It’s no secret that retail is no longer a one-step shopping experience. Customers want the flexibility of taking their in-store experience online and vice versa. In 2020, Walmart responded to the global pandemic by improving their omnichannel experience and adding more square footage to their stores for online order fulfillment. This helped them achieve a 97% spike in e-commerce sales.
A study by First Insight showed that customers in many categories still prefer in-store shopping versus buying online. In particular, the study showed that over 70% of shoppers are more likely to make impulse purchases or buy more in store, because of the merchandising and customer experience.
It’s just that the pandemic has made it more likely that the customer journey starts online, even if the actual purchase happens in a physical store. As such, for traditional merchants, it’s not about whether customers are shopping more online or in-store. It’s about needing to serve customers across multiple channels, often at the same time. This is why the entire omnichannel shopping experience is increasingly important.
But if you’re a traditional retailer just starting out in this brave, new world, where do you start? Changing store processes to serve omnichannel shoppers isn’t something that can happen overnight. This is where “clicks-to-bricks” strategies come in.
Clicks-to-bricks simply refers to strategies that focus on using “digital storefronts” or “pre-shopping discovery” online to drive foot traffic into stores instead of encouraging customers to mainly shop online. Even if you offer delivery, there are a lot of benefits to focusing on store-driven online shopping.
Top 5 Advantages of a Clicks-to-Bricks Strategy
It maximizes local awareness of your business online. During the pandemic, a lot of businesses focused on selling online and neglected the fact that store shoppers also start their buying journey online. Whether it’s checking store hours or stock availability, being found online is key to offering a smooth customer experience. The easier it is for shoppers to find you online, the more likely they are to purchase from you as compared to some of your competitors who may not be as easy to find.
It increases sales per shopper. Shoppers buy more when shopping in store. Retailers want customers to buy in store because they are more likely to make additional impulse buys with higher margins. If store products are linked to online search with tools such as Google’s See What’s In Store (SWIS) or Local Inventory Ads (LIA), you’ll get store shoppers that walk in “ready to buy” as they already know what you carry and have on your shelves. In fact, helping customers “pre-shop” or “discover” products online can drive more traffic to both physical and online stores. This will increase overall sales per shopper as you’re able to serve shoppers in multiple channels.
It maximizes profitability. Besides bigger basket sizes, using online awareness to drive higher quality foot traffic to your store means that you’ll be spending less in marketing for higher sales. If you use omnichannel tools that link your store data with online research, you can even save on the cost of having employees or agencies manage your product information online.
It gives you useful customer insights. Connecting with customers on multiple channels means more opportunities to gather information about your customers. Whether it is an email address or a physical address, having more data increases retailers’ insights into their customers and their buying habits, making marketing easier and cheaper over time.
It gives you useful inventory insights. Knowing what sells well on which channel allows retailers to sell and target specific segments when releasing new products or product lines.
Multi-location retailers have more issues managing multiple stores because no one can be at more than one place at a time. In order to run a multi-location business, even when you are not always there, you should look at processes that have an impact on productivity and customer satisfaction. We have put together a list of things to help retailers manage their multi-location retail businesses, so that their business can run smoothly no matter where they are.
Multi-location means that you will have different people working in stores that may not interact with each other on a day-to-day basis. Managing each store effectively means standardizing and automating processes so that they all run with the same efficiency. These processes can range from onboarding new employees, delivering product knowledge, processing returns, to updating inventory.
While it’s not easy finding the resources and time to document processes, having something written down will significant speed up future training and make it much easier for staff to understand your policies and procedures. The most successful retailers are those who can a provide consistent experience to customers across all locations. After all, the experience a customer has in a store is a significant part of the brand image of a retailer.
2. Use cloud technology to centralize and streamline your business processes
Cloud technology helps sync up and organize inventory, customer history, employee performance, sales, and cashflow. This means that you can manage your entire business from a single system. Having a centralized location for all business data allows retailers to get accurate, real-time feedback into how their business is running and identify any gaps in their workflows.
One of the best parts about using cloud technology is that it gives you mobile accessibility. You’re no longer tied to a single computer and can have access to your business data on-the-go to see changes in your store as they happen. While some solutions will give you access to your sales data from anywhere, a lot of the modern, new cloud retail management systems will let you access and manage all of your business data so that you can run your store from anywhere.
Another benefit to using cloud technology is that it automatically helps you backup your business data in the cloud. Unlike older store systems which require manual backups or expose you to hardware failure, even if you lose power during a storm, all of your business information will be safely stored in the cloud. And as long as you have smartphones, you can continue to sell using mobile devices.
