The $92 Billion In-Store Competitive Advantage and How to Maximise Your Share Of It

How bricks and clicks can unlock a major competitive edge.
min read
Retail Express Team
February 7, 2024
Retail Express Team
February 7, 2024

Table of contents

Although technology continues to advance and eCommerce sales continue to grow, bricks and mortar stores are still the preferred mode of shopping for Australian and New Zealand consumers.

In a study by Adyen:

  • 50% of Australian shoppers were found to prefer in-store shopping
  • Compared to 27% who favoured online shopping

This is significantly higher than in the US, where only 37% of shoppers favour shopping in person.

Why? It all comes down to perceived convenience and efficiency.

Humans innately seek out the least path of resistance to fulfilling their needs. Right now, most Australian consumers still believe that by visiting a physical store as part of their purchase journey, they can complete the whole process and go home with the product they want that day; rather than buying online, waiting for it to arrive and having to pay for home delivery – all at the risk that it might not be the right fit nor meet expectations once it arrives.

While major eCommerce players in Australia & New Zealand are closing the gap with practices like same day delivery and free returns to compliment the obvious benefits of price transparency available via a web search, there is still some way to go to shift Australian consumer perceptions that a pure eCommerce purchase experience is as simple and instantaneous as one that involves a store visit.

Make no mistake about it, eCommerce sales will inevitably continue to rise and take up a greater share of overall transactions in Australia & New Zealand. The same Adyen report found that retailers expect online purchases will comprise 30% of all sales within three years, up from 23% today. However, while many industry commentators turn to trends in growing eCommerce sales to paint a bleak picture for bricks and mortar retailers and a promising one for pure eCommerce players, we would argue it is likely that the retailers who stand to win the most market share are those that offer BOTH online and in-store shopping options with smart integration at the core. (It's also worth recognising that a significant proportion of the growing eCommerce sales are actually Click & Collect sales which requires an in-store presence to fulfil).

The in-store experience will continue to play a unique role in most shopping purchases, albeit blended with integrated digital channels to deliver the best of both worlds. If stores and their employees are empowered with the right product knowledge, inventory & fulfilment management, loyalty and customer service systems this can provide value and efficiency to shoppers that is hard to match with an online only purchasing journey. With the right service and cross-selling and up-selling capabilities, in-store visits typically drive higher average order values than online purchases and create more engaged, loyal repeat customers.

This means that bricks and mortar retailers that can adapt and add an integrated digital presence to their operations are well positioned to provide a superior omni-channel experience - but only if they can integrate their channels to deliver the easiest, fastest and most pleasurable shopping experience available in their category.

Unified Commerce - Bricks AND Clicks Presence Offers A Competitive Advantage

Shoppers now use a combination of in-store and digital touch-points to complete their purchase journey. Their expectations are ever-growing in terms of how well these channels are integrated. Two out of five shoppers abandon a sale because of a lack of cross-channel options to make a purchase – such as purchasing online and collecting in-store. This has resulted in $7 billion in lost sales. At the other end of the scale, 51% of shoppers bought an item they didn’t initially intend to buy because of the convenience of cross-channel shopping. Known as Unified Commerce, delivering an effectively integrated cross-channel experience can be highly lucrative. Adyen estimates there’s a $92 billion opportunity for retailers at stake. Businesses that adopt omni-channel strategies achieve 91% greater year-on-year customer retention rates compared to businesses that don’t, according to a survey conducted by Aspect Software.

Unified Commerce Requires Unified Systems

So what do retailers need to do to maximise their share of this $92 billion opportunity? Well, to have an effective Unified Commerce strategy, you need to have the right business systems in place. A key step is combine your inventory across your bricks and mortar and online stores - also known as an Endless Aisles approach. This refers to retailers pursuing a business model where each of their stores and channels can leverage all inventory across their entire supply chain to maximise product availability and choice and optimise the fulfilment experience for customers. Endless Aisles usually involves a wide range of systems and practices including Automated Inter-Store Stock Transfers, Click & Collect and In-Store Stock Check, In-Store Kiosks and Drop Shipping. As well as providing product choice and maximising the likelihood of inventory availability (avoiding lost sales from understocking), an Endless Aisles approach means a wider range of fulfilment options are available to maximise speed and convenience. Shoppers can choose from the purchasing channels that provide them with the most efficient and enriching experience.

According to the Australian Retailers Association, Australian shoppers have a high usage of Click & Collect; the two key drivers being ‘to avoid home delivery charges (45% of shoppers)’, or ‘more convenient than home delivery (37% of shoppers)’. Retailers need live, real-time omni-channel systems in place that allow inventory across all their stores to be up to date in their eCommerce store and instantly reserved for collection once a Click & Collect purchase is made online. Where inventory is not available in the preferred pickup location for the customer, the best systems enable stock to be transferred from other nearby stores. This reduces the risk of online abandonment due to the customer not seeing a nearby location that they can pick up from. The same systems used for Click & Collect should also enable a real-time In-Store Stock Checker function to be offered on your eCommerce site. This means that customers who want to try products before they buy can visit your store knowing that stock is available and complete their purchase there.

When it comes to the in-store experience, systems need to ensure that shoppers are quickly provided with a solution to their needs, that the right products are stocked to take home that day, and there are effective cross-selling, up-selling and loyalty / repeat purchase process systems in place across all their stores. Employees need to be equipped with software that empowers them to answer questions quickly and win the sale, ideally with mobile tablet compatibility so they can engage customers anywhere in the store.

Bricks and mortar retailers that can evolve to combine their traditional skills and systems focused on inventory availability and customer sales & service with integrated, digital capabilities to serve customers a truly omni-channel experience will be well positioned to thrive in the future retail arena. Developing these capabilities is no walk in park, but it is made much more achievable with the right technology stack.

With $92bn up for grabs, it would seem a worthwhile investment.

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