Breathtakingly Naive: How Aussie Retailers Still Struggle With Digital

In this guest post, Which-50.com’s Tess Bennett says, despite all the pouting, most Aussie retailers still struggle with the digital aspects of their businesses…

Industry-wide retailers have a “breath taking naiveté” when it comes to the role of digital in omnichannel, argues a new report from Retail Systems Research (RSR).

Omnichannel retail is the sensible idea that customers should be able to interact with a retailer seamlessly across different channels — essentially because shoppers don’t see channels, just one brand and one experience.

In practical terms it’s often to do systems that allow the customer to purchase, take delivery, or return a product through the channels of their choice or, allow inventory allocated for one channel to be used for another channel’s fulfillment.

Omnichannel is also a term the industry is tired of hearing. Despite this, the report argues: “Omnichannel is not ‘done’. It’s not dead, over-subscribed or over-valued. It is an essential strategy for how retailers will continue to compete and remain relevant to ever-more digitally savvy shoppers.”

The study called, Retailers’ Omni-channel Blind Spot: Digital, is based on a survey of 134 qualified retail respondents conducted between May and June 2016. It found retailers are underestimating the impact of digital on stores.

“When it comes to understanding the role that digital has in shaping business challenges, retailers, whether large or small, high-performing or low, reveal a breath-taking level of naiveté about the role of digital in an omnichannel strategy. There are exceptions. But on the whole, despite making progress in understanding multichannel shoppers, the very progenitor of omnichannel – the rise of digital – seems to be the place where retailers are the blindest,” the report says.

The role of digital in retail

The survey asked retailers to define what is the primary role of digital channels. Top of the table was to transact ie sell products through an eCommerce store. The second highest results was also (indirectly) about sales: digital is to drive customers instore. In 2015, only 11 per cent of retailers reported that the primary function of digital was to drive traffic to stores. This year, 20 per cent of respondents agreed this is the primary role.

On the flip side, digital as a shopping aid in stores dropped from 14 per cent in 2015, to four per cent this year.

The percentage of retailers citing digital’s primary role as creating brand awareness has steadily fallen over the last three years, from 20 per cent in 2014 to 17 per cent in 2016. On the other hand, the objective of educating consumers about lifestyle elements of the brand has steadily grown, from six per cent in 2014 to 11 per cent today.

RSR argues, “these shifting perspectives year-over-year reflect no small degree of thrashing about as retailers try to understand how to accommodate digital as part of the store experience for both consumers and employees.”

“Over the last two years of RSR’s store benchmarks we find retailers are struggling to define the right role of store employees, the right role for digital, and even the basics of a store strategy,” the report states.

“Part of the reason retailers may be falling back on looking to digital to merely sell and forget the rest is because they hold very dim views on how much digital has an influence on stores. In 2015, Forrester estimated that 52 per cent of retail sales were influenced by digital activities of consumers, and that this influence will reach 59 per cent by 2018.”

Omnichannel advocates will often urge retailers to think in terms of operating a “digital flagship store” which will attract traffic volume far beyond the number of shoppers which will enter the best performing stores in terms of foot traffic and sales.

RSR findings show retailers have acknowledged omnichannel is an important priority however, “they don’t appear to honestly believe that digital has much impact on their store business, and while they talk a great talk about wanting to be something more to consumers than just a place that sells products, when it comes to the tactical opportunities they want to pursue, aspirations fall to the tactics of physically dragging inventory across channels.”

Retailers need a transformation strategy in place which is focused on customer needs and differentiated services.