Reimagining the Role of Physical Stores in an Omnichannel Retail Landscape

Sales | 5 minutes to read

21st Mar, 2022

Online retail is here to stay, but brick-and-mortar stores will play a crucial role in omnichannel distribution networks of retailers and vertically integrated brands. It will be central to experiential marketing plans of retailers and delivering personalized buying experiences to customers.

Snapshots

    • Physical retail stores need to be reimagined in the new omnichannel avatar for supporting higher sales volume and minimizing overheads

    • There are three key archetypes that can help retailers orchestrate an interconnected store ecosystem from offline to online

    Amidst the rising e-commerce competition and rapidly evolving customer preferences, leading retail brands have started to reimagine the role of their physical stores. As per recent customer trends, despite online shopping, in-store retailing is here to stay. However, it will have a different function than before with new capabilities and features.

    Brick-and-mortar stores will play the most significant part in the advancement of an omnichannel network. It will be used to unify offline and online channels and will double up as a strategic fulfilment centre to fulfil call-in and online orders. Alternatively, the low-performing stores can be converted into dark stores to augment home deliveries within a region.

    Transforming physical stores for heightened customer experiences 

    The transformation to a forward-looking omnichannel model requires retailers to make operational modifications for keeping shoppers engaged and satisfied in-store. At the same time, they must fulfil the demands of customers who have grown accustomed to online shopping. While reimagining a store’s physical space, retailers must factor in the recent customer trends, such as BOPIS and click-and-collect services, along with their longevity. Brands must also leverage tech-enabled retail solutions to re-engineer their in-store infrastructure that can effectively handle orders across online and offline channels.

    As consumers are returning back to the stores, retailers must bring back in-store experiential elements such as creative in-store branding, visual merchandising, sampling stations, and more. Revival of in-store sampling and try and buy features will encourage impulse purchases and increase basket sizes. Additionally, companies can leverage one-click payment and automated check-out facilities to minimize the crowd at the check-out counters. This will also help in speedy order processing, thereby positively impacting buyer experiences in the store.

    Physical retail has two advantages that e-commerce or virtual retail cannot replicate. Firstly, consumers engage more intimately within a physical environment, and secondly, they can engage all their senses while shopping in-store. Therefore, retailers should experiment with their in-store branding, signages, visual merchandising, and spatial layout to create an unparalleled experience. Also, with highly trained and agile in-store promoters, retailers can personalize the entire shopping experience as per the preferences of individual consumers.

    There are multiple factors that contribute to shaping customer experiences, including the store size, layout, visual merchandising, technology infrastructure, and customer expectations from a brand. Brands need to cross-leverage analytics-driven retail solutions to understand how these factors play out in brick-and-mortar stores.

    Given the digital shift in customer shopping habits, brands must now weigh the pros and cons of maintaining a physical presence. They must understand that online and offline channels are no longer substitutes for competitors but complementary in an omnichannel marketplace. While customers shop online for convenience, offline stores are essential to providing personalized shopping experiences. Offline stores also support brand building and retail entertainment. Brands can remodel their stores into different layouts or archetypes for successful omnichannel integration:

    • Retain the existing layout and integrate online order fulfilment services on top of it.
    • Repurpose a part of the store space into a dark store or micro-fulfilment warehouse
    • Completely transform the store into a dark store

    Read our latest blog “Decoding the new normalcy: Adapting to change in customer preferences” to understand how virtual retail solutions can help brands execute a contactless, Phygital model to bolster sales in the new normal.

    Planning store design across three key parameters 

    While deciding the future role of stores and the omnichannel integration, smart enterprises must rethink the design and usability of their stores along three key parameters, viz., customer, infrastructure, and store operations. Additionally, they need to factor in the economic significance of these modifications.

    Customers

    The decision to repurpose a store depends on how omnichannel retailers address customer behaviour and preferences across online & in-store experiences. Retailers who have large online basket sizes and expect more doorstep deliveries should choose to have more dark stores in tier-2 and tier-3 cities. This will help them optimize their order collection and dispatching processes.

    Store infrastructure

    The repurposing of stores also depends on their existing layouts, overall footfalls, IT infrastructure, and financial health. Brands can choose to shut down underperforming stores or transform them into full-fledged dark stores, particularly in regions where they have store density. However, they should also look at competitor presence in those markets because direct competition will increase their churn rate. Establishing micro-fulfilment centres must also be thought out from the perspective of providing last-mile delivery to customers in the quickest turnaround time.

    Automated real-time inventory management and planogram tools are crucial for modern retailers to separate offline from online stocks, doorstep delivery from BOPIS orders, and other stock assessment features.

    Store operations

    The choice of refurbished store model will also rely on a store’s ability to manage inventory, optimize costs-per-order, and deliver speeds. The larger the online basket size, the more difficult it will be to fulfil them through legacy store models. Operational inefficiencies can also become a bottleneck for legacy stores while handling a large assortment of SKUs. Also, cost-per-order is the highest at a traditional retail store because in-store promoters and service staff have higher wages than the logistic workforce.

     Prioritizing economics for shifting momentum 

    Omnichannel retailers will have to upgrade their supply chain networks, store processes, and IT systems and require a fundamentally revised economic approach before shifting gears. Establishing dark stores, providing doorstep pickup and delivery, enabling BOPIS, and automated in-store operations will raise the overheads initially. However, increased visibility along with increased online demand will enable the holistic omnichannel transition.

    Conclusion 

    Reimagining the role and design of physical stores will be key to successful retail execution in the rapidly digitizing retail landscape. Retailer brands will have to rethink their offline strategy and leverage digitally-native retail solutions to optimize in-store experiences. Aligning the offline retail strategy with online channels is no longer about survival. Instead, interconnected stores orchestrated with tech-enabled retail solutions, merchandising analytics, and automated inventory management will be crucial to sales success in the future.

    Contact us today to leverage analytics-driven retail solutions and orchestrate a hyper-connected store ecosystem across key markets.

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