3. Improve retail business inventory control
It is crucial to have accurate inventory and stock data at all times. One of the major problems with running a multi-location business is that it is much harder to keep your product information in sync. This has only gotten worse since the pandemic started since more retailers are also selling online. The best retail companies are those that use technology that gives them visibility into their inventory and stock levels at every point of storage. Having products available exactly when customers want to buy them is best in an ideal world but helping customers (e.g. shipping to their home or directing them to another location) even when a product is not in stock is key to customer service and closing every sale.
Other ways to control your inventory include keeping an eye on your re-stocking schedule (which requires knowledge of lead times and seasonal availability) as well as your minimum stock levels. This is so that stores are able to re-fill stock before selling out.
4. Use a single commerce system
To make sure that store data and reports are all in-sync, retailers need a single, smart commerce system that can handle both store sales and online orders. Combining your POS and e-commerce processes into a single system helps you determine what products should be carried, which items are bestsellers across different locations or online sales channels, and which products need to be discounted or discontinued across your entire business. Using a single system also helps employees deliver the same experience to customers wherever they shop.
5. Secure your data
In order to comply with local and national privacy laws, retailers need to do their best to protect the privacy of both customers and employees. Finding the right software and hardware to manage sensitive information is key to building customer trust and keeping retail businesses healthy.
TAKU Retail stores customers data on separate databases to minimize the risk of privacy breaches. Read more about our security features here.
Want to know more about our multi-location capabilities? Read more.
The bottom line is, you want to make a profit with your business. This means selling products and services that customers want and are willing to pay for at the price you are selling. Finding that point can be confusing to many business owners: balancing margins and finding out the going market price are things to consider before releasing a new product. The wrong strategy could lead to large financial losses; we have created a pricing guide to help retailers get to the other side and find the right pricing strategy for your business.
Cost-based pricing
This is the most straightforward way to determine sell prices. This method is not related to market pricing and sets prices based only on actual costs. In this case, retailers estimate all fixed (e.g. purchase cost) and a share of variable costs (e.g. overhead costs that you have to pay even without any sales such as rent, payroll or utilities) to determine the sell price of a product. This method is most commonly used in product categories that are highly competitive where market prices are relatively known. Staple products or commodities are common examples.
Cost-plus pricing
Instead of adding the actual overhead cost of the business, cost-plus pricing is a lot easier to calculate as it assumes a specific fixed markup percentage to a product’s purchase cost. For example, some merchants will simply multiply the cost to buy a product by a factor of 2x to 3x. This is called the price markup. While this method is much easier to use, it is important for retailers to make sure that the markup percentage is enough to meet your target rate of return (profit) and to periodically review the markup to make sure that it is still suitable.
Value or market-based pricing
This is the most common method in industries where the perceived value of a product is highly driven by emotion or lack of availability such as fashion, art, luxury cars or concessions at sporting events. Essentially, this method sets prices mainly based on the perceived or estimated value of a product or service to the customer rather than according to the cost of the product or historical prices. This is commonly used by retailers with deep understanding of brand building, market pricing, managing exclusivity and valuing the benefit to a customer versus how much she or he is willing to pay.
While market-based pricing is constantly changing, and therefore more sophisticated to manage, with newer technology, it is increasingly possible for retailers to incorporate value-based pricing into their pricing strategy to avoid “leaving money on the table.” It’s also worth pointing out that the increasing number of merchants going online has also made pricing in some categories more transparent which increases price competition and can drive pricing lower. It’s why many premium brands enforce MSRP on their online retailers (e.g. Apple) and more merchants are selling their own branded products online today as these categories are the most likely to be successful since supply can be more easily controlled and substitutes are less available.
Penetration pricing
Introducing new products into the market by lowering price is a strategy that some retailers use to introduce their products into a saturated market. This is a good chance to build brand loyalty and to get new customers to try your products.
Although it may seem intuitive to jump into the market with this strategy to gather as many customers as possible, this strategy does have some drawbacks. Raising prices (after the initial release) often leads to some reluctance from customers, so proceed with caution.
Sensitivity to price changes
All of the pricing methods above should not be applied without considering whether a product is price elastic or inelastic. Price elasticity refers to how sensitive price changes will have on the demand for a product. For some products, demand will change significantly if prices are changed and vice versa. A classic example is grocery store bread. Unless brand loyalty is strong or there is a special product feature, bread pricing tends to be elastic: as price increases, the demand will decline.
Price elasticity is useful as it gives you a sense of how much you can adjust pricing without significantly affecting the demand for your product. It’s important to remember that many products have category thresholds. This means that even if you sell an product that is price inelastic or not sensitive to price changes (e.g. luxury purses), the market will have a perception of the maximum a buyer is willing to pay.
Similarly, it is important to remember that demand sensitivity is also impacted by the availability of substitutes or competitors. So if you sell in a category that has a lot of competitors with similar alternative products, the demand for your products will most likely be more sensitive to price changes since it’s easier for your buyers to find replacements.
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