Andy Dunn, CEO and Founder of online men’s apparel company Bonobos, makes an interesting observation about retail. In an article published in The New York Times, he comments that e-Commerce is growing fast “but that doesn’t mean the offline world is going away — it just means it’s changing.”
Strictly online only
And he should know. He founded Bonobos on a fundamentally online-only model in 2007 only to open six bricks and mortar stores last year. But what makes these physical stores unique is that you can’t actually buy anything from them. The stores or Guideshops exist as a place for men to try on the apparel for size and feel, put outfits together and get advice from the salespeople on the shop floor. As a customer, if you like what you see, you need to order it online from the Bonobos website.
Bonobos is not alone in reinventing the bricks and mortar store to marry the digital offering.
Burberry too has taken a widely different approach by introducing the new Burberry bricks and mortar store as a physical extension of the company’s online marketing strategy.
Located at 121 Regent Street, London, the store is designed as a bricks and mortar replica of Burberry’s website. Burberry.com is exquisitely brought to life in the flagship store which delivers a premium destination experience and successfully blurs physical and digital channels. Described by Christopher Bailey, chief creative officer of Burberry as a place where consumers can come to hang out, explore and understand all the different things that Burberry does, the store experience is built on a richness of digital technology. This includes interactive mirrors and iPads to encourage shoppers to sit and browse, and spend more time in the store viewing a deep level of information on the clothing range from design, manufacture and catwalk.
The tech wizardry really comes into its own in the shape of RFID chips which are fitted to the garments in-store. Take a garment into the changing rooms and the RFID chip interacts with the changing room mirror to screen video of the garment beautifully adorning a catwalk model strutting down a runway. In addition, a screen measuring 38 square metres is the centrepiece of the ground floor and streams Burberry catwalk shows, music videos and short films. The flagship store reflects everything that the website delivers bolstered by a prestige address and with knowledgeable retail professionals who can help shoppers assemble the perfect outfit and more.
While Burberry’s flagship store is certainly the vanguard and setting desirable style trends among high end retailers, John Lewis, is of course famed for creating a near perfect marriage of its bricks and clicks operations. Its fast growing eCommerce site is the envy of department store retailers across the globe and now accounts for more than 25 per cent of the retailer’s business. Indeed, for the year to 26th January this year, the department store reported that its online sales soared by 40.8 per cent to £959 million. Let us remember that John Lewis first opened its doors back in 1864. The fact that the company stands to surpass £1 billion from its online channel over next year or two serves to highlight the power of foresight and reinvention in the digital age.
Bricks and clicks story
But for all of retailer’s incredible success in the online space, John Lewis is embarking upon an ambitious bricks and mortar expansion program where it will open new stores across the UK. Andy Street, managing director of John Lewis describes it as a bricks and clicks story. In an article published in the UK’s Telegraph, he says, “People may place orders online, but they still want to come to see and touch things and have a social experience.” Click and collect orders have doubled at John Lewis in the past year, and already account for 35 per cent of online sales.
So building a pantheon of click and collect operations is an inspired move as a click and collect offering encourages existing customers to shop more frequently and also attracts new customers. It will make shopping online at John Lewis an even more attractive option for shoppers as they will not have to wait at home for their purchases to be delivered. With more physical stores, and greater click and collect operations through its partnership with Collect , the barriers hindering even greater success are fast being removed.
Back home in Australia it’s bewildering that there’s still the tendency for high street retailers to treat digital as an ‘us and them’ scenario when clearly it is not. Retailers need to innovate and ensure the digital and bricks and mortar businesses fit together hand in glove.
Omnichannel is total retail
Digital is a big part of the shopping process regardless as to whether it ends with an online or offline purchase. For many products, consumers take an omnichannel approach where online shopping and research supplements the traditional bricks and mortar retail experience.
According to Kantar Retail, a global insight and consultancy firm that’s part of the WPP Group, while digital sales currently account for around eight per cent of retail sales in the US and UK, approximately half of those purchases are influenced online. Almost 50 per cent of shoppers research online before purchasing in-store. Customers scan the internet for reviews, information and price comparison and then go to a store for expert advice before buying a product offline.
Likewise, according to Econsultancy in their report, “How the Internet Can Save the High Street” digital has a huge influence on off line purchases. The UK numbers show that:
- 44 per cent of UK shoppers always research purchases on the internet before buying offline.
- 80 per cent of UK shoppers have reserved products online for collection in stores in the past year (up from 74 per cent in 2011).
- Just four per cent never use the internet for product research.
- 43 per cent of UK shoppers now use smartphones while on the move to compare prices and read product reviews (up from 19 per cent last year).
Looking at the numbers closer to home, according to the latest NAB Online Retail Sales Index the online channel continues to influence the Australian retail landscape. Online retail sales increased to an estimated $13 billion in the year to January 2013. Year-on-year growth remains strong at 27 per cent.
The report goes on to say that the key for retailers is to ensure their online offering complements and supports their core business. Successful retailers are providing their customers with alternative ways to shop.
Yet Australian retailers are still dragging their feet in providing an omnichannel experience. Research, conducted by market research firm Colmar Brunton, and published in March found that Australian consumers are frustrated with the limited online shopping options from national retailers. More than 50 per cent of the respondents said that this fact was forcing them to spend their money offshore with global competitors. Two in five of the respondents believe Australia is behind the rest of the world when it comes to online retailing.
While I can’t see our department stores posting anything like the kind of results that John Lewis enjoys or a flagship store of the scale and prestige of Burberry’s on our shores any time soon, there is the strongest imperative for Australian retailers to get in touch with consumers and start delivering a fully-fledged omnichannel experience.
Simon van Wyk, Founder of HotHouse, explores some of the smartest retail innovations on the planet and implores Australian retailers to catch up.