for customers to pick up online orders without paying shipping costs. Mobile Commerce reports that with Dick's omni channel approach, ecommerce sales have grown by 50 percent in local markets with a physical location.
Omni channel marketing allows customers to interact with businesses on the customer's own terms. This ability to customize interactions leads to increased sales. In late 2014, Taco Bell launched a mobile ordering app. Early this year Taco Bell reported at an investor conference seeing the average mobile order come in at 20 percent higher than in-store orders.
Allowing customers to order additional ingredients such as sour cream, onions, creamy jalapeno sauce, and nacho cheese through the app contributed to the higher-priced orders. An additional benefit of Taco Bell's omni channel approach is allowing customers to take the time to create their own combinations without the being in a physical line where there is pressure to order quickly.
"In many high growth markets, 3M is collaborating with specialized eRetailers who have pure play online business models and cater to long tail customers," explains Raj Rao, Vice President Global eTransformation of 3M. "This is particularly important in our Industrial & Health care markets where spec-driven buyers have increasingly shifted purchases online for efficiency and convenience. We often conduct workshops and product demos for these buyers at retail shops, and drop ship products to online buyers using retail inventory in order to keep our channel profitably engaged with our diverse customer base."
Omni channel marketing allows for innovative ways to integrate customer interactions. Chander Chawla, an advertising technology consultant to numerous businesses and CMO of Moki, Inc., asserts that in order for an innovation to be successful, it must be customer-led. In short, that means that customers should be familiar with the idea of the technology in order for the technology to be successful. This concept of customer-led innovations is particularly true when applied to omni channel marketing. Chawla cites display screens as an example. Customers are accustomed to display screens on their phones, tablets, and on the backs of airplane and car seats. Adding a technology as ubiquitous as a screen the customer controls (a "customer Facing Device") to a brick-and-mortar store is a natural innovation for tech savvy customers. As a result, Customer Facing Devices have become a huge part of the omni channel marketing strategy, allowing ordering, customization, and video displays through tablets, digital signage, and interactive kiosks.
The future of successful marketing strategies lies in being able to bridge the divide between physical store space and digital mediums. It is estimated that by 2020, 75 percent of businesses will be digital. Integrating Customer Facing Devices into the marketing and sales processes allows the retail brand image to be controlled while giving the customer the ability to customize.