As all things digital become more integrated into daily life, customers are merging their online and in-person retail experiences and expect the same from their retailers. Although about 90 percent of retail purchases still take place in a physical store, digital now influences 64 cents of every dollar of those in-store purchases. E-commerce is expected to grow from $153 billion in 2017 to over $400 billion in 2020. Shoppers are engaging in an increasing amount of online research before visiting physical, brick and mortar stores. This is precisely where the untapped opportunity lies for retail marketing.
This term gets used as a buzzword in various contexts, but it refers to a real substantive trend that retailers need to understand. Basically, customers expect to be effortlessly in touch with their brands on any device, at any time and in any location. Retailers must have a digital strategy that connects their digital touchpoints and in-store activities to create a seamless purchasing journey. This connected experience allows customers to look up features, pricing, discounts and reviews, visit a store to confirm their research, make a purchase, and arrange for delivery – all with minimal friction.
The Technology Underlying Omnichannel
A multilayered relationship between vendors and customers was once more aspirational than practical but, now machine learning and other technological advances have made it a reality. Store Visit tools are an innovation worth examining, because they introduce a whole new interface between digital and in-person commerce. Many of the world’s top brands have utilized an omnichannel strategy to drive customer engagement and conversion rates.
The Evolution of Google’s Store Visit Conversion Tool
In 2014, Google launched the first version of their AdWords store visits tool, enabling retailers with enough web traffic and store locations to discover how many ad clicks convert to physical store visits. The tool aggregates data anonymously, letting marketers work with quantitative data to determine the ROI of their advertising spend, while preserving customer privacy.
Advances in deep learning led to far greater accuracy in applying this tool, and in spring of 2017, Google announced that they have captured over 4 billion store visits in the past year that are tied to clicks on particular online ads. These visits encompass over 200 million individual store locations globally, and they now include ads on Google’s Display network and YouTube’s TrueView. Google plans to add store sales management to the equation, providing data on how many actual sales result from these shoppers, not just how many people clicked on an ad.
The technology has continued to evolve to the point where it can distinguish individual store visits in dense urban environments and multi-story malls. Users have to opt in to Location History Tracking on their phones in order for their anonymized data to be a part of this program. Bank Of America reports that 44% of millenials are comfortable with their phones tracking their location, suggesting an increasing shift towards integrating the online and in-person shopping experiences.
SnapChat Connects to Store Visits
SnapChat now leverages multiple data partnerships to improve its ability to track and measure ad performance. These third-party partnerships with Marketshare, Nielsen, Analytic Partners and Marketing Management Analytics, among others, are included in ad packages to connect ad campaigns to in-store sales.
Facebook’s Store Visits Program
Facebook’s Store Visits program is marketed to retailers, restaurants, auto dealerships, grocery stores, and telecommunications storefronts demonstrating the value that omnichannel experiences provide across industries. Facebook allows retailers to optimize their advertising with a specific ad units offering proximity-based copy, CTAs, maps, and a store locator, and they are piloting the ability to target customers that are ‘most likely to visit a store.” Advertisers can track the number of store visits, cost per store visit and demographics of the audience reached. The Store Visits program is proving successful for Jack in the Box where VP of Marketing Communications, Richard Cran, has stated, “…we were uniquely able to see the direct impact of our digital ads on driving foot traffic – our most fundamental communications goal.”
A 2017 Mobile loyalty survey conducted by 3C found that 64% of retail companies report that loyalty program membership has increased this year, and most companies attribute that increase to their addition of mobile components. In that same survey, they found that 51%of respondents now offer mobile premiums and coupons, a giant leap from only 12%in 2016. While these mobile coupons can drive in-store traffic, companies should evaluate their offerings and discount programs and test accordingly.
How Digital and In-Store Support Each Other
The boundaries between online and in-person shopping are being eliminated through the store-visit analytics programs outlined above and a variety of other innovation areas:
Stores as Innovation Labs
Lowes makes a good use case for using technology to optimize brick-and-mortar locations as it moves forward with its Innovation Labs. Lowes provides a dazzling array of innovations, as it presents its “visualization imperative” and touts its relationship with Savannah College of Art and Design. They have revamped their processes to include creating comic books that they then bring to life: resulting in using 3D printers to customize products or print parts for discontinued lines, the creation of the holoroom for DIY tutorials, and wearable exoskeletons that add robotic reach and strength for warehouse workers.
