From the middle of the 1990’s onwards, traditional retail outlets responded to the first offensive on the part of e-commerce pure players by creating their own shopping websites. They did this as part of a move towards multichannel operating logistics. Multichannel ran the various sales channels in parallel, and so e-commerce effectively became a separate activity, and very often one that was in direct competition with the established business model: the brick-and-mortar store chain network. It was to be nearly 15 years before this dichotomous, even conflictual, approach was challenged by the reactions of consumers, disappointed when expectations for a consistent brand experience from one sales channel to another were not fulfilled.
While cross-channel was the buzz word then, the model now emerging as number one on the lips of retailers is without doubt that of the omnichannel – requiring not just unification of strategies and information systems, but also a restructuring around the customer to hear their wishes and accompany them seamlessly via whatever point of contact they choose, and at whatever stage they have reached in their purchasing journey.
The harbingers of the end of physical commerce can no longer be heard. For sure, the share of e-commerce in the retail sector is increasing relentlessly: in France, it rose from 3.4% in 2010 to 9.1% in 2018, with a 92.6 billion euro turnover, as against 30 billion 8 years earlier (source Fevad). The first mistake one could make is to attribute this growth to pure players alone:
For example, in Paris, the store Fnac at the Gare de l’Est receives nearly 40% of its revenue from the collection in-store of articles ordered via the fnac.com website. More surprisingly, at least for those continuing to compare and contrast web and store operations: “when the Fnac constructs a new store in a territory where it had no presence before, this has a very positive impact on the frequentation of the website by local inhabitants” asserts the ‘Commerce’ director of business property agents Cushman & Wakefield.
Here is the proof that, far from being competitors, website and physical networks are complementary, and more so than ever before. It also reveals the reality of omnichannel behaviours as regards consumer purchasing and - something we tended to downplay in the past - the fundamentally local dimension of their activities and practices that so strongly anchors major stores within their physical territory. Pure players have already grasped this vital point: the advantages offered by the physical network are now appreciated, and back in favour. When Amazon bought Whole Foods in 2017, it was with the aim of gaining a foothold in the alimentary sector with a network of 460 stores providing as many local logistics intermediaries, close to the point of consumption, and through which it can develop its other activities.
Traditional retailers have an advantage over pure players in that they dispose of a point of sale network. It remains the case that this precious asset has to be profitable – and continues to be so! – in an omnichannel world and this, in a socio-economic context where powerful adverse trends are at work: dwindling in-store consumer traffic and falling yields are the reality, as well as the trend to move business premises outwards to the periphery of town centres, lower prices per square metre and a lot more space further out offering obvious advantages over scarcity of surface area and rising property prices in city centres.
For our partner DIAMETRIX, data analytics specialist for the retail sector, “only an approach based on data and advanced modelling techniques, using analysis and spatial representation can unravel these complex interactions and influences in sufficiently fine detail to allow decisions to be made that will shape the future of our retail outlets.” This is why DIAMETRIX has chosen to integrate GEOCONCEPT
To ensure profitability in an omnichannel world, major chains will not only have to rethink the geography and typology of their network, but also adapt their “indoor” operations to the constraints of real time and continuous improvement. As they become more accessible, tracking and visual recognition technologies along with real time sales analysis will increasingly be deployed inside the store, for example to:
In parallel to