How to Adapt to the Rise of E-Commerce
Retailers have noticed that the work they need to accomplish is changing.
More customers are buying online and picking up their purchase in-store. Recalls are rising across different types of products and require an immediate, real-time response. Customers have different expectations and want their experience at the store to be quick, simple, and painless. All of these shifts are occurring as labor budgets are unable to expand.
So why is this shift happening, and what can be done about it?
The Shifting Role of Retailers
E-commerce is already a potent force in the retail ecosystem and is only going to become more powerful.
- In 2016, retail saw $395 billion in ecommerce sales, an almost 16% increase from the previous year.
- There’s an expectation that online retail will grow by between 8 and 12% in 2017, almost three times higher than the projected growth of the industry as a whole.
- This growth is expected to continue over the next few years, with $632 billion expected in e-commerce sales by 2020. That’s a massive jump from where we’re at now, an increase of around 60%.
E-commerce, inevitably, is going to change the way that retail operates. As e-commerce grows as a percentage of all retail sales, the percentage of store operations that interact with online and omni-channel services will also increase. In 2015, 49% of Americans tried click-and-collect for the first time. This means that more work has to be completed, as store associates have to physically collect items, transfer them to the collection point so they’re immediately ready for pickup, and handle the transaction when the customer arrives. This also means that more work has to be done to make sure inventory levels are accurate. If inventory levels aren’t assessed in real-time, out-of-stock items may go unnoticed, making click-and-collect irrelevant.
An increase in e-commerce inevitably means an increase in work done at retail stores. With labor budgets facing the upward pressure of increasing wage rates, how are stores supposed to make room for this extra work?
The Relevance of Brick-and-Mortar
When figuring out an answer to this question, it’s important to remember that physical stores are still very relevant and are an integral part of retail. Retailers cannot just shift more of their services to a strictly online platform because, while online sales are increasing, people are still showing a strong desire to go to retail stores.
- 56% of consumers show a desire to see, touch, and feel products before ordering them online.
- Over 65% of consumers are researching products online before going to stores. This means that, even though these consumers are spending time online, they’re physically travelling to stores to pick up products.
- 73% of retail customers use multiple channels during their shopping journey. These are customers that are using a combination of online and physical channels.
An expansion of e-commerce doesn’t simply mean that physical stores are not as necessary as they once were. The retail store is still a pivotal part of the customer experience, and retailers need to take that into account as they plan for the future.
What Can be Done?
There are two major overhauls that retailers can do to alleviate the pressure of adapting to a rise in e-commerce sales.
- Optimize Omni-Channel Offerings: Retailers need to dig deeper into how to best use their omni-channel offerings. This means making sure that retailers’ digital and physical spaces aren’t operating in silos and are actively operating together to push customers towards the store. In-store customers tend to buy more, and while it’s important to emphasize convenience for the customer, giving them the ability to shop in as many channels as they want, it’s equally if not more important to use all channels to funnel customers to the store.
- Investment in Tech Solutions: Investment in real-time store operations solutions are key to expanding the amount of work that can be accomplished in stores without raising the labor budget. More retailers are deciding to adopt these solutions, and stores that don’t are going to start lagging behind stores that do. For example, the use of workforce management solutions is growing rapidly, with the global market size for those solutions more than doubling by 2025. A workforce management solution can quickly generate schedules, accurately forecast a store’s labor needs, and optimize schedules to ensure that store associates are given roles tailored to their abilities, taking in to account associate work preferences. This saves retailers millions and drastically increases efficiency and customer engagement at the store.
With e-commerce taking up a larger percentage of retail sales every year, it’s important to understand how to augment the retail experience with new technology while still understanding how essential the brick-and-mortar store really is. Understanding how to optimize omni-channel services while investing smartly in store operations solutions can give retailers an edge over online pure-plays.
Retail may be changing, but retailers don’t have to wait for the future to provide stores with the tools to succeed.