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The expanding digital divide between consumers and retailers

Consumers want it all … but just how much can retailers deliver?

January 28, 2016 by Chris Petersen — Owner, IMS

I'm fortunate to have an opportunity to travel to India next week to speak at the Omnichannel India Conclave. It is always a great learning opportunity to visit another country to discover retail trends firsthand. And, India is a fascinating market place, with one of the highest percentage of population under the age of 30. In preparing for this event, I encountered a new perspective that is emerging worldwide. The new retail reality is a growing digital divide between what today's smartphone wielding consumers expect, and what most retailers can deliver. One of the biggest challenges retailers face in 2016 is where to invest when they simply can't do it all. A related question will be how to measure ROI when purchases can now occur anytime and everywhere.

Why this is important:Retailing has always been about serving customers. But, today's omnichannel consumers have unlimited options available via their smartphones. Make no mistake, the consumer is driving the bus, not retailers!

Omnichannel was created by a "perfect storm" that empowered us

One of the interesting topics I was requested to speak on is the "history" of omnichannel. When you do the research, there is no agreement on when "it" actually happened. Some have suggested that the roots of omnichannel began in 2003 with Best Buy's focus on "consumer centricity."

Many others have suggested it wasn't until about 2008/10 that the term omnichannel came into prominent use by marketers. Regardless of the exact date, there was a "perfect storm" of simultaneous trends that created the age of the empowered consumer:

• Rapid penetration of smartphones and mobile devices
• Ecommerce ability to "quick ship" in two days or less … often free
• Explosion of social media enabling connections with friends and reviewers
• New retail capabilities like "click and connect" which provided more purchase options
• Increasing capabilities to personalize products and services

Omnichannel is not about retailer channels, but how consumers shop

There still is a major misconception about "omnichannel." Many think it literally means doing retail business across multiple channels. And, from a retailer's perspective, that is a reality. But, omnichannel is NOT about how retailers conduct business via selling channels, or distribution. Omnichannel is all about how consumers have changed their shopping, and purchase behavior.

Omnichannel has come full circle back to "consumer centricity." From the perspective of today's consumer, shopping anytime and everywhere is "normal." We expect to be able to use our smartphones to check on products at the beach, at the game, or right in the store aisle. The bottom line is that we as consumers don't consciously think about which "channel" we are going to shop. For today's consumer, omnichannel has become a seamless shopping experience that incorporates both "digital" and "physical" (stores).

Omnichannel unleashed … surging consumer expectations

What most retailers do not seem to recognize is consumer omnichannel behavior is NOT retailer specific. 80+ percent of shopping journeys start online. And, the consumer will typically visit several websites to gather information: ecommerce only (Amazon), product brand sites (manufacturer) and one or more retailer sites (typically Walmart). If it is a considered purchase involving a "significant" price point, the consumer will then visit one or more stores AND use their smartphone to check facts and prices, while in the mall and stores.

A result of all this omnichannel experience from multiple sources = HIGH Expectations!

Consumers don't just benchmark a retailer, or an ecommerce site, they holistically evaluate the best of the best experiences across all touch points. The outcome is that today's omnichannel consumers have some incredible expectations based upon their experiences:

• Customized, personal landing pages based on previous choice and experience
• Deep consumer reviews and FAQs organized around consumer style questions
• Shopping lists that follow you everywhere, available any time
• Rich content beyond features and specifications
• Product videos and/or demos showing how consumers benefit from the product
• Knowledgeable staff (in store and chat online) who can assist with questions
• Real time inventory … ability who has what where
• Ability to purchase anytime … everywhere … any way
• Ability to pay for purchase multiple ways … credit, cash or digital
• Ability to choose delivery at home, office, pickup in store
• Delivery in two days or less, and within hours in a major city
• Immediate tracking of all orders, and shipping status if appropriate
• Customized, personal service after the sale
• History of all purchases, warranties
• Follow up on subscriptions, warranties and relevant offers

And, the list goes on and on! In short, it's a GREAT time to be a consumer!

Can retailers provide what consumers expect?

The challenge for today's retailers is their historical baggage of "legacy." Retailers are what they were when they were operating prior to 2008 and the birth of omnichannel consumerism. Traditional bricks and mortar stores tend to follow their product centric heritage of selling products from "place" (stores). While the new ecommerce players have a bit of an advantage of more flexible systems designed for mobile consumers, they tend underestimate the power of consumer experience, need for rich content, and the power of personalization.

The major question facing all retailers today is where and how to address rising consumer expectations. There are a host of questions that today's retailers must resolve relative to consumer expectations:

• Can a retailer really reach consumers anytime and everywhere?
• Is it possible to have virtual inventory to enable purchase from store or web?
• Can retailers afford all the returns from consumers disappointed by their experience?
• What is the realistic cost of creating CRM systems that track it all for consumers?
• Is it conceivable to meet the rising expectation for "free shipping"?

Again, the list goes on and on! In short, it's a TOUGH time to be a retailer!!!

Future retail success … Resolving for the great "Digital Divide"

There may have been a point in history when a retailer could come close to being all things to all people, at least in a local market. That is simply not possible today. Woe be it to the retailer's financial bottom line if they try to meet ALL of the rising consumer expectations. The consumer omnichannel experiences across many retailers have created a great divide of what they perceive as possible, versus what a single retailer can realistically deliver:

It is easy for an executive to state: "We must be become more seamless … more omnichannel in order to serve customers." The cold hard reality is that you can count the retailers on one hand that might have the resources to be able to achieve such a mission.

Future retail success will require "picking areas of opportunity," where a retailer can differentiate their services and experiences to customers in ways that create value.

A way to think about future success is the ability for a retailer to "curate" and differentiate their consumer experience touch points, versus curating products for sale. Yes, products are still important. So are prices. But, the "Ps" are just a necessary foundation, not sufficient as differentiators for to appeal to today's omnichannel customers awash in services and opportunities.

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