We’re reaching the end of 2017! Looking back at the past twelve months of retail, the general sentiment is that physical retail is dying, not just here in Singapore, but pretty much the rest of the world as well. But is this the real truth? Is it true what most people say about e-commerce killing off physical retail?
Given the growing number of unit vacancies and too-frequent change in stores in many shopping malls in Singapore, it’s hard to argue that physical retail is doing well here. While I do agree that many physical retail stores are not doing well, it’s far from accurate to say most are not doing well. Furthermore, saying that e-commerce is the main cause of the demise of physical retail is unfair.
Need of Digital
Retail is not a battle between online and offline! That’s the biggest misconception most people have. Retail is about making the best use of both online and offline. Now, to address the need to go digital, it does not necessarily mean a brand needs a web store, or a mobile app. A brand needs to first identify its objectives and goals, before planning a proper digital strategy. In case you’re thinking that building a pretty online store is all it is to going digital, you’re utterly wrong. There are many ways digital can contribute to growth besides pushing product sales online.
For example, Topshop chose to use their website to drive traffic to their brick-and-mortar stores this Christmas.
A little while ago, IKEA decided they would create a unique experience for their customers when they launched this AR (Augmented Reality) app. Sure, this wasn’t exactly 2017, but it’s a great example worth sharing!
Making use of both online and offline mediums is definitely not a new thing. The term “omni-channel” became popular in 2016 and the number of companies providing omni-channel solutions have grown tremendously this year.
Omni-channel retail is put simply, a uniform and consistent customer experience at every engagement point. Engagement points could be in person, or online via a website, mobile app, or social media interactions.
Starbucks is known not just for their coffee, but their culture as well. Walk into a Starbucks joint anywhere in the world and you will be greeted by friendly staff, and if you’ve been to the same joint enough, it’s likely the staff will remember your name and even how you like your favourite beverages. But Starbucks didn’t just stop there, no. They’ve taken it a step further by implementing the Starbucks Rewards App, which allows their customers to check and add card balances, make payments for purchases in-store, and utilise accumulated rewards. These changes are reflected in the mobile app and the website real-time. This keeps their customers engaged no matter where they are.
O2O stands for “online-to-offline”, which can get confusing quickly since the two ‘O’s represent opposite things. O2O is a retail strategy to make use of online avenues to provide information, discounts, and promotions to customers so as to enhance their offline shopping experience. One of the earlier players of O2O is the group buying deal site Groupon, which drove significant traffic from online shoppers to physical destinations such as spas and restaurants.
In the recent years, O2O has evolved further with the entry of some of the biggest giants in the world, Alibaba and Amazon. Alibaba announced that they will be opening a physical 5-storey mall in 2018, housing brands carried by Tmall, Taobao, and Hema. Being a tech company, they will have virtual fitting, amongst other cool stuff in this new mall, called More Mall. Having a strong physical presence means they will capture parts of the offline shoppers’ market, on top of their monster share of e-commerce customers.
Whether it is online or offline, personalisation is one of the biggest factors to building customer loyalty. Unfortunately, that is hardly the culture in most places, and brands are not adapting to its obvious need. Most marketers today are still thinking of personalisation as a face-to-face interaction, or as an online storage of customer purchases. Personalisation is much more than that. Personalisation is the appreciation and familiarity of individuals regardless of shopping online or walking into a brick-and-mortar store.
Again, this leads back to the above-mentioned omni-channel approach. Two of the many reasons to the lack of adoption of personalisation is the need of a particular expertise, and the cost to implement such a strategy. More of that in time to come as that deserves a dedicated post.
The Fallen of 2017
I’ll end this post, and this year, with three of the most known brands that have fallen in 2017.
- Toys “R” Us – the third largest bankruptcy in the US, filed in September 2017.
- True Religion – high fashion denim brand, filed in July 2017.
- Payless Shoesource – Discount footwear brand, filed in April 2017.
Retail is extremely competitive, and will continue to become even more competitive with new tech solutions and strategies. It is imperative for brands to get ahead of their competition, or at the very least, keep up with the rest of the world. There is no other way to survive.