Can Omni-Channel Retail be the Solution to Inflation in D2C Brands? — Jacopo D’Alessandris
In midst of the pandemic, D2C and third-party delivery services were at a high. For a year and so, it had been the new routine to order groceries via Instacart than just walking down the block and exposing ourselves to the virus. But now that COVID cases are decreasing, and vaccinated numbers increasing, people are longing for the feeling of normal. “Pandemic shutdowns and social distancing measures have allowed shoppers to build up their savings, as well as their desire to get out in their neighborhoods, travel, and shop. To prepare for the surge in spend, retailers are embracing multichannel strategies that bring more customers in-store.”
This renewed desire to shop physical retail is fueled by something more than just “pent up” demand for B&M shopping or mall-hopping nostalgia.
Over the past years and way before Covid, e-com pure players and D2C brands have faced significant increases in operational costs, from customer acquisition and retention, to fulfillment, to customer service. In the past 15 years, with the economy booming and benefiting from unlimited availability of cheap capital, these expenses were considered almost like an after-thought, provided that the number of customers continued to grow. However, with the recent inflation spike, tightening of the money supply and stock markets crashing, digital-only company must now increase their prices to grow cash-flow and profitability, and minimize their reliance on debt.
The attached research provides a breakdown of the key components of the increasing cost of digital-only e-commerce and advertising.
This “perfect storm” of post-covid inflationary prices and consumers’ desire to go back to a normal social life contribute to the true emergence of an alternative retail model: omni-channel. I recently read an article published in Upside “Brick and Mortar Retail is Making a Comeback”, which highlights why Brick and Mortar retails are coming back stronger than ever. Here are 4 key unique “omni” strategies that should be pursued:
- Cheaper and fuller “clicks-to-bricks” customer acquisition experience
“It combines the strengths of online customer acquisition with the upsell opportunities of the “real world” by starting the buyer’s journey online and then bringing them in-store for their purchase or for item pick-up.”
First, establishing why consumers should shop there, creates a unique distinction for the brand. Then motivate those customers to finalize their purchase in-store with a monetary or experiential incentive such as cashback or discount or gift.
“When customers finally venture in-store, retailers have the opportunity to build trust and upsell. The best way to do both is with compelling (but profitable) promotions and a best-in-class customer experience.”
2. Experience it to Believe it
When consumers can experience how a product works for them, the chances of purchasing are higher. With a compelling storefront, it could also increase foot traffic such as holiday displays, sensory-rich seasonal displays using music, diffusers, or textured decorations, or contest display that requires passersby participation to increase attention surrounding the store.
“Dick’s Sporting Goods invested in interactive features like batting cages, rock climbing walls, and putting greens to attract new customers.”
3. Unique Pop-Up Experiences
“Surprise and delight” your prospective shoppers with a relatively inexpensive experience, particularly when positioned in convenient one-stop shop malls: “Customers hear about the pop-up online or through friends, and its short-lived nature drums up excitement and brings customers in-store.”
4. Test and Learn
B&M is also a relatively cheap test opportunity to evaluate the different customer acquisition strategies: “As consumers are coming back in-store, retailers everywhere are evaluating the best way to get started with a clicks-to-bricks strategy. Not only that, but they’re auditing their current expenses, so they only invest in the most profitable acquisition channels. “
With inflation upon us, shoppers will be more evaluative about what they are buying and in hopes that it is sustainable in the long run. Hence, with true omnichannel retailer, in-store experience allows them to combine a better experience with lower cost and better control over what they buy.
You can read the original article here.
