Beyond commerce, make the experience frictionless

By Bertrand Chovet, Managing Director, Interbrand Paris

“It is by leveraging innovation, co-creation, and conversations that leading retail brands will build and defend their value in consumers’ minds and hearts as they embark on, and enable, the digital retail transition together."

In today’s exciting new world of commerce, we see more opportunities than risks for strong leading brands. Leading retail brands have limitless possibilities to take advantage of this new landscape.

Digital must be used strategically to bridge a compelling in-store experience with the devices that now run our lives, creating a digital strategy that incorporates omnichannel selling, mobile shopper digitalization, conversations between brands and consumers, augmented experiences through digital interfaces, and a brand architecture built on seamless access and transactions.

This environment necessitates a true understanding of shopper insights by making sense of data and behavior. This approach also requires pragmatism, efficiency, and a dose of enchantment to deliver an engaging shopper journey and a strong business performance. It is both a structural revolution and a business challenge, and today most European retailers are working hard to make the transition with style and intelligence.

Closing the gap on omnichannel

While e-commerce accounts for an estimated share of 5 percent in total European retail, the traditional retailers are back in the game and catching up with digital pure players. Zara, John Lewis, Fnac, Leroy Merlin, Carrefour, or Tesco to name a few are now part of the most visited e-commerce websites.

The battle also takes place in the physical space. A representative example is the success of the drive-through hypermarket format in France (representing 2,500 units on top of the 6,650 hyper/supermarkets in 2013), which Auchan pioneered in 2000. It has become one of the secret weapons for food retailers to protect their business and build on the strength of their brand.

As a proof of success, Walmart is starting to replicate this format in the U.S. with Walmart To Go. A same-day online delivery service, Walmart To Go may counteract Amazon Fresh, which will make its non-U.S. debut and European launch in Germany this year.

Grocery e-commerce sites that include home delivery have not taken off everywhere, however. In some regions, customers are often unwilling to pay delivery costs (or higher prices) and many do not want to block out time to wait for their goods. In such areas, the Drive (or drive-through) concept offers a convenient alternative. Though the Drive format has to consolidate its profitability, it is giving leading brands a competitive advantage and securing customer loyalty.

Lastly, by developing hybrid models such as Zara/Zara.com, John Lewis/johnlewis.com or Fnac/Fnac.com, European brands are not only proving their inventiveness, but also their ability to meet shoppers’ expectations: being on the purchase funnel before, during and after, with better service leading to improved customer satisfaction. It is now clear that the digital gap will narrow, if not disappear, if leading retail brands use their brand assets to impose a strong landmark, defend their premium, and engender loyalty.

Towards a frictionless shopper journey

Whatever the platform, European retailers are learning that the key is to maintain brand consistency and pay attention to details. If format convergence and consolidation are moving forward upstream, omnichannel is elevating change downstream. While 20 percent of shoppers already use a mobile device during the purchase funnel, 4 out of 5 European consumers are using their smartphones in-store.

When it comes to mobile, shoppers are seeking a customized approach, and the future will be paved with mobile/point of sale interactions. Mobile commerce, whether RFID, NFC, or MEMS, will accelerate adoption and strengthen shoppers’ preference for such transactions. Success will belong to those retailers who embrace simplicity and immediacy in their mobile channels.

For retailers, the omnichannel revolution involves investments and necessitates questioning regarding the ROI of those investments and their scalability. But all are gamely embarking on this journey, and it is time to connect the dots more deeply.

Beauty retailers such as Sephora, L’Occitane, and The Body Shop are well on their way, while other categories need to approach it in more comprehensive way to deliver a fully “on-brand” shopper journey. Europe’s leading retailers must make their brands the cornerstone of this strategy, and articulate their goals in order to address the challenges of engagement, responsiveness, authenticity, and relevance.

A more holistic brand experience

Despite the e-commerce boom, the majority of commerce for the next decade will still occur in the traditional manner: through the physical, in-store retail experience. Omnichannel is really about making relevant emotional connections—and a strong brand is the key lever to drive the success of in-store/online retail integration.

Today, European retail brands must be more responsive than ever before. They must listen to shoppers and be incredibly consistent at every level of the purchase funnel if they want to bridge their brand proposition with customers’ needs and desires and achieve sustainable growth. After all, the customer’s experience with the brand is a critical factor in the purchase decision. In the near future, the substance of retail brands will grow through the ability to deliver functional expectations seamlessly and engage shoppers in an emotional experience.

The most successful retailers are already, and will indeed continue, deploying an omnichannel strategy. Availability of inventory will be paramount and allow retailers to develop online distribution, while physical retail combined with experiential touchpoints will enable them to serve eager consumers.

Both online and offline, European retailers will have to work harder to ensure that convergence benefits customers and increases satisfaction.

Retail brands now have the power to be both in the pocket of customers (via mobile devices) and create sensory engagements (via the physical store experience). It is by leveraging innovation, co-creation, and conversations that leading retail brands will build and defend their value in consumers’ minds and hearts as they embark on, and enable, the digital retail transition together.

Retail trends and challenges in the European region

  • E-commerce accounts for an estimated 5 percent total of European retail; traditional retailers such as Zara, Carrefour, and Fnac are catching up with digital pure players
  • The drive-through hypermarket format has become one of the secret weapons for food retailers
  • Brands must invest in omnichannel solutions and ensure that convergence benefits consumers and increases satisfaction both online and off
  • Retailers must bridge their brand proposition with customers’ needs and desires and pursue growth sustainably

EMERGING TRENDS

  • E-commerce accounts for an estimated 5 percent of retail sales in European retail; traditional retailers such as Zara, John Lewis, Carrefour, and Fnac are catching up with digital pure players.
  • The drive-through hypermarket format has become one of the secret weapons for food retailers to protect their business and build on the strength of their brand; Walmart is replicating this format in the U.S. with Walmart To Go.

CHALLENGES AND RISKS

  • Brands must be willing to invest to take advantage of the omnichannel revolution and work harder to ensure that convergence benefits consumers and increases satisfaction online and off.
  • Retailers must bridge their brand proposition with customers’ needs and desires and pursue growth sustainably.

Lessons for all

  • Digital must be used strategically to bridge a compelling in-store experience with a multi-dimensional digital strategy (omnichannel selling, seamless access and transactions, etc).
  • Retailers must use data to gain a true understanding of shopper insights and create a frictionless shopper journey, putting their brands at the cornerstone of that journey to achieve engagement, responsiveness, authenticity, and relevance.