Retail recalibration key to success in hybrid customer era

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At its 2022 European Exchange customer conference this week, Manhattan Associates Inc. announced the findings of its latest international research, highlighting the need for retailers to keep up with the pace of evolving consumer expectations. It also revealed a retail landscape where the lines between physical and digital commerce are becoming increasingly opaque and complicated.

The global retail industry has grown accustomed to disruption. Over the past decade, it has witnessed seismic structural shifts as the sector transformed for the digital era and the pandemic upended shopping habits further, thrusting billions of consumers into a more digital world.

Recalibrating omnichannel 

We are witnessing a period of evolution and recalibration, as it becomes increasingly difficult to distinguish between physical and digital retail. “Shopping habits have changed forever,” comments Henri Seroux, SVP EMEA at Manhattan Associates. “There can be no return to the status quo, with 83% of retailers now claiming they operate a level of interconnection between their online and in-store functions.”

“As the retail industry recalibrates for this next normal, the ability to navigate disruption, while enhancing the physical and digital customer experience will become increasingly important; as will the technologies that allow retailers to fulfil in-store and online orders in an agile, sustainable and profitable fashion.”

A single view of inventory

When it comes to fulfilment, the ‘one size fits all’ approach no longer works, and retailers are reacting to this. Natalie Berg, retail analyst, author and founder of NBK Retail adds: “While the vast majority of surveyed retailers stated that they have a level of interconnection between their online and in-store functions (83%), only around half are offering buy in-store and return online (50%) or buy online and return in- store (46%). Furthermore, only 6% of retailers believed that they had an accurate overview of their inventory across their entire business (in-store and online) 100% of the time. 

“Shoppers today expect to shop on their own terms with more than a third (34%) considering click & collect to be the most important delivery method, followed by contactless/curbside pickup at 19%. This finding highlights the importance of offering consumers choice when it comes to fulfilment options and the need for a retailer to possess a single view of inventory, as keeping that all important customer promise just got a whole lot more complicated.” 

Modern stores mirror the modern consumer 

Almost a quarter of consumers (24%) now expect shop assistants to be able to check availability in a nearby store if a product is out of stock, or order that product for home delivery or collection, highlighting the blending of the physical and digital retail spaces.

Seroux continues: “40% of consumers still favour traditional sales checkout in-store, whereas 19% would like to use more digital methods such as self-checkout on the shop floor with a shop assistant via a mobile device (8%). Interestingly, almost two-thirds (63%) of retailers agreed that checking stock availability was the most important customer-facing duty performed by their shop assistants in 2022. Over the last decade bricks & mortar spaces were seen as liabilities in a digital era. However, the perception of the physical store has been fundamentally changed by the impact of the pandemic.” 

Seroux adds that today many retailers are evaluating the roles of their stores, recognising their added value as strategic hubs for online sales, not least as a fulfilment hub for click & collect, returns, endless aisles, same-day delivery and more. “While digitalisation and frictionless shopping are certainly two of the big winners from the pandemic, the research shows that we should not be too quick to discount the importance of human interaction or the role of the physical store in the era of digital commerce,” he says. 

Berg believes the pandemic has been highly instrumental in up-ending shopping habits. “It has propelled us into a much more digital future, and it has accelerated retailers’ digital transformation strategies,” she says. “That's really the basis of the report. We know that we have been thrust into this digital more hybrid world but where are we going next, which habits are sticking and what are the priorities for retailers? I think the findings of the report really affirmed a lot of what I've been seeing in the industry and based on my conversations with retailers it's been great to have some data to back that up.”

Re-purposing the physical space 

Berg adds that there is the need for retailers to continue to re-purpose the physical space. “We know that the physical store – the bricks and mortar store – is on a journey, but there's a need to continue to digitise touch points and with technology bring it into the 21st-century,” she says. “There’s also the need to invest in solutions that help to bridge the gap between physical and digital because there's been this blurring over the past decade and this has really accelerated over the past couple of years. So, I think we’re going to see an acceleration in the convergence of physical and digital through investing in things such as click and collect.”

Berg also maintains that there is the need for a single view of inventory, not just more transparency internally but also in terms of letting end customers see that data. “As customers today we want to shop on our terms; we want access to all kinds of information, so opening up data to customers is important,” she says.

Equipping staff with the right digital tools and the right training is also important, especially the digital tools to help them to enhance the customer experience, adds Berg. “That's very key and as we look to the next decade I think the role of apps will evolve dramatically. Retailers have many and varied tasks, whether that's dealing with click and collect orders, dealing with queues or serving customers and offering more personalised experiences. There's a lot of moving parts, so I think that's going to be a key focus.” 

Another key point, according to Berg, is the need for a greener supply chain. This was a theme picked up by Ann Sung Ruckstuhl, Senior Vice President and Chief Marketing Officer at Manhattan Associates. “ESG (Environmental, Social and Governance) is my own personal passion. We want to leave the planet better off for our kids and while we’re here do something good. Consumers – that's all of us we – are in charge and we’re demanding more visibility further and further back into the supply chain. For example, if I buy a fish I want to know where that fish came from, who fished it and whether there was a violation of any policies so that I know I'm buying the right fish and not encouraging the wrong fishing practice. I'm using that as an example of every piece of merchandise that you and I and our children buy. We want to see visibility in sustainability practice.” 

She added that, as a supply chain technology provider, Manhattan Associates is dedicated to reducing companies’ carbon footprint through helping to optimise warehouse and truck efficiencies while also making it easier for companies to allow consumers to change orders within a short timeframe rather than having to return a package and increasing the carbon footprint of the transaction. 

Additional research findings

  • 51% of consumers reported environmental/sustainability efforts were important or top considerations when choosing where and with whom to shop
  • 26% of retailers believe creating a more environmentally aware and sustainable supply chain is one of their top three priorities for 2023
  • 74% of surveyed retailers provide shop assistants with handheld devices that show a consolidated view of inventory across the network
  • If a return is made in-store 99% of retailers make the product available for resale with 38% making it available online, 25% putting it on the shop floor and 27% doing both
  • The most common reasons for starting the shopping experience online were to find the best offers (46%), to find out more about the product before they purchase (44%), to make sure the product is in stock (42%) and to read reviews (41%)
  • 68% of retailers reported that they were now operating micro-fulfilment strategies in efforts to service the numerous channels used by today’s hybrid consumers
  • 65% would like to have a choice of couriers and delivery dates, and 18% would like a choice of couriers with different cost options

If you have been interested by any of the research findings or emerging trends and would like to find out more, you can download the full report ‘Recalibrating for the Next Normal’ here.

*Research methodology and sample size 

3,500 adult (18+ year’s old) consumers were surveyed about their sentiment and attitudes towards the role of the physical store, innovative fulfilment options, inventory visibility, convenience, consistency across channels and the shift in commerce. 

700 management or senior-level retailer respondents, representing Tier 1 retail organisations (generating more than $100m in annual revenue) and operating stores and online, in Grocery, Consumer Electronics, DIY and Home Improvement, Beauty, Sporting Goods, Fashion and Pets sectors were surveyed about their technology-based investment plans to support ecommerce, reduce customer friction and increase fulfilment options. 

Consumer and retailer respondents were based in the following countries: France, Germany, Italy, The Netherlands, UK and USA.

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