The buzz for years has been around the imminent demise of brick and mortar stores, making room for online shopping experiences. Yet, the reports of the death of in-person commerce, to quote Mark Twain, have been greatly exaggerated.
Even the massive shift to eCommerce driven by COVID-19 and the associated lockdowns haven’t ended the reign of physical stores. It’s true that eCommerce continues to climb, with Forrester analysts predicting that online shopping will own more than 25% of retail sales by 2024.
It’s important, though, to look at what that statistic leaves unsaid — that 75% of retail purchases will continue to be made at brick and mortar locations. Of course, that doesn’t guarantee a store’s success. Just ask Barnes & Noble or Forever 21.
The light at the end of the tunnel exists, but only for those retailers who are willing to adapt. As DMI Senior Client Partner, Pablo Pazmino said, "The pandemic has taught retailers that, while eCommerce is important, a store presence can be leveraged for supply chain and customer service purposes."
So, if brick-and-mortar stores aren’t going away, and eCommerce is only set to grow, what does the future of retail look like? And how can today’s merchants future-proof their stores?
To be successful in retail, merchants will need to rethink both the relationship between online and offline shopping and even take a hard look at how they serve their customers.
If retailers have a blind spot, it’s the space between online and offline retail channels. Many stores continue to see these two channels as separate entities, both logically and operationally.
The problem is that that’s not how customers view retail brands. Instead, consumers see all touchpoints — including websites, brick and mortar, and even mobile applications and social media buying — as a single entity. Stores need to adapt to see their business the way consumers do.
Why? Because when these are treated operationally like different stores, consumers have no reason to keep the thread going between their online and offline activities. If the brand has a conceptual break between their physical locations and online presence, then it becomes easier for a consumer to break these up as well. That distinction — whether conscious or subconscious — makes things like showrooming in one location and buying from another brand online much easier.
Identifying the strengths of each of the channels and playing those up and off of one another makes it easier for consumers to carry a purchase through from offline to online. Let your physical locations do what they do best, like supporting their customer’s need to look, see, and experience products, or interact with experts. At the same time, online channels should shine in their own ways, like offering the convenience of having merchandise delivered or being able to place an order from anywhere at any time.
Combining these channels means supporting online shopping through offline locations. But it can also mean bringing online experiences into brick and mortar stores. For instance, introducing kiosks that customers can log into and receive personalized content, or using locational services to push coupons and deals to a shopper’s mobile app further collapses the distance between your channels.
Whether eCommerce displaces brick and mortar stores in the far future is yet to be seen, but one thing is certain: eCommerce has changed consumer expectations around shopping. For the savvy retailer, this is good news. It’s possible that changing the way you think about shopping within your stores and online can lead to better customer experiences.
For instance, online men’s retailer Bonobos launched brick and mortar locations, strategically located, to bring in new customers. Men could visit these locations, shop, try on clothes, and make purchases. However, everything purchased would be sent directly to their homes.
Data on their ideal customer avatar revealed that men prefer not to carry shopping bags. This new approach allowed the store to overcome the objections of their customer at making a purchase from multiple angles. The consumer knew the items would fit and look good, but didn’t have to deal with the hassle of carrying around their purchases afterward — and the data proved correct. In addition to attracting new customers, the average order from one of Bonobos’s stores is twice that of online-only purchases for the retailer.
There were also advantages, operationally, for the brand. Their store footprint could be smaller, and they didn’t suffer from having stock available in one location, but not another. Cost savings on logistics as well made up for the required changes to their internal processes and infrastructure. And it allowed them to focus more on the customer experience.
Retail has become a fast-paced industry, and consumer demands are constantly evolving. When, where, and how people shop has changed, and retailers need to keep up or fall to the wayside.
Even before the pandemic, larger retailers had begun to add new modes into their shopping flows. Target, Kohl's, and Walmart, among other retailers, had launched Buy Online Pick-up In Store (BOPIS) programs, combining the convenience of online shopping without waiting for items to ship.
When consumers stopped going into stores and lockdowns forced many locations to close, these retailers were able to pivot their BOPIS model to accommodate consumers and were able to quickly add services like delivery.
There was a mad race to catch up for stores without an existing connection between stores and eCommerce. Without an underlying infrastructure that was able to handle rapid shifts in business operations, many of these retailers were forced to fall back on their online components alone.
The common factor that pulls each of these future-proofing strategies together is digital transformation. Leveraging technology to tear down internal silos, support innovation, surface new opportunities and rapidly adopt new processes is the key to ensuring success in retail going forward.
There are two deterrents, however, that keep modern retailers from initiating the changes that would enable that transformation. The first is existing, legacy technology and infrastructure design that prevents the kind of agility and cross-functional sharing that’s required. The second is an all-or-nothing mindset - the thought that the only way to move from legacy systems and infrastructure is all at once or not at all.
Neither should hold a retailer back from digitally transforming their organization, especially their eCommerce systems. The path begins with understanding what’s working for you and what isn’t, and identifying the systems and processes that support the elements that work.
“Things that work” in this case refers to those elements of the business that serve the customer well, promotes agility and innovation, and helps the organization reach its goals. It’s likely that some, perhaps most, of your current technology needs to change. Ideally, you’ll want solutions that work well together, that are scalable, resilient, secure, replaceable and maintainable.
Achieving this balance of flexibility and stability requires solutions that support all of those attributes. At DMI, we get to see under the hood of a lot of eCommerce systems as we help businesses from mid-sized, internet-born stores to large corporate retailers implement their solutions.
In the midst of that work we’ve found nothing better than leveraging MACH architecture to meet these goals. MACH — Microservices-based, API-first, Cloud-Native, and Headless — supports the business's needs, even as they change, with a highly composable system and the ability to rapidly update, refine or change out components as business needs evolve and consumer demands change.
MACH overcomes the challenge of modernization as well as concerns over all-or-nothing system replacement. Regardless which solution you choose, however, it should be one that can support migration to new technologies and features over time. This allows your organization to change those things that need to be changed immediately, add in new features and functionality quickly, all without risking the disruption that massive, all at once change can wreck on the business.
Most importantly, however, is to recognize that there are experts, like DMI, that are available to help you future-proof your eCommerce systems. A partner with extensive experience in eCommerce modernization can do everything from helping you identify and prioritize the technology changes needed within your organization to meet your goals, to planning, design and implementation of those changes.
At DMI, we’ve helped some of the most well-known retail brands make the move from rigid and brittle systems to flexible, innovative, and scalable solutions that support their needs today and tomorrow. DMI can help you, too. Contact us today to discuss how we can help your business be ready for the future — whatever that may be.