We hear a lot about the difficulties of traditional retail chains, which suffer from competition from online retailers. So, why are some of the largest online retailers taking the opposite approach?
In the latest news, Alibaba.com will pay $ 2.87 billion to buy 36% of Sun Art Retail Group, the largest chain of hypermarkets in China. The reason was clearly expressed by Daniel Zhang, CEO of Alibaba: “Physical stores play an indispensable role during the consumer journey and, in the era of the digital economy, should be improved thanks to data-driven technologies and personalized services ., “. Alibaba was a precursor to this trend, investing $ 9.3 billion last year in traditional stores since 2015, including bars and coffee shops, supermarkets and concept stores.
Last summer Amazon paid $ 13.7 billion to buy Whole Foods, allowing the online giant to access the most sought-after and high-density markets almost overnight. Amazon also announced a partnership with Kohl’s to offer free returns at 82 stores in stores in Los Angeles and Chicago. Amazon has also opened 13 bookstores, mainly on the east and west coasts; and two upcoming openings have also been announced. Lately, the online giant also opened a revolutionary cashier in Seattle, Washington.
Even digital retailers are becoming physical retailers.
It is obvious that the retail trade is in a transition phase. So, why are these online giants interested in the offline world?
One of the main reasons is that they realize that a physical presence is a fundamental component of the entire client. The reality is that in many shopping experiences, consumers still want to be able to touch and feel the products before buying them. The most common scenario is to go to a local store to examine the product closely, before ordering online. And if customers want to return a product they have purchased, many prefer the safety net of return to a physical store.
For example, if you bought a garment that does not suit you, returning the item can be a boring procedure. That’s why a physical presence is so important, whether it’s an in-store partnership (like Amazon’s and Kohl’s) or branded stores, where returns and exchanges can be made more easily.
The fierce struggle to offer a truly omnichannel experience.
New channels, voice applications such as Amazon from Alexa to connected devices and interactive showcases appear continuously. It is expected that multi-channel sales, driven mainly by the launch of new digital channels, will evolve rapidly to provide a homogenous omnichannel experience that meets customer expectations.
Does this justify, from the commercial point of view, the opening of new routes to the offline world? Of course! In the United States, Amazon has captured 44% of the current e-commerce market, but around 90% of sales are still offline. And in China’s thriving retail market, 80% of transactions are made in stores. Our online life has become so important that we often overlook the fact that most retail sales are still offline.
Strong power in local markets, thanks to physical stores.
Nike’s new strategy is to adopt a local approach, with a new campaign to promote “local companies worldwide” by developing services for clients in 12 cities, starting from London. This approach could lead to the development of highly targeted products for these strategic cities, which should represent 80% of the company’s growth in the coming years. Retailers must also think of innovative ways to overcome the last frontier of the customer experience. IKEA’s creative acquisition of the do-it-yourself service from Task Rabbit will help ensure customer satisfaction by eliminating one of the most complex aspects of a customer’s journey: assembling furniture.
The retail trade is undergoing a great transformation. The customer experience does not end when a customer leaves a store or closes their browser. The cornerstone of the new retail world is the combination of data-driven e-commerce solutions with a focus on experience and traditional stores to offer smooth customer travel without interruption.