Online stores the route to retail success

This article is brought to you by Retail Technology Review: Online stores the route to retail success.

With many High Street retailers continuing to struggle in 2009 as the economy shows little sign of an immediate recovery, Russell Dorset, Sales and Marketing Director at Maginus, argues that retailers investing their efforts in online retailing are likely to prosper. However, they must not only invest in the online store environment but also the customer service experience to ensure they keep coming back for more

The current economic climate finds the retail sector battling to sustain their business under intense financial pressure. Household names such as Woolworths and MFI have already fallen victim to the recession, while a host of other big names have been placed into administration and are fighting to stay alive.

The Interactive