The retail market, especially the electronics retail market, is among the most cutthroat of all. CEOs who transform their business models with an eye to delivering a seamless omnichannel shopping experience will pull ahead of the competition, a new survey from JDA Software Group done by PwC, predicted.
“Certainly, every retailer is grappling with how to enable omnichannel in their business channels,” said James Prewitt, vice president, retail industry strategy, North America for JDA in an interview with EBN. “At the same time they are looking at ways to make these transactions more profitable. Customers set expectations but not all of these are making money for retailer.”
Today, in an age of 'me commerce,” customers expect an integrated and seamless shopping experience. What they find is much different. Currently, three quarters of retails are using a siloed approach between online and in store, which results in a disconnected brand experience for customers, the survey, which is in its third year, found. At the same time, it's a critical move that gives CEOs greater confidence in revenue growth (59% vs. 48% average for all CEOs) and profit growth (63% vs. 43%) than their peers.
Wayne Usie, senior vice president, Global Industries and Value Delivery at JDA, said in a written statement:
The survey results indicate that retailers poised to become omnichannel leaders are investing more in capabilities that allow them to better understand their customers, delivering richer customer shopping experiences. Companies who want to successfully compete with these leaders, therefore, must not only remove the business silos that hinder seamless operations, but also rapidly increase their investments in omnichannel capabilities before they fall further behind omnichannel leaders. These actions will define retail winners and losers going forward.
However, retailers are caught between a rock and a hard place when it comes to delivering an omnichannel experience profitably, the report, titled CEO Viewpoint 2016: The Journey to Profitable Omni-Channel Commerce, pointed out. The study, which was conducted in late 2015, surveyed more than 300 retail and consumer goods CEOs around the globe in late 2015.
In the quest for livable profits, retailers are looking at a variety of shifts, including raising the minimum purchase for free shipping and offering in-store pickup, that balance the need for better margins and the reality of increased customer expectations. “Retailers said that these transactions inherently don't make much money and costs are increasing,” said Prewitt. “The highest costs are related to shipping directly to the customer.”
For those retailers who do feel confident, it is possible to attract customers with less worry. “We found that these retailers were more confident in their own profitability and growth potential,” said Prewitt. “They felt less pressure to charge for these new customer options and invest in value added systems like customer analytics. We also so less cannibalization of physical store sales in these organizations.
CEOs also reported general plans to invest in technology to help them reach their omnichannel goals. “As far as infrastructure and capital spending, CEOs said they are planning to spend more in the upcoming year than they are planning to spend three years from now,” said Prewitt. “This demonstrates how high the pressure is to get these capabilities in place.”
Take a look at the infographic below to see more of the study's finding. Then let us know in the comments sections what trends you are seeing.