PAC: Stores to play key role in omni-channel strategy

13 October 2015

Retailers see the importance of onmi-channel offerings to meet customers’ demand, and are further investing in the improvement of customer experiences’ through a range of digital channels. A recent survey by Pierre Audoin Consultants finds that contrary to dire predictions, physical branches are expected to remain an important aspect of the omni-channel journey over the coming five years.

Europe’s retail industry is rapidly being transformed as technologies available to consumers develop and become second nature. As a result, customers increasingly expect a variety of channels, both physical and digital, through which to make product purchases, while retailers are seeking for ways to influence the shopping experience through carefully constructed omni-channel shopping journeys.

In a recent survey, Pierre Audoin Consultants (PAC), supported by HP, Fujitsu, SAP and GK Software, sought to discover how digital changes have transformed the retail market across Europe. The survey involved 200 respondents in Western Europe coming from different segments, including fashion (19%), electronics (18%) and furniture (15%). Survey respondents were all larger than 500 employees, with the majority situated in Germany (20%), France (20%) and the UK (20%).

The survey finds that, across Europe, of the five channels considered – physical branches, online/web shops, mobile, catalogue and social media – the majority (54%) of stores offer three or more channels. 15% of those surveyed use all five methods to connect with their customers. The vast majority of respondents have a physical location (87%), and/or an online/web shop (82%). Social media (34%) and catalogue (38%) are the least engaged channels.


Gathering importance
The report highlights that the retail industry is expecting a continued increase in the importance of almost every channel over the coming five years. 69% of respondents expect online/web shops to become more important and merely 4% say that they will become less important. 50% expect mobile to become more important, while 12% say that the channel will lose importance. Interestingly, far from disappearing, 73% respondents see the physical store becoming ever more important in the near term.

According to 21% of respondents, the biggest loss of importance will be in the catalogue segment, with only 13% saying this section will see an increase. Social media is also not expected to grow greatly in importance over the coming five years. 27% say it will grow in importance, whereas 15% say it will decrease.


Respondents from different regions make different projections about the future development of shopping channels. In the UK for instance, only 23% of respondents believe that physical stores will remain the number one shopping channel and 70% see NPS* as a key to shopping channel success. In France, 95% say customer satisfaction remains the main driver for its rollout and 50% of retailers are investing in IT infrastructure to support their omni-channel offerings.

In Germany, 85% of respondents see physical branches become more important, while in the Benelux region this rises to 90%; in the UK 62% think so. Italian respondents are not yet jumping on the possibility in mobile channel - only 25% suggest it is important.

Omni-channel challenges
Although the industry expects there to be continued demand for and development in omni-channel offerings, a number of factors will remain challenging.  The biggest issue will be the development of a long-term channel integration business strategy, seen as a major challenge by half of respondents. Making changes to organisational structure will also be a major challenge for some, while a clear challenge for others. Understanding their customers’ activity across a range of channels comes in at the third most pressing issue.

Of least concern are the introduction of uniform cashless payment systems, the ability to support mobile payments and management of external and internal data - highlighting that predominantly business challenges, rather than technical challenges, are making omni-channel rollouts more difficult.

Nick Mayes, Principal Analyst at PAC, comments: “The findings of the study show that European retailers are at very different stages of their journey towards omni-channel. But it is very encouraging to find that so many see it as a business as much as an IT challenge, and that strategy is being led in many cases from the boardroom.”

* The Net Promoter Score (NPS) rates a business according to the customers’ answer to the following question: “How likely is it that you would recommend our company to a friend or colleague.”


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