The rate of change has never been greater — or faster — for the footwear industry, with new challenges popping up every day in nearly all corners of the business, from navigating cash crunches and supply chain issues to understanding the latest technological advances. In its “Ask An Expert” series, FN asks industry leaders — all solutions-based providers — to take on some of the most timely topics.
E-commerce dominated the retail landscape in 2020, as stores were forced to close and shoppers opted for maximum convenience. But data consistently shows that there is consumer desire to return to brick-and-mortar and this is something that brands and retailers will need to address, as part of their 2021 strategy. Expectations for both online and in-store shopping have adjusted and businesses must be able to leverage the best of both worlds, in order to keep shoppers happy and loyal. But achieving true omnichannel has proved more challenging than some might have thought.
Stephan Schambach, founder and CEO of Omnichannel-as-a-Service platform NewStore, spoke with FN about the enduring role of the store, how footwear should be managing its channel offerings and what achieving true omnichannel will look like.
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FN: Is the physical store still relevant?
Stephan Schambach: Absolutely. One of the dirty little secrets of e-commerce is that it is super expensive – and online marketing has only become more expensive recently, because of the duopoly between Google and Facebook. With the uptick in digital buying, prices are now even higher; it is not unheard of that, for a shopping basket worth $100, $40 goes to Google. So, it’s becoming enormously difficult to make money, despite the rush to e-commerce. If you operate an e-commerce website and your existing customers come to you, great. If you want to win new customers online only, it is expensive. Stores, on the other hand, are more cost-effective for winning new customers. In this environment of depressed leases, combined with a trend of brands doing away with their wholesale partnerships, I think we will see more store openings by brands as part of their direct-to-consumer strategy.
FN: What can physical stores learn from the online experience and vice versa?
SS: First and foremost, stores need to learn to run their locations like an e-commerce website. This means being data-driven. Online, website visitors get a cookie. When you go back to that website, they know who you are and what you’ve bought before, from that cookie, so they can offer items tailored to your preferences. Whereas in-store, if you shop a brand in one city and then go to the same brand’s store in another city, they don’t know you. You need to have a high capture rate and be able to see shopping history, preferences, etc. These shopper details also need to be available to store associates so they can immediately help customers to find the colors and styles they’re most interested in.
On the other side, e-commerce is generally impersonal. The trust that one develops with a store associate cannot be replaced by the website. A store associate that helps me and has my best interest in mind is someone I am more than willing to buy from – even over WhatsApp or iMessage. An average brand may have hundreds or thousands of store associates who may not always be busy. But, if they can reach out to customers digitally and turn a chat session into a sale — and also leverage inventory from locations that aren’t their own store — that’s an additional type of e-commerce. Our customers who use remote selling functionality have a conversion rate of 60%, which is astounding and something e-commerce websites can only dream of.
FN: What are some of the challenges of achieving true omnichannel services?
SS: Often retail brands are trying to achieve omnichannel incrementally by fixing just one process. Let’s take buy online pickup in-store (BOPIS): This one process requires precise store inventory and order routing and a whole bunch of other complicated systems that aren’t achievable in an incremental fashion. You can’t stick together some packages you already have and make integration magic. In my opinion, it is not possible to get omnichannel on the cheap. Retailers that have tried this often end up with expensive and never-ending IT projects, with complicated tools that store associates can’t actually use.
FN: For footwear specifically, which types of service work better in-store and which are better suited to online?
SS: Reserve online pickup in-store (ROPIS) and buy online pickup in-store (BOPIS) are great services for the footwear category because of fit. Customers want to be sure the size they want to buy is available, but they also want the flexibility of trying another size if they need to. That’s less hassle than buying online and sending it back if it doesn’t fit. Additionally, because of the depth of inventory in footwear — there are so many size, width, and color combinations — it is important for the brand’s e-commerce website to be able to access the inventory of its stores, for buy online and ship-from-store. The same is true in-store with endless aisle, where you can fulfill the order from another location and send it directly to the customer’s home. These use cases make total sense in footwear, even more so than in other retail categories.
FN: What do you think the “perfect store” will look like in 2021 and beyond?
SS: I think stores are going to become a marketing and customer service expense. Their primary purpose will be to introduce new customers to the brand and be a service liaison. Additionally, stores will carry less inventory; they won’t be at zero inventory, but 30-40% less than what we’re used to. It will become much more normal for items to be shown in a store, but then for the specific color and size combination to be shipped from a different location. It will all be a simple and slick transaction though, much like shopping online. Finally, experiences will play a bigger role in the design of stores. That’s one more reason to get rid of the cash register or any visible hardware that’s not helping the brand tell its story.