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How can Brick & Mortar Retailer stay competitive in changing Retail landscape?

Written by: Prof. Sandro Castaldo, December 22 2015: Economic Times

In the last few years, there has been a rapid growth in number of people shopping online through various devices and applications. But there will always be a segment of customers who will frequent brick and mortar stores for the opportunity of ‘touch & feel’ the products. Even Amazon, one of the world’s biggest online retailers, could not resist the opportunity it was missing by not being present physically; hence it has opened a new brick and mortar book store in Seattle.

In Retail, technology is changing the behavior of customers. Our research has showed that, in India a whopping 71% of the people are using 1 technology for shopping i.e. website, mobiles, social networks, etc. whereas in the World just 26% of the people are using1 technology for shopping.In the World, 43% of the people are using 2 or more technologies whereas in comparison in India just 18% of the people are using 2 or more technologies. Surprisingly, just 11% of Indian people don’t use any technology for shopping while in the World its 28%.

From the data we had collected, we tried to understand is there any relationship between trust and loyalty of a customer in multichannel attitude. Shoppers who are accustomed to spending more time online are more open to the idea of multichannel shopping, but the flip side is that they would like to have relationship with very well known & trusted brands.

How is it possible to create trust? Offline shopping experience and satisfaction are the key drivers to create trust and loyalty.Therefore Retailers should create this trust offline and then bring the trust online. Obviously, this kind of relationship is stronger in collectivist culture than individualistic culture. India has a collectivistic culture; therefore it’s both, a big challenge and opportunity for offline retailers.

I believeoffline retailers should focus more on improving the shopping experience. Rather than investing in creating online store, offline retailers should concentrate more on creating or enhancing the technologies in their stores, trying to create a real omnichannel experience. There are some very good examples of the brands which created a seamless experience across online and offline.

I will mention a couple of examplesBurberry and Luxottica, which I really think have transformedthemselves and created a real seamless experience. Burberry, one of the biggest fashion brands,had a great online ecommerce website but the offline store had traditional experience. Hence they decided to transform their Burberry shops by producing contents online and implementing them offline with the help of technologies. Some of the things they did were interactive mirrors transforming into personalized screens, global events screened live at the store, galleries displaying the history & material of the product and digitally enabled cultural space. The aim of the store was to create a real experiential store, generating an opportunity to interact not only with the product but also interact with the brand.

Another example is Luxottica. Luxottica is the biggest eyewear company in the world, controlling more than 70% of the eyewear brands and 7000 stores. Luxottica launched an ecommerce website called Remix selling customized Ray-ban products. With this website, Luxottica implemented reverse showrooming, the opposite of showrooming where the customers try the products offline but purchase them online at a lower price. This website allowed customers to define their personalized Ray-ban, wherein later on they can visit the store to try it.

My advice to Brick & Mortar retailers is that online retail should not be viewed as our top competitor but as our first opportunity. Retailers have to switch from multichannel approach to an omnichannel approach.

Originally the article was published on December 22 2015: Economic Times