We hear a lot about the difficulties of traditional retail chains, which are suffering from the competition of online retailers. So why are some of the biggest online retailers now taking the opposite approach?
In the recent news, Alibaba.com will shell out $ 2.87 billion to buy 36% of Sun Art Retail Group, China’s largest hypermarket chain. The reason was very clearly stated by Daniel Zhang, General Manager of Alibaba: “Physical stores play an indispensable role during the consumer journey and, in the era of the digital economy, should be improved thanks to data-driven technologies. and personalized services, “. Alibaba has been a forerunner of this trend, investing $ 9.3 billion last year in traditional stores since 2015, including bars and cafes, supermarkets and concept stores.
Already last summer, Amazon paid $ 13.7 billion to acquire Whole Foods, allowing the online giant to access, almost overnight, some of the most coveted high-density markets. Amazon has also announced a partnership with Kohl’s, to offer free returns at 82 of the store’s stores in Los Angeles and Chicago. Amazon has also opened 13 bookstores, mainly on the east and west coasts; and two upcoming openings have also been announced. Lately, the online giant has also opened a groundbreaking cashier store in Seattle, Washington.
Digital resellers are also becoming physical resellers.
It is obvious that retail is in a transition phase. So, why are these online giants interested in the offline world?
One of the main reasons is that they realize that a physical presence is a fundamental component of the whole customer. The reality is that in many shopping experiences, consumers still want to be able to touch and feel the products before buying them. The most common scenario is to go to a local store to examine the product closely, before placing the order online. And if customers want to return a product they bought, many still prefer the safety net of a return to a physical store.
For example, if you bought a garment that does not suit you, returning the item can be a tedious procedure. That’s why a physical presence is so important, whether it’s a store partnership (like Amazon’s and Kohl’s) or branded stores, where returns and exchanges can be performed with greater ease.
The fierce struggle to offer a truly omnichannel experience.
New channels appear continuously, voice applications like Amazon by Alexa to connected devices and interactive storefronts. Multichannel retail, which is driven primarily by the launch of new digital channels, was expected to evolve rapidly to provide a seamless omni-channel experience that meets customer expectations.
Does this justify, from a commercial point of view, the opening of new routes to the offline world? Absolutely ! In the United States, Amazon has captured 44% of the current e-commerce market, but about 90% of sales are still offline. And in China’s thriving retail market, 80% of transactions are in stores. Our online life has become so important that we often overlook the fact that the vast majority of retail sales are still offline.
Strong power in local markets, thanks to physical stores.
Nike’s new strategy is to take a local approach, with a new campaign to promote “local business globally” by developing services to customers in 12 cities, starting with London. This approach could lead to the development of highly targeted products for these strategic cities, which should account for 80% of the company’s growth over the coming years. Resellers also need to think of innovative ways to cross the ultimate frontier of customer experience. IKEA’s creative acquisition of the Task Rabbit online DIY service will help ensure customer satisfaction by eliminating one of the most complex aspects of the customer journey: furniture assembly.
Retail is experiencing a great transformation. The customer experience does not end when a customer leaves a store or closes their browser. The cornerstone of the new retail world is the combination of data-driven e-commerce solutions with a focus on experience, and traditional stores to offer perfectly fluid customer journeys.