The brick-and-mortar retail sector had been experimenting with data collection and analysis for some time now. Loyalty points, discounts, credit card records, shopping patterns, customer feedback and locations were collected to analyse who the customers were, what they bought and how much. Walmart, a pioneer in Big Data analytics, set up its WalmartLabs way back in 2011 with a 'Big Fast Data Team' to explore and fully realise the power of predictive analysis.
The advent of the e-commerce industry - online giants such as Zappos, eBay and Alibaba, as well as a host of start-ups - queered the pitch considerably. In the face of such an onslaught, the brick-and-mortar retail sector is now going online and mobile too to win back businesses. Enter, omnichannel.
Loyalty & e-commerce are oxymorons
In the initial years of e-commerce, it was generally accepted that customer loyalty and online shopping were mutually exclusive. The Web seemed to make customer loyalty irrelevant; a click of a mouse could make a shopper effortlessly cover the globe in search of the lowest price, with little to hold him to one site. Retaining a customer long enough to make him buy became daunting task, let alone win his loyalty. Loyalty as we know died and e-commerce opened newer horizons for consumers caring more for relevance, pricing and services, such as availability or quick delivery. Online retail companies also needed to quickly leverage Big Data analytics to become more relevant.
The biggest trendsetter in this was Zappos, a subsidiary of US online giant Amazon. Zappos started by encouraging its customers to call, email or chat 24x7. As the model became successful, Amazon and other giants followed suit.
The brick-and-mortar business
In the face of such competition, traditional offline retailers need to realise that to remain relevant they need to be twice as innovative. Connected consumers are driving a revolution in retailing. In developed markets, offline retailers are making a strong comeback powered by e-commerce. In the US, some of the biggest e-commerce companies are brick-and-mortar retailers such as Walmart and Macy's. Omnichannel retailers like Myer, David Jones, Woolworths and Coles account for 50 per cent of the e-commerce market in Australia, growing at almost double the rate of pure-play ecommerce companies. Likewise in the UK, physical retailers like John Lewis, Tesco and Sainsbury's are some of the biggest online sellers as well. Singapore and Central Europe-based players in the domain are not far behind.
India logs in, but late
The offline retail sector here, caught off-guard when Flipkart, Jabong or Snapdeal came into being, are gearing up to the challenge. Landmark, Shoppers Stop, Reliance Retail, Tata Group's Infiniti Retail are all now realising the power of omnichannel to challenge the online players, combining shopping avenues - Internet, physical stores, mobile, TV, etc. - to reach out to consumers.
Still some way to go…
Despite such moves in the right director, there's still a long road ahead. eMarketer predicts that by 2018 India will have 346.3 million Internet users against the US's 274.1 million. Given these encouraging numbers, it is only a matter of some years before e-tail catches up with organised brick-and-mortar retail. In India, companies have their own way of doing things till an external provocation disrupts the industry. And the retail sector is not an exception; online retail was one such provocateur. Brick-and-mortar retailers are still reacting to the online counterparts. But they need to pre-empt the market, as it happened in the developed markets. And of course there is the big power of Big Data. It's time they unleash the full potential of Web and Big Data analytics. Time they realise the Big Now.
Omnichannel alone is not a panacea
But then, it's just not enough for Indian retailers to log into omnichannel. To transform the operations and be a truly customer-centric company, it is critical to prioritise this. In fact, customer centricity sans the involvement of your customer in your board discussions is a chimera. Check the agenda for your next board meeting, is the customer in it!