For retailers, e-commerce alone won't make the sale

Walgreen's 3D
This image, taken from a YouTube video, shows a pilot project at Walgreens to provide 3D views of goods sought by a shopper in a store. The technology comes from Google’s Project Tango and Aisle411, a shopping location application maker. Credit: YouTube

Giants like Disney and Under Armour say success means merging online and in-store

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NEW YORK -- Two or three years ago, major companies at the National Retail Federation were focused on building out their e-commerce sites.

Their money went into e-commerce. Their meetings were all about e-commerce. Online was king.

This week, though, retailers like Disney, Under Armour and Nike all said they no longer focus on online sales.

Today, retailers need to focus on creating a customer experience that crosses channel borders, linking mobile with brick-and-mortar stores and websites.

"It's not, do you want brick-and-mortar or digital? The answer is both," said Kevin Plank, founder and chairman of Under Armour. "The brands that win truly understand how to live online and understand how to live offline. We need to meet our customers, no matter where they are."

Merging the online world with the physical world is one of the major themes at this week's retail conference, which has drawn more than 34,000 attendees from around the world.

Retailers can no longer simply offer a website that catalogues their products and enables customers to put them in a digital cart and make their purchase. Customers expect more -- and will go to the retailers that deliver.

An increasing number of people will go online to read reviews, compare prices and get as much information as possible before buying. And even once they walk through a store's doors, they'll use smartphones or tablets to search for features and deals.

"Shopping is now digitally influenced at every point along the shopping journey," Rod Sides, vice chairman of U.S. Retail at Deloitte LLP, said at the NRF conference Tuesday. "Over the last year, an increasing number of transactions are online, but that's not the whole story. Today, consumers are using their mobile device all the way through as a shopping aid."

It's the rapidly evolving technology field that's driving this change in retail. That's a challenge for retailers that have traditionally not been cutting edge of tech.

"With the rise of things like artificial intelligence and advance analytics and 3D printing, the pace of change is happening at lightning speed," said Sides. "How do we survive and deal with that kind of challenge in the market place? We've been somewhat reluctant to do that."

Under Armour's Plank said he is looking over his shoulder for the tech-savvy start-ups that are born merging online and physical efforts and expanding users' shopping experience. "We're worried about the competition that doesn't exist yet, that will think digitally," he said. "We're worried about the company that will create apparel that will change color or type or body temperature with the flick of the wrist."

Charlie Mayfield, chairman of John Lewis Partnerships, a UK company that runs John Lewis department stores and Waitrose supermarkets, said his company had to re-engineer itself to prepare for this retail focus.

The business can take an online order at 8 p.m. and a customer can pick it at one of the physical stores by 2 p.m. the next day.

"It's extremely popular and has driven an enormous amount of growth," said Mayfield. "The notion of two separate channels is very unhelpful."

He noted that 80% of the best and most valuable customers shop both online and in-store, and 75% of all John Lewis purchases involve customers going in-store and online.

For Disney Retail, which does $45 billion in annual global sales, company execs wanted to do more than think about merging their digital and physical sales efforts. Paul Gainer, executive vice president of Disney Retail, told an NRF audience that he consolidated the e-commerce and physical stores into one division.

"Half of traffic and one-quarter of business comes through mobile platforms," he noted. "But it's bigger than that. Our guests expect a seamless experience. Two-thirds of those who've made a brick-and-mortar purchases have been online."

Giving those consumers a shopping experience that crosses channels is necessary to Disney Retails' success.

"This is a minimum barrier of entry. It's the least people expect," said Gainer. "The future consumer is going to expect a quality, seamless experience and we are focused on that."

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