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

13 October 2015 Consultancy.uk

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%).

Omni-channel
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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Lack of high street openings sees UK retail in precarious state

11 March 2019 Consultancy.uk

Changes in consumer behaviour, particularly in favour of online shopping, are starting to take their toll on shop-fronts in the UK, while stagnant wages are hitting peoples’ willingness to go out for food and drink. As a result, the rate of closures is more than four times that for the same period in 2017, although largely reflecting of a lack of new openings.

The retail market has fallen under a cloud of uncertainty in the UK; consumer confidence has dipped, while wages have continued to malinger in negative territory. Retailers are also under pressure from disruptive technology, as consumer sentiment shifts to more online shopping and at-home leisure. While retailers have been able to weather the storm for the past years, transformations, low consumer spending and technology have begun to take their toll.

New analysis from PwC explores the current market conditions in the UK for retail shops, focused on net openings and closings. The market changes in the UK have seen the net closures to date hit 1,123 in H1 2018 across the UK’s top 500 high-streets. The rate of closures was considerably above openings for the first half of 2018, at 1,569 openings and 2,692 closures. Compared to H1 2017, more than four times as many shops closed than opened.

Openings and closures for retail industry

The study considered the most prominent areas to see a reduction in openings and net closures across the retail landscape. Overall, fashion stores were the hardest hit in absolute terms, with a total of 104 closures for H1 2018, followed by public houses and inns, which saw 99 closures in the same period. Electrical goods stores saw a net -44 decline, with a total of 8 openings for the period. Meanwhile charity shops were in a state of relative flux, with 80 openings to 117 closures. The firm notes that service sector shops, including estate agent, banks, recruitment agencies and travel agents, among others, too have begun the process of moving online.

Not all areas of retail saw closures, with coffee and ice cream shops seeing a small net increase in openings over all. Book stores – predictions of their total obliteration appear to have waned – saw a net 18 openings, while supermarkets drew the highest overall growth relative to closures, at 18 opened and 6 closed.

Regional figures for the UK

Not all areas have seen the same level of closures, with the Greater London area and the South East the hardest hit by the current wave of closures, at -268 and -197 net change, respectively, compared to -23 and -25 closures for the same period in 2017. The middle of England too saw considerable closures, with the West Midlands clocking a net -89, and Yorkshire and the Humber down -117 stores overall.

Commenting on the figures, Lisa Hooker, consumer markets leader at PwC, said, “Openings simply aren’t replacing closures at a fast-enough rate. Specifically, the openings across ‘experiential’ chains, such as ice cream parlours, beauty salons and vape shops, haven’t been enough to offset closures in the more traditional categories. Looking ahead, the turmoil facing the sector is unlikely to abate. Store closures already announced in the second half of the year due to administrations and CVAs already will further intensify the situation.”

Related: Artificial Intelligence offers $340 billion opportunity to retail sector.