Is ecommerce prioritization damaging the retail in-store experience?

The pandemic may have catalyzed a surge in ecommerce activity, but it has not sounded the death knell for physical retail predicted by many. However, is retailers’ fast-paced pivot to online now creating cracks in the bricks and mortar at a time when the customer experience is so critical to consumer loyalty and protecting share of wallet?

According to an IFM panel, there are signs that ecommerce activity is cooling after the enforced spike in sales online in 2020, with digital share shifting down from 21.1% in 2020 to 16.5% in 2023, suggesting high street fortunes may once again be on the rise.

Digital native brands in France such as Sézane began life online only and have since opened physical stores to increase penetration rate and accelerate growth. In addition, the top five most visited ecommerce websites in France are largely comprised of pure players (Amazon, Leboncoin, Cdiscount, and Vinted – Fnac being the only exception), which means that, for everyone else, customers are still counting on physical stores to look for products. 

While consumers will often carry out an initial product benchmark online, there remains a critical central role for stores to play in showcasing products to consumers as part of the overall purchase journey. AlixPartners’ recent Critical Consumer study of more than 10,000 consumers across EMEA revealed that the need to see and touch a product, allay any quality concerns, and avoid high delivery costs are the top three reasons not to order online.

There is no doubting the importance of online channels in retail, and the understandable focus placed upon it by retail leaders. However, a number of scenarios are emerging in stores that suggest that the basics of brick-and-mortar retail are being forgotten as a result. These include limited product or range availability and sub-standard store experiences or salesperson interactions, all of which were highlighted as reasons for consumers to stick to online purchases in the Critical Consumer research.

These events represent the telltale signs of retailers being so focused on delivering a strong ecommerce experience that they forgo delivering the basics of a solid in-store experience, with several underlying explanations for these scenarios: 

  • Planning and assortment are becoming increasingly complex: products can be online exclusive, store exclusive or omnichannel. 
  • Profitability requirements push retailers to retain inventory in warehouses, allocating less to stores in order to maximize online or on-request availability and thereby improve sell-through.
  • Store replenishment usually follows strict rules (pack-size replenishment, regular frequency, etc.) meaning that inventory is often lagging when it is most needed.
  • Decreasing footfall led to store closures, relocation to smaller stores without stock space, or even reduced investments to refurbish stores and make them attractive to high street consumers.
  • The recruitment and retention of qualified personnel has become harder – so much so that training efforts are becoming less of a priority than recruitment. 

To reinvigorate the store experience, retailers have been creative in adjusting to new trends of consumption. These include experiential and social elements (brand collaboration, partnership for an event, etc.), or service enhancements (personalization, repair, second-hand offering, etc.) 

However, those new extra promises are merely nice to haves. Primarily, in order to drive footfall, stores have to get the basics right, presenting an urgent need to restore the delivery of those fundamental in-store promises of being: 

  • A place to try products, where you can find the perfect fit for your jeans or dress and stop any attempt to measure yourself and compare with a brand’s “size guide”. 
  • A place to be oriented and advised, where you can consciously choose what you would like to buy with the right level of information, thanks to vendors capable of responding positively to all of your doubts, questions, or hesitations. 
  • A place to have products “crush”, where consumers come for something specific, yet leave with much more than they originally planned.

To reestablish this baseline, traditional operations must be reimagined, with a strong focus on inventory and client service, including: 

  • Stock visibility: Having access to real-time stock data is key to success, both at general store level but especially vendor level. This will maximize the chance of converting enquiries into sales.
  • Product and size allocation: Thinking of a brand as omnichannel needs to include reflection around the product and size allocation across both physical stores and online. However, this should not be a one-time shot but a strategy of continuous product movement to fulfill needs at the right place, at the right time.
  • Replenishment models should encompass several changes, too:  
    • Usually, retailers would set a minimum stock quantity to be reached in order to launch a replenishment. But what if this stock was also considered according to the time of the week? For example, maximum replenishment required just before the weekend?
    • Variations of packs size: allowing stores to order not only packs (complete size ranges) of product but units of products would require investing in logistics and preparation teams. 
    • Significant product transfers from store to store requires robust real-time data and visibility on stocks. 
  • Sales pitch support and playbooks: What are the key selling points for products? How do you match customer features with the products (matching hair color, eye color, etc.)? What are the key questions customers are asking about the products? What do customers who buy product A, also typically buy as products B and C? All those questions and many more can be anticipated and documented better, integrated within salesperson on-boarding, with further support delivered through handheld sales devices that are now widely available.

Delivering on the importance of customer experience and higher quality services offered in-store will not be possible without investment in staff training and the store itself. 

Leadership teams must focus on increasing retention and driving a brand culture that fosters development and opportunity for staff. Meanwhile, efforts made on the management of stocks should encompass putting the knowledge in the hands of the store vendors themselves to create a sense of belonging and a mission to accomplish. One such example could be developing incentive schemes for store salespeople based on ecommerce sales according to the location of the purchase (catchment area), recognizing the role that on- and off-line will play in purchase decisions.

The stores themselves are also assets to maintain and improve. Perhaps before leaping from the ecommerce boom to AI or other emerging technologies, the basics should be revisited and remastered, creating firm foundations for future innovation: lighting, furniture, cleanliness, and smart product merchandising in-store are all important details that can move the needle in physical retail while heads have been turned too far towards online innovation. 

Discover more from AlixPartners' recent Critical Consumer study.