Offline retail should focus on 3 things in the omnichannel future

In this previous article I described what i view as the future playbook for omnichannel retail. And i wanted to expound a bit more on the offline elements of the equation (from that article, which you see below) and what i view as the main role/focuses of offline retail in the future omnichannel world.

1.The #1 focus should be on acquiring new customers for your online channel

By this I mean that the offline retailers should focus on acquiring customers for the online business, which breaks down into 3 main parts: get them to walk-in, then get them to register online, and finally get them to purchase online. I'll break these down here:

part 1.1: Get as many new customers to walk into your offline location as possible

• 95% of the focus of the store should be on how to get a new customer to walk-in, and it almost doesnt matter to attract return walk-ins as you want them shopping online and picking up (more on that in section 2).
• As you can focus on this goal you can get quite creative... attractive offers to get first-time customers that are merchandised impressively on the outside of the store. Targeting specific customer groups that you think are a major opportunity for set periods of time (eg. "teen week" at the store where the whole store is merchandised this way).

part 1.2: Get as many of those customers that walk-in to register as an online customer as possible

• Now that they've walked in your goal is to get them to download the app and recognize the value proposition of purchasing online instead next time. Namely because you have 100x+ the assortment online and they can easily try things on and pick things up at store.
• Also communicating the value proposition of great online personalization... eg. hey shop online, and we will get great at predicting exactly what you want and offering you great deals on it!
• Loyalty is also a powerful tool... eg. earn 5% cashback on your offline purchase which can be used for your next online purchase

part 1.3: Get as many of those online registered customers to purchase online and pickup at the store as possible

• This mainly comes down to fulfilling your online promise with great assortment, personalization, a crisp on-site experience, and perhaps great online deals on the clothes they want.

2. The #2 focus should be on being a great pickup / upsell channel

By this I mean that your offline store has to be a terrific and fast experience for picking up your online order and potentially quickly adding a few things the customer sees in the offline store to their purchase.

• part 2.1: Your pickup experience needs to be seamless and fast. Meaning a customer that has ordered online for pickup should quickly be able to collect their order, try it on in a fitting room, purchase from their app, reject whatever they don't want, get their purchased items put into a bag and walk out. In and out in like 10-15 minutes. Max.
• part 2.2: A lot of this comes down to a great in-app experience for rejecting items while in the fitting room and checking out directly from the fitting room. No queuing up at the cashier.
• part 2.3: You also want to take advantage of upselling. Meaning the customer can easily just grab a few things off the shelf on their way to the fitting room (or while waiting for one) and then check it out on their app with the rest of their purchase (without going to cashier). Easy to say, but often technically more difficult due to how inventory systems of POS systems are often separate from the online inventory.
• part 2.4: You should also merchandise your store to take advantage of these upsells. What is the customer likely want to add to their purchase without thinking much? (eg. one size items like belts, hats, etc.). How do you position that in the store so they grab it on the way to the fitting room?
• part 2.5: I also really like the idea of training the customer to visit the store (while picking up) at regular intervals (eg. monthly). For example you can tell the customer "hey... we change 90% of our in-store styles every month, so come visit us every month!". The goal here is making the whole thing a habit.

3. Lastly, it should be an inventory-less experience

Being an operations person at my core, this one just makes so much sense to me from a supply chain standpoint. The future stores should not hold inventory on things that come in sizes... rather just showroom items that cannot be taken home.

• part 3.1: You can hold one of every size so that the customer can always try on their size. But when they see that it fits, they need to order it on their app (or at cashier) and it will be delivered to their home (next day delivery would be best). Most customers do not absolutely need to take the item home the same day (for clothing) and as long as they can try out their size, it becomes a very safe purchase for them (ie. very low risk of return.. just like typical offline sales).
• part 3.2: This way you never have broken sizes... meaning you do not lose sales due to broken sizes. Immense amount of sales are lost due to broken sizes in offline retail, as well as a high degree of customer frustration.
• part 3.3: Because you are not holding inventory you can show more different styles in your store. And you can also shift new styles in and out faster as there is less of it to move.
• part 3.4: It takes time to train the customers on this model and you might lose a little bit in the short-term but the benefits longer-term far outweigh what you lose in my view. Why? Because you can hold all of your inventory in a centralized warehouse rather than dispersing it among all of your stores. This makes planning and inventory efficiency so much better & easier. For example, if one store sells something particularly well you have plenty of inventory in the warehouse to keep sending to that store. Rather than having it locked up in other stores where it is not moving.

• part 3.5: Note that this inventory-less model is already becoming quite popular in China with the proliferation of 'new retail'

Parting Thoughts

The analogy i like to make of getting a customer to like something they see in an offline retail store is 'hitting a dartboard in the bullseye' whereas when they shop online it is more like they can hit anywhere in the entire dartboard and find what they like. Why? Because offline stores typically hold up to 500 styles, whereas you can easily have 5000 or more online. Plus online you will have great ways of personalizing it based on what you know about the customer so that you serve it up front and center as opposed to them having to sift through lots of offline shelves in a store that is not personalized to them at all. So if they have 30 minutes to shop in an offline store they will often be lucky to find 1-2 items they like, whereas if you are good with your on-site experience they can easily find 10-15 items in that same time. Then they order it for pickup in their nearest store, reject what they don't want, and are in and out in 10-15 minutes. The future of retail in an omnichannel world...