Alan’s corner: The tipping point

Of all the industries that exist in the marketplace, retail is the one that stands out for me as the one that has experienced probably the most disruptive change in the last 50 years. Whether you see it as a positive change or negative is all to do with your attitude and your willingness to embrace retail “Darwinism”.

From open market stalls to small stores with counters, to open department stores and gigantic malls, the evolution has been relentless. Television shopping channels arrived in the 80s with a very product-focused pushy selling style, and it was followed in the 90s by the big daddy of all disruption, the internet.

There is a lot of confusion and noise around how online shopping is causing a retail apocalypse and the closure of physical retail stores.

For sure, online is eating into overall retail spend and as it becomes more efficient and sophisticated, it will inevitably grow. Some figures were released during the pandemic that suggested that the global spending on retail (not including airlines, and hospitality bookings) was about 12-13 per cent, with experts at that time suggesting that it is unlikely to grow beyond 20 per cent of the overall retail mix.

However, the pandemic has changed much of that. The inevitable spike in online purchasing has advanced the global needle by three to five years. It did of course drop back after the pandemic, but it is still expected that the overall mix will increase from 12-13 per cent, as new migrants to the channel grow to love it.

Key observations

The bottom line here is that online shopping is growing and it’s a significant part of the strategic mix for retailers. You might wonder why I’m even saying this. Well, it’s because of some recently released data. Here are some of the highlights along with some of my own observations.
Consumers. Since the onset of Covid-19, consumers have embraced online in their droves. There is an obvious spike as you can see above.

Small retailers. Quite shockingly, there is still a cohort of small retailers that should, but don’t even have a website. Only 25 per cent of all SME retailers sell online. Given that 82 per cent of online shoppers do so somewhat frequently, this makes those non-adopter businesses lose out. Strangely, 46 per cent of them say online is not their priority. Their relevance in their locality will continue to diminish, jeopardising their and their employees’ livelihoods.

Your online store. As normality returns and consumers feel less loyal to brands, they will once again start comparing sites across the whole global spectrum. Retailers need to use this time right now to further enhance their online shopfronts, their range edit and their descriptions.
International players have a greater choice or ‘endless aisles’ online.

Perhaps you could speak to your main suppliers about getting their support with this. Photography and descriptions too offer you an opportunity to localise your site with language and detail that will inspire your customers to buy. That means that you can no longer just ‘copy and paste’ your suppliers’ catalogues.

Click-and-collect. Businesses that started out as pure-play retailers (i.e., online-only, otherwise called DTCs – direct to consumer) are now opening stores. Why? Two main reasons stand out. They want to build a human rapport with their customers. And experience shows that customers can be influenced to buy more when they come in to store to collect their online purchases.

Returns. Recent research shows that customers buying decisions are hugely influenced by online retailers’ return policies. Use that to your advantage as a local supplier servicing a local customer base where international supply chains can be troublesome.

Data. Omni-channel is the next step beyond multi-channel. Multi-channel means that you enable your customers to buy either in-store or online, by telephone or by email. Omni-channel is when you use technology to join up all these channels and offer your customer a seamless experience – where all touchpoints are connected. That and the use of data for personalisation may be a step too far for those with less budget. But don’t let the noise around omni-channel put you off starting with the basics, described before.

The last word

While online is likely to grow to 25 per cent of the overall mix, don’t forget that that means 75 per cent of all retail purchases will still be in-store. Because of the noise around online, I feel that many retailers forget this. Please don’t fall into that trap.

Alan O’Neill is the managing director of Kara, change consultant and speaker

Read: Alan’s corner: Imitation versus innovation