Bricks-and-mortar nightmare or pure-play dream? Whatever your take on Christmas 2020, there’s no denying it’s unlike any other. But the mass online migration that’s dominating the news is only part of the story. This blog looks at how retailers are rapidly reinventing themselves to offer consumers sparkling omnichannel experiences – all year round.
Shoppers are going digital in droves. As early as September, Kantar noted online accounted for 49% of spending in fashion, beauty, entertainment and toys – four big Christmas staples. The “VoucherCodes.co.uk Shopping for Christmas 2020” report, carried out by the Centre for Retail Research, predicts that 48% of all retail sales will be online as part of a retail colocation strategy, a startling £12.9 billion-worth more than in 2019.
Yet this doesn’t necessarily signal the demise of bricks and mortar. In a recent “Global retail trends 2020” report, while acknowledging it’s no longer possible to drive growth through physical stores, KPMG concludes many of them “will return to growth” after the pandemic. Other industry watchers agree.
Physical stores that survive are unlikely to stay the same. Even as they juggle Christmas demand and COVID-19 regulations, my clients in the retail sector are reimagining their store presences. They’re thinking, for instance, about stores that function like warehouses where customers browse before buying online (lighting up dark stores, you could say). Conversely, businesses might decide to recreate their physical spaces online, as a major department store is doing this year with its 3D virtual Christmas shop.
Blurring the lines between virtual and physical
Gone, then, are the boundaries between online and physical retailing. Digital-first companies are renting pop-up stores to meet their customers face-to-face. And video is digitising activities that once took place exclusively in the real world, like test driving a car or viewing a property. Video consultations are part of this next normal too. A well-known mobile phone retailer is just one example, with in-store staff giving advice and product demos to shoppers at home.
What’s more, physical stores and in-person experiences are now embedded in a broader omnichannel environment appearing to suit shoppers of all ages. We’re increasingly comfortable going back and forth between multiple virtual and physical touchpoints. Purchasing on our smartphones over mobile networks or at home on the Internet through broadband providers not only affords safety and convenience, but also presents online retailers with advertising opportunities. Moreover, our position at the heart of connectivity and colocation makes Telehouse potentially the key to facilitating those hybrid buying encounters through the user of hybrid cloud connectivity.
Unlike earlier retail models, this omnichannel approach isn’t set in stone. On the contrary, it’s evolving all the time. For instance, Shopify includes social selling through video and shoppable video among six omnichannel trends to watch in 2021. Other innovations will surely emerge. In such a fluid environment, the dynamics of individual customer journeys are virtually impossible to predict. At the same time, joining up the growing number of touchpoints for an end-to-end view of each customer journey has never been so vital. I’ll come back to this shortly.
Expectations soar as channels merge
Inevitably, digital experiences raise customers’ expectations of physical stores. When next-day or same-day delivery is available online, we’re more likely to be irritated when a product is out of stock at a local branch. Getting every experience right across all the touchpoints all the time is a tremendous ask – but the sector is rising to the challenge.
In fact, retailers have been innovating for some time in response to changing consumer behaviour. What the pandemic has done is concentrate those efforts, putting digital transformations on fast-forward. And making it imperative to cover all the bases. Starting now, retailers must become (if they weren’t already) experts in non-core subjects like distribution logistics, data analytics, process automation, artificial intelligence, machine learning and augmented reality – to name but a few.
The A word (agility) is your ace card
The logistics of online fulfilment are an especially hot topic this Christmas. Retailers are showing remarkable flexibility in managing the surge in demand created by COVID-19 restrictions. For instance, the major department store referred to earlier has doubled its click-and-collect locations through a partnership launched in May with another chain. This type of collaboration is likely to become commonplace, as businesses strive to put in place all the pieces of the logistics puzzle.
And that level of flexibility should be sustained. Agility, the end goal of any digital transformation, now has to infiltrate every aspect of a business. Retailers need to become truly agile in their thinking and how they serve their customers, as well as how they operate. That’s the only way to keep step with customers’ evolving behaviour and properly chart all their journeys (I said I’d come back to this).
Giving data pride of place
Data’s the key. Integrated and centrally located, because silos have no place in an agile business. Demolish silos, and you illuminate every aspect of your operation. You can observe in real time which products and channels (including physical stores) are performing well and make decisions accordingly. You can track every nuance of customer behaviour. And you hit paydirt by being able to improve or adjust services swiftly to respond to developing trends or unexpected events.
From now on, how retailers collect, analyse and use customer data to market, personalise, sell and deliver their products will be critical to success. My clients in the sector are re-evaluating their IT infrastructure and data centre provision against the demands of capturing, processing and accessing masses of data and storing it securely. Hosting, hybrid cloud solutions and colocation services are central to these discussions.
Bring it home safely with Telehouse
Retailers know they need to embrace new, automated and intelligent platforms that will support agile operations long after the pandemic is over. They must also ensure they have a welcoming environment for their IT infrastructures – not just secure, but also immensely scalable with high-speed connections available 24/7.
Telehouse is the natural home for such platforms. We offer unparalleled security and always-on high-performance links to key commercial centres around the world. Our data centres’ unique connectivity to carriers and Internet exchanges – as well as mobile and Internet service providers – gives retailers the ability to reach customers over all their preferred digital channels.
With Christmas around the corner, other concerns are on hold until the New Year. But lessons learned now will persist far into 2021 and influence Christmas futures throughout the decade, as retail undergoes what’s possibly its greatest ever (and certainly fastest) metamorphosis. And Telehouse will be there to support businesses of every size, every step of the way.
Please get in touch if you’d like to talk about your challenges and aspirations:
Mobile: +44 (0)7712 106808
Email: [email protected]
Wishing you good health, happiness and prosperity this Christmas.
Nick Layzell
Senior Sales Manager
Telehouse UK