Retail in the new multi-channel era

Shopping trolley on a computer keyboard

Christmas is nearly upon us, and so too is the annual peak season for retailers. This year will be especially critical for retailers who will be hoping for an extra-large bump in sales after a challenging year for the sector.

But will we see the traditional Christmas trading period break with tradition? Will shoppers head online or even on mobile to do their Christmas shopping this year? A debate has been brewing for a while now about whether the influx of online shopping websites will threaten or even replace the more traditional ‘bricks and mortar’ retailers.

Australia’s bricks and mortar retailers are currently experiencing some challenging conditions; rent costs in capital cities such as Sydney are among the highest in the world, the Australian dollar is fluctuating dramatically and the GST exemption on overseas purchases under $1,000 has caused some consumers to look to overseas websites for a better deal. But while price is a significant factor in the way consumers chose to purchase their desired goods, research into changes in consumer behaviour has found there is considerably more to it than that.

The way people shop has changed. Technology is allowing people to compare products, seek out independent product reviews, share their customer service experiences and make more informed purchasing decisions. Like most innovations, consumers are the driving force behind the recent change in dynamics.

The customer may not be ‘always right’, but they are ‘always on’ and the relationship between customers and retailers is now very different to the pre-digital era. So retailers need to spend time to get to know their customers again rather than applying old thinking about what the customer wants. Rather than simply shopping, customers now want to ‘connect’ with brands and retailers through avenues like social media and loyalty programs, so this is a golden opportunity for retailers to reinvent themselves to meet this need.

One size does not fit all

Retailers know that one size rarely fits all – it’s the same with customer preferences for their pre-sales, purchase and post-sales interactions. Personal attitudes as well as factors such as the consumer’s age, income, lifestyle and whether they are the key decision-maker often play an important role in the way people chose to shop.

Customers are not all the same and have different needs, values and preferences. Some may prefer to impulse buy in-store or be guided by a sales assistant’s advice; while others prefer to research online and listen to third-party recommendations; some may prefer to shop online or out of a catalogue. A retailer cannot meet all these different needs with a single channel approach. Adopting a “multi-channel” approach – using many channels to reach customers such as email, web, mobile, social, bricks and mortar and more – will help retailers attract and engage today’s consumers. The golden rule is all about creating a dynamic and rich tapestry of integrated, multi-channel communication that is complementary, not confusing or disjointed.

Recent research by the Australian Centre for Retail Studies (ACRS) entitled Multichannel and Social Media: The State of Play in 2011, sheds light on how Australian consumers value different channels in terms of their pre-purchase, purchase and after-sales behaviour. One of the more fascinating findings was that around six out of 10 (58 percent) Australians are now multi-channel shoppers, an increase from 49 percent in 2010. The study also found that multi-channel shoppers will also go on to spend between three and six times more than store-only shoppers.

Email, social media and mobile are amongst the most popular ways retailers communicate with consumers. 55 percent of Australians have registered to receive emails from retailers and 14 percent opt in to receive communications via SMS. Furthermore, 14 percent of consumers engage with retailers through an iPhone application and an impressive 22 per cent engage with retailers through social media.

The ACRS research also found that the multichannel shopping behaviour is typically adopted by younger shoppers, largely due to their rapid adoption of new technologies. So this trend is set to continue to grow in coming years.

Act local, be social

As the biggest users of social media in the world, Australians have demonstrated that they want to engage and communicate not only with their friends but also brands through social networks, providing an enormous opportunity for Australian retailers and brands that have a social media presence to engage on a one-to-one basis.

Facebook and social media let people ‘like’ or ‘follow’ their favourite brands online, and this personal endorsement is highly valued by brands as such recommendations are then shared with online friends. 64 percent of Facebook users have become ‘fans’ of at least one company, and 51 percent of Facebook fans are more likely to buy from the brands they are fans of. The results on Twitter are even more effective, with 79 percent of Twitter followers more likely to recommend the brands they follow. Given the popularity of social media by consumers, it is almost a natural progression that brands would take advantage of its success and use it to its advantage.

In a similar way, brands that are utilising mobile channels and providing consumers with an additional channel of engagement are more effectively communicating with their customers than those have haven’t yet embraced it. And mobile has the additional benefit of giving consumers the capability to carry out transactions.

According to a recent study by Paypal, 1,000 transactions are now being processed from mobile phones every hour in Australia. The growth of mCommerce (transactions that are performed using mobile devices) has increased dramatically in the past 12 months.

Mobile has also contributed to increased competition between retailers – 70 percent of shoppers use their mobile in-store which is advantageous for consumers who want to compare prices of nearby retailers to help them decide to purchase then and there, or pursue a better deal. Rather than a threat, retailers should look at mobile as an enormous opportunity to market directly to these consumers in store at the point of sale through location-based technologies, QR codes and loyalty programs.

While the popularity of social media and mobile channels provides a compelling reason for retailers to embrace these channels, email remains the most popular digital channel with 98 percent of online users using email, and over 500 million emails sent from hundreds of leading Australian brands with an opening rate averaging above 30 percent.

Giving consumers choice

Knowing your customers and staying relevant with a balance of old and new channels will help underwrite your business’ growth potential. The big challenge for marketers and retailers is to provide these various touchpoints or channels in a consistent, integrated and interconnected network. Also, retailers need to be mindful not to concentrate too much on one channel at the expense of others.

It is reassuring to see successful retailers embrace the new digital dynamic while continuing to invest in existing channels and delivering greater levels of personalised customer service and engagement to meet all tastes and shopping needs. By providing choice, multi-channel retailers are being rewarded with more long-term profitable customers, as consumers engaged across multiple channels shop more frequently, spend more and display greater loyalty.

Traditional retailers that adopt a multichannel strategy will not just survive in the digital world, but can create a meaningful bridge between traditional and online, reaching new and existing customers.

–Nick Spooner is CEO of Salmat Digital