Opening Up Every Channel for Sales
While many stores are closing locations and enhancing their digital presences, some digital-first companies such as Warby Parker have expanded into physical locations to provide a seamless experience. Beyond integrated marketing, many retailers have instituted methods such as ship-to-store, buy-online-pickup-in-store (BOPIS), ship-from-store, endless-aisle, digital in-person appointment scheduling, and social commerce, to meet customers in every channel. BOPIS will be especially attractive this holiday season as 69% of 2016 holiday shoppers that visited a physical store to pick up a digital purchase made additional in-store purchases.The key to using the new digital tools is rethinking processes and reimagining the customer and employee experiences.
Simplifying the payment experience and enabling faster purchases is essential to meet customer expectations and drive purchases. Mobile payments and digital wallet offerings from Apple, Samsung, Google, Mastercard, Visa, etc. are becoming more widespread, even if they haven’t yet caught up to the initial hype. Apple’s new partnership with Barclay Visa card allows customers to apply for a Barclay card directly from the Apple website or in-store, and to enjoy certain Apple premiums when they shop with the card. Amazon’s patent on One-Click Payments expired in September, opening up the potential for all companies to implement similar digital checkouts. By integrating digital and POS systems, companies can extend the omnichannel experience and further simplify transactions.
Mergers and Acquisitions Driving Omnichannel
Amazon and Whole Foods
While Amazon’s ownership of Whole Foods has certainly been felt by customers through lower prices on select products and Echos on stale, speculation is still rampant about just how Amazon plans to fully use the network of 456 upscale natural food stores it has purchased. Amazon is combining POS systems, a move that would provide them with a fully unified customer view while increasing the benefits of Prime membership. According to a recently published article in Harvard Business Review, Amazon has essentially bought itself a laboratory, in which it can run live experiments on price points, shopping experience, delivery options, and more. Hermann Simon, author of the HBR article and chairman of the consulting firm Simon-Kucher & Partners, notes that this acquisition “provide[s] Amazon with insights it can cash in on in other retail sectors.”
Walmart has recently purchased multiple digital-born companies including Jet.com, ModCloth and Bonobos in order to provide a seamless shopping experience. The companies are remaining as individual brands as they appeal to different demographics and customers. However, cross pollination of the brands and shared learnings are beginning to emerge, such as the new white label brand Uniquely J. Walmart’s purchase of upscale men’s clothing label Bonobos represents another disruptive move that Pamela Danziger calls “a bigger deal than Amazon’s purchase of Whole Foods,” because of “what it means to the evolution of the retail economy and the competitive leverage it will mean to the world’s already biggest, baddest retailer, Walmart.” Walmart is also striking a deal with Lord & Taylor to sell Lord & Taylor products on Walmart.com – a move that could signal an offering similar to “Sell On Amazon.” Interestingly, Lord & Taylor is also partnering with WeWork in a move to drive foot-traffic to its stores (in addition to selling its headquarters to the shared workspace company).
Adding to the potential impact acquisitions will have on omnichannel, Foursquare has been using its check-in data and foot traffic trails to predict potential acquisition targets for Walmart and Amazon.
Digital Transformation Strategy is Essential
While the potential offered by omnichannel access is huge, it’s also important for retailers to be aware of the potential hazards if innovations aren’t integrated as part of a well-thought-out digital strategy. By the end of 2015, Fortune reported that 61% of stores with both physical and online presences offered a BOPIS option. However, they noted that results from this so-called convenience are mixed as half of those who opted for a BOPIS shopping method experienced problems with their orders. This is not that surprising given that the employee skills, processes, and store planning that go into the traditional store experience are entirely different than that of a warehouse distribution center. In order to properly deliver upon the promise of these new experiences and tools, retailers must create new processes, integrate store inventory systems, and reimagine the concept of a store as part of their omnichannel digital strategy.