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This is What Retail Brands Must Do to ‘Thrive,’ Expert Says

Retail has faced significant headwinds this year. But through those challenges, one strategic retail theme has prevailed.

While “unprecedented” might be the most-used word of 2020, “omnichannel” is likely a close second. And a recent report from omnichannel platform provider NewStore reveals that the trend toward multi-channel commerce is likely here to stay.

The pandemic has measurably accelerated retailers’ efforts to offer more convenient and seamless ways to shop, Newstore’s data showed. Throughout 2020, they’ve augmented contactless engagement and convenience-boosting services to keep consumers engaged during periods where shopping in person was not possible or popular.

Perhaps the most visible change at retail is the increased dependence on buy online, pick up in store (BOPIS), which has grown by 15 percent year-over year, with 40 percent of brands offering some version of the service compared to 25 percent in 2019. Curbside pickup, which 32 percent of surveyed retailers currently employ, offers shoppers the same benefits without having to leave their cars.

Online appointment booking for shopping and service-driven businesses is also on the rise, with 20 percent of respondents now allowing consumers to reserve time slots on the web, up from just 9 percent a year earlier. Where just 38 percent of surveyed retailers offered live web chat in 2019, 63 percent offer the service today, allowing shoppers to get quick answers to their burning retail-related questions from their couches. The vast majority of retailers (83 percent) offers contactless pay, using phones instead of cash or credit cards, versus 75 percent a year prior.

“Services like curbside pickup and contactless checkout are here to stay,” NewStore founding CEO Stephan Schambach told Sourcing Journal. “Consumer behaviors are not going to go away when restrictions around Covid-19 do.”

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Schambach noted that omnichannel services shouldn’t be implemented as one-off quick fixes. “Brands need to plan for long-term implications and look at omnichannel as a holistic shift in how they run their businesses,” he said.

Retailers have traditionally drawn strict distinctions between their e-commerce channels and their brick-and-mortar operations, with separate teams, strategies and goals for each. But that lack of synergy is unlikely to serve in a modern world where shoppers go through multiple touch points on their path to purchase.

“Shoppers are more purposeful than ever before,” Schambach said. “They’re more likely to check inventory online before going into a store—and they’re more likely to buy something for pickup in store or curbside.”

With brands investing in better experiences, the stakes are only growing higher across the board. “The changes being made will remain in place well beyond the pandemic,” Schambach said, pointing to contactless payment as an example. Consumers have now been conditioned to regard their phones as a replacement for their wallets, and “the number of consumers expecting a touchless checkout experience has skyrocketed as safety and convenience are paramount.”

When it comes to contactless engagement, though, the largest contingent of brands (28 percent) was characterized by NewStore as merely “surviving,” not thriving (2 percent). That means that they aren’t being proactive about putting new payment tools or curbside pickup in place.

Even worse, 39 percent of retailers are actively avoiding implementing increasingly important services like BOPIS or clienteling. Just 24 percent of retailers were described by NewStore as “evolving,” or actively building out these channels to meet the realities of a new retail world, and 4 percent were said to be “thriving” amid their new service offerings.

While omnichannel “isn’t something a retailer can implement overnight,” Schambach has seen brands implementing new tech and strategy “much quicker than ever before” in light of this year’s unique circumstances. “Decisions are being made in a matter of months where previously they would have taken years,” he said.

Some of the omnichannel services most popular during the pandemic have been consumer facing—like BOPIS, curbside pickup and contactless payment—but some, like new systems for inventory management, take place behind the scenes.

“What the consumer may not always know is there has been a major increase in ship from store,” Schambach said, citing NewStore data showing that nearly half (46 percent) of retailers now ship directly from their stores to a shopper’s front door. This allows retailers to sell from a pool of all of their inventory—whether it’s on store shelves or in a stockroom, not just shelved in a warehouse.

NewStore’s Omnichannel platform for store fulfillment has seen a marked increase in usage, Schambach said, with 100 percent of brand customers now using it to ship from their stores. “It’s been the reason many of our customers were able to keep folks on the payroll, or hire back after store closures,” he added.

“The backbone of omnichannel is a central source for real-time data on inventory, customers and orders,” Schambach said. “Serialized inventory is critical, especially for brands that sell via wholesale or marketplaces.” Shoppers should also be able to make returns directly to brands, regardless of where an item was originally purchased, he added. “It’s a matter of convenience for the customer, and higher full-price sell through rates for the business.”

Still, a whopping 80 percent of brands are described as either avoiding (50 percent) or struggling (30 percent) to implement changes like ship-from-store that would augment consumer experience. Only 12 percent were said to be actively evolving and incorporating the tools.

While Schambach believes that brands are “well aware of the importance of and urgency behind making changes to operate as omnichannel,” and that they know these shifts are likely to be permanent, many are falling far short of what consumers are coming to expect and demand. It could be the added expense of implementing these tools and services, or the sheer stress of operating on reduced staff and budgets during Covid, that holds them back.

Either way, Schambach believes willingness to embrace new tools and services will be a determining factor in surviving the pandemic.

“Brands have a really good chance to thrive right now, but the ones who follow a traditional retail model are in trouble,” he said.