Rethinking retail vs Online E-Commerce as Recession Deepens

Rumours of sluggish Christmas sales were confirmed when the British Retail Consortium reported that 2019 was the worst year in 25 years in the UK offline and online. Expect a similar story from other countries which points to the problem being an impending global recession as much as local uncertainty caused by Brexit. What you do about it will depend on whether you are a brand or a retailer. Rethinking your retail strategy will help to adapt to the changing environment.

Problems for big retailers like Boots and Debenhams run deep. They are closing branches and shedding staff; the Managing Director of John Lewis quit after a poor Christmas and the company is now conducting a major business review. Mistakes may vary but all have faltered in their ability to adapt to a fast-changing retail landscape.

There is still an expectation in the high street that online sales will sustain the viability of the core business while they figure out what offline formats works. That clearly hasn't happened for many of them but the good news is that some strategies are starting to show results and point to solutions that may work.

Getting Personal with Retailers

Downsizing physical infrastructure and closing big stores is a response that only works if retailers know what to replace them with. Otherwise it's an exercise in consolidation rather than a change and unlikely to be enough. A more proactive path taken by Nike is opening small neighbourhood stores but it's not the size matters it's the way the company is bridging online/offline worlds with more personalised services that is ground-breaking.

Nike has become a data-driven company and uses a number of apps to grow online sales but also to reinvigorate the physical stores and better cater for footfall. The apps use geolocation tagging to know when people enter an outlet instantly unlocking a more personalised experience: customers can request fitting rooms and shoe sizes avail of special offers targeted at them and skip checkout queues by paying through their phones.

Subscribers to the apps enjoy omnichannel integration enabling interchangeable shopping across online and offline channels. Both are aligned to promotional campaigns that draw on data captured from mobile apps websites and social media channels to make offers personal and timely.

Nike is a brand with its own retail footprint which makes it easier to build out a digital ecosystem. Brands with no outlets are dependent on retail partnerships and have learnt the hard way that they will also need a data-driven strategy that brings them closer to end customers.

Mitigating Retail vs Online Risk

The bankruptcy of Toys 'R' Us highlights some of the risks that brands face. A terrible Christmas in 2017 put the toy chain on the path to bankruptcy. Worse still liquidation had already taken out 26 UK stores at the start of December leaving major brands like Hasbro and Mattel horribly exposed. Huge product inventories were trapped in closed stores during their busiest time of the year and there was no plan B.

It's a stark reminder of the risks of being overly dependent on a major retail group. If a primary distribution network goes down an entire business could fall off the cliff with it. It's another good reason why brands need to get closer to customers and curate relationship directly. The trick is to turn data into market intelligence and get a much better understanding of how products are consumed.

We now see toy manufacturers thinking outside the box running their own supply chains mitigating the risks with pop-up stores and retail toolkits that enable a wider selection of outlets to take their stock. Interestingly a slimmed down Toys 'R' Us resurfaced last year echoing the change with smaller interactive shops that combine technology with traditional bricks-and-mortar shopping.

What happened in the toy business reflects a trend across all retail. Rather than an overreliance on large chains who stock high volumes brands are pursuing a direct to consumer models with a much broader focus on omnichannel. They are developing tools and online infrastructure to advance eCommerce strategies.

At the same time a good deal of internal re-organization is taking place. Like ocean liners big brands are notoriously slow at changing course. What we now see is an appetite to join the dots across different departments making them better able to spot warning signals to identify the iceberg in time to avoid it.

It all comes down to data and an organisation's ability to access and share it. And that's where ChannelSight comes in. Wherever you are on the battle to beat retail disruption we like to think we are well positioned to help. There is never a situation where a conversation with ChannelSight won't improve outcomes.

Want to learn more about ChannelSight?

ChannelSight has worked with a number of brands to drive digital success. Read our recent ecommerce strategy case study on tado, a smart home company that embarked on a journey to transform their online strategy with ChannelSight's. ChannelSight's eCommerce Solution can help you achieve your goals. Book a demo today with our team to see how our 'Where to Buy' solution could work for you. Contact us today to learn about how our eCommerce solutions can help you and your brand today. In other words what are you waiting for?

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