For $7.99, “Prime members can get products like paper towels, shampoo, and batteries delivered right to their door in an hour or less,” boasted a press release announcing the Prime Now service, coming to a city near you in 2015.
In week two of the new-year, the U.S.Postal Service announced it would expand the pilot program of its same-day-delivery service - MetroPost - to Washington, DC. For the previous year and a half, the program had been delivering essentials for a fee on behalf of local retailers in San Francisco and New York.
Even valet grocery services, it turns out, are not merely a pricey convenience for the wealthy. ShopRite in Philadelphia delivers groceries to poor urban customers, who find the minimal delivery charge to be cheaper than bus fare to and from the store. Retailers of a mind to mimic ShopRite’s success can do so right away via third-part delivery services like Instacart and Postmates.
By the year 2020, according to RetailNet Group (RNG), e-commerce will claim 20 percent of all retail sales and digitally influenced store-based retail will account for 61 percent. “Retailers have to be available wherever shoppers want to act, and they’ve got to make it easy for them,” says Tim O’Connor, VP of the research company RetailNet Group (RNG). “Alternative delivery is for everybody.”
This comes as no surprise to retailers and their vendors, all of whom sport bumps and bruises from having been knocked around by the mobile marketing maelstrom over the past two years. What brick-and-mortar retailers can’t afford to lose sight of during these turbulent times is that, while they must compete digitally to remain relevant, their most profitable business will continue to take place inside their store doors. Added costs of a delivery business include additional labor for picking and packing, as well as trucks and drivers, butdemanding consumers are often unwilling to pay enough to cover the tab. While retailers must explore offering online shopping alternatives to key customers, the long view on profitability favors a multichannel blend of delivery, pick-up, and store-based sales, with the store as the hub of an omnichannel, digitally-run marketplace.
Integration Pays Off
A study by Ahold showed that a hypothetical $100 in-store customer who added Peapod home delivery upped her total spend to $150, $80 of which was in-store. The total spend increased to $175 dollars for the shopper who used all three consumption methods. Again, the in-store portion remained the largest at $70. People want convenience, but people still like to touch, feel, taste, and see products before committing to purchase. Similarly, a 2014 Nielsen study found that 74 percent of shoppers still prefer to buy groceries and other consumables in stores, even if they buy other essentials online.
To thrive in an omnichannelretail environment, chains will need to continue to give their customers new reasons to come into their stores. They will need to employ new technologies to not only engage with shoppers at retail, but to track their shopper movements and encourage a multichannel experience in-store.
Pioneers of the Digital Retail Frontier
To succeed in an ever-evolving retail environment lead by technology, retailers will need to consider:
- Integrating in-store with online offerings: Using mobile apps to present new ideas to consumers will be essential in further encouraging exploration in-storeguiding their educational process when they arrive.
- Fully exploiting collaborative options with powerhouse brands: To create unique offerings for shoppers, brands will see greater opportunities to captain “store-within-a-store” merchandising programs designed to lock up permanent in-store visibility in exchange for underwriting the cost of production and installation.
- Deploying innovative attention-getting devices: New techniques of lighting, sound, motion, and even scent can help displays jump out from the in-store media clutter. Application of emerging technology can grab hold of individual shoppers and lead them to displays with personalized appeals via mobile devices.
- Making the “online store” a seamless extension of the actual store: Wherever a valued customer is shopping, either on a sofa at home or in a store’s prepared food aisle, use the technology at hand to keep brand imagery and messaging consistent on websites, apps, circulars, and displays.
The United Kingdom’s Tesco chain is a good example of a brand that has leveraged these considerations to make noticeable strides in its bottom line, witnessing a twofold increase of business from its Clubcard members who shop both in-store and online. Its app for club members forms the centerpiece of its multichannel strategy. Using the app,, shoppers can order items and schedule pickups, discover new recipes in an online magazine, and add needed ingredients with a few simple clicks.
After the success of the app, the company began testing a MyStore feature, which will display exactly where items can be found in a particular store. With such a feature, consumers get the best of both worlds – the convenience of online purchasing combined with the ability for tactile interaction. Imagine a store pick-up customer who wants to try a new recipe, but wants to touch and feel the unfamiliar ingredients before purchasing. When he arrives to pick up his order, he can use the app to quickly pick out the new ingredients and add them to his order. A cross-channel transaction is born.
“Retailers have to look at the different ways people use digital and give them what they need to make decisions,” O’Connor says. “Merchandising in-store may have to include digital activators. It may have to get more multi-brand or multi-product to provide relevant solutions.”
Digital shopping and alternative delivery methods have quickly become fixtures on the retail landscape – and this situation is not likely to change until someone figures out how to reconstruct food products with 3-D printers.
What will change among the retailers and successful vendorsin this environment is their understanding that the store remains a critical staple in an increasingly digital landscape. Stores will serve as experiential destinations in a multi-channel system where each channel feeds off the other and emboldens the shopping experience.
For information on how WestRock is developing innovative in-store solutions to turn shoppers into stoppers and browsers into buyers, call your WestRock representative.