Retail has gone through a revolution. A glance at recent headlines indicate that many global brands in Q1 alone such as BCBG and Urban Outfitters have shown signs of trouble. The former filed for bankruptcy, citing changing consumer habits and increased competition from online players as key factors and Urban Outfitters stated that the ‘retail bubble has burst’. 

According to Bloomberg, shoppers’ visits to retail stores in the US are declining every year, leading industry veterans to wonder, “is anyone not seeing large foot traffic declines?”

Online retail, on the other hand, is thriving in the US. Retail sales through digital channels, including mobile sales, increased by a massive 23% in 2015.

One player enjoying this shift is Amazon. The company now accounts for 43% of all online retail sales in the States and has ventured aggressively into different verticals; from private label fashion brands to groceries. It also made entries into new markets, to the Middle East through the acquisition of Souq, a possible entry into Australia and a rumored entry into Southeast Asia.

A key aspect to its growing success is its omnichannel strategy – allowing shoppers to buy whenever, wherever. The company has been using offline to compliment its online platform, for example, with the launch of its offline bookstores in the US and its trial launch of Amazon Go, an offline grocery store that allows shoppers to scan items and pay through the Amazon Go app. 

Traditional retailers try their hand at omnichannel

The omnichannel strategy focuses on the idea that providing a ‘perfect’ shopping experience requires an integration of online and offline experiences. This is to encourage cross-channel shopping so that customers who shop only in stores will begin also buying online, and vice versa.

Although brick ad mortar players have an advantage here, pure-play brands and retailers are testing offline strategies to offer enhance their entire brand experience. Online brands such as NET-A-PORTER used this strategy back in 2012 by launching offline pop-up stores and eye wear brand Warby Parker launched its first offline store in 2013.

In Southeast Asia, more players are following suit. Thai online fast fashion label Pomelo has launched pop-shops in Bangkok and Central Group bolstered its online presence with acquisition of Zalora.

Retailers are counting on an omnichannel strategy to be their “killer app”. But is this true?

Harvard Business Review teamed up with an anonymous US retailer that operates hundreds of offline stores across the country to find out.

Out of the 46,000 study participants who made a purchase during the 14-month period from June 2015 to August 2016, only 7% were online-only shoppers and 20% were store-only shoppers. The remaining majority used multiple channels during their shopping journey – these are the omnichannel customers.

Omnichannel customer behavior

Findings showed that omnichannel customers loved using the retailer’s touchpoints in all sorts of combinations and places, such as purchasing offline and having the product delivered at home, or targeting in-store customers with personalized messages to their phones.

Shoppers were found to be avid users of in-store digital tools such as an interactive catalog, a price-checker, or a tablet. They were also leveraging their smartphones to compare prices between stores and to download discount coupons but it’s important to note that,

Among customers who lived close to a store, no type of coupon made a significant difference to shopping or profits – HBR

The more channels customers use, the more valuable they are

Omnichannel shoppers spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers. With every additional channel they used, the shoppers spent more money in the store.

Customers who used more than four channels, spent 9% more in the store compared to those who only used one channel.

Omnichannel shoppers were also more loyal. Within six months after an omnichannel shopping experience, these customers logged 23% more repeat shopping trips to the retailer’s stores.

Findings suggest that deliberate searching beforehand led customers to 13% greater in-store purchases. This disputes arguments about the popularity of impulse buying and showrooming, which refers to how traditional shoppers conduct their research in the store and then buy online.

This particular retailer sees the rise of webrooming, consumers that go online to browse products before going offline to buy the products in-store.

Whether the richer, multi-touch point shopping experiences of omnichannel led shoppers to spend, return, and advocate more remains an open question – no causation can be determined – but the case for omnichannel retail is positive.

In a developing market like Southeast Asia, department store culture is huge but ecommerce is only beginning to emerge – less than 4% of total sales. Whichever player is able to reach omnichannel success first looks to capture a large share of the region’s $150 billion retail opportunity.

Traditional retailers with physical stores will do better not only by leveraging the power of the online world, but by synchronizing the physical and the digital worlds to provide shoppers with a multi-channel experience that online pure plays simply cannot match. – HBR

Findings in this article were taken from “A study of 46,000 shoppers shows that omnichannel retailing works”, published on Harvard Business Review.

Here’s what you should know today.

1. plans 5 new warehouses to strengthen infrastructure

Fresh off celebrating its first anniversary in Indonesia, the Chinese ecommerce giant is now planning to launch 5 new warehouses in the country.

It is also planning to launch new verticals on the site, including movie and plane tickets.

“What makes our business model unique is that we do more than just selling and buying; we also build an infrastructure. Promos and discounts are merely gimmicks, an entry point for customers to try shopping in our platform,” says Teddy Arifianto, head of corporate communication.

Read the rest of the story here.


2. Singapore’s central bank is ready to use the blockchain for inter-bank payments

The Monetary Authority of Singapore (MAS) announced that it has completed a proof-of-concept trial of using distributed ledger technology (DLT – of which the blockchain is a type) to power domestic inter-bank payments.

Next, MAS wants to try to improve investment trading and settlement periods with the help of DLT. It also wants to take payments using digital currency cross-border.

It is also currently talking to other countries to enable digital currency payments to be settled through central bank accounts.
Read the rest of the story here

3. Recommended Reading: What went wrong at BCBG Max Azria

By way of explaining its Chapter 11 protection filings, BCBG said on February 28 that online shopping and changing consumer tastes were responsible for its decline,

“Like so many other great brands, BCBG has been negatively impacted by the growth in online sales and shifts in customer shopping patterns and, as a result, has too large a physical retail footprint. In order to remain viable, the company — like so many others in its industry — must re-align its business to effectively compete in today’s shopping environment,” wrote spokesperson Seth Lubove in an email to RetailDive.

Another problem was that BCBG was overstored. It had approximately 600 boutiques around the world, and not the same margin they once did.

Read the rest of the story here.


Here’s what you should learn for today.

1. Rocket Internet’s global venture fund is now worth a billion dollars

German startup Rocket Internet announced today that it’s secured investor commitments of US$1 billion for its Rocket Internet Capital Partners Fund. It added that the fund will invest in startups focused on marketplaces, ecommerce, fintech, software, and travel.

Read the official press statement here.


2. Thailand’s KBank keen to buy Indonesian banks

While Indonesia has very high potential for KBank and the takeover of local banks is an option, the requirement that foreign banks have to purchase more than one bank is something that it might not be particularly comfortable with.

Meanwhile, the establishment of a physical branch in Indonesia is likely to be more difficult than doing so in Vietnam, which is another focus country for KBank.

Read the rest of the story here.


3. BCBG to close stores, will restructure as online shift takes toll on business

BCBG has “too large a physical retail footprint. In order to remain viable, the company must realign its business to effectively compete in today’s shopping environment.”

BCBG is facing a cash crunch, but it doesn’t see bankruptcy as an imminent risk, said one of the people.

Read the rest of the story here.