8 Observations from Online Retailer 2022
Last week we attended the Online Retailer Conference & Expo for 2022 and had a great time seeing the best in the business share their thoughts & wisdom on all things online retail.
We wanted to briefly share the 8 key themes we observed, much of which is aligned with our thinking on the future of retail:
1. Sustainability - the single most mentioned word of the conference. Sustainability is now a non-negotiable for all retailers and must be addressed as a core part of their business strategy. Though we observed that few retailers really knew how to address it in a meaningful way which if not executed properly can lead to the very dangerous territory of greenwashing which can significantly damage a brand. While greenwashing can cause irreparable damage to a brand, customers want progress, not perfection. There is a lingering misconception that brands have to compromise in order to be sustainable. However, many smaller retailers are disrupting the narrative and showing us that this doesn’t have to be the case. Their tips? Make it simple, fun and engaging to the consumer, innovate processes to remove or alleviate friction points and focus on progress, not perfection.
2. Customer Experience (mainly around personalisation and building communities) is key to sustained engaged growth and meeting ongoing increasing customer expectations, particularly now that non-pure plays have more or less caught up with their digital channels during Covid lockdowns.
3. Delivery is the new pureplay battleground – the delivery part of the customer journey is where major customer pain points are and pureplays are scrambling to improve this part of the journey, though aren’t entirely in control of delivery having to rely on third party delivery partners.
4. It's very expensive to acquire customers through digital channels – pureplays are becoming more creative with organics / community building or looking at alternative channels to acquire customers rather than traditional paid models (Google, Facebook, Instagram, etc.).
5. The relative attractiveness of physical is becoming apparent to online retailers - now that physical shop rents have fallen throughout Covid pureplays are starting to look at the relative attractiveness of physical channels for new customer acquisition. However physical channels require a fundamentally different skillset. However pure plays do have an edge over traditional retailers in that they are more willing to adopt new and exciting in-store technology to deliver a more seamless omni-customer experience.
6. The rise of marketplaces –While there is one clear winner in the marketplace space (Amazon), the number of marketplaces in Australia is growing, which is making differentiation all the more important. For marketplaces, personalisation and post-purchase activity is critical as Google has provided customers with the tools to find the best product, price, and deal for them. Whether it’s a small gift, discount code or a personalised note, post-purchase activity is crucial in driving trust and loyalty. With rising online costs growing to be unsustainable, many retailers are turning to marketplaces to increase their channels, build brand awareness, acquire new customers and meet customer’s delivery and convenience expectations. However, being discerning is crucial for retailers and marketplaces alike. Unless you are a tier-1 complete destination type marketplace, selling anything and everything can be confusing and ultimately cause major brand damage. Likewise, selling across any and all marketplaces can undermine brand reputation, particularly if your brand plays in a specific category. At all times ask: Would this make sense to our customer?
7. The prevailing importance of purpose at an individual and business level – A critical lesson that serves us well beyond the business and retail world, clarity of purpose and building resilience are key drivers for high performance. From a retail and customer perspective, there has been a marked shift away from the chase to the bottom as customers seek an elevated message in the brands they choose. A clear business purpose and message aligns customers with your brand in a way that discounting simply cannot. More than that, clarity of purpose builds resilience within a team when it can be linked clearly to the tasks we perform daily. In short, purpose is the foundational ingredient that keeps you on course.
8. Covid-19 forced many traditional retailers to focus on their digital channels and broader omni strategy – RM Williams are the quintessential Australian heritage brand whose customers are fierce brand advocates – just ask any private school alumni. However, as with many traditional bricks & mortar retailers, Covid-19 forced RM Williams to develop their omni-retail strategy. As any sound strategy should, their approach started with the customer. With the customer in mind, RM built out the ideal customer journey and from there, engaged the best technology to shape that new UX. From a new POS system through to RFID pilot in their Adelaide workshop, RM Williams may be changing with the times, but one thing remains the same – the customer always comes first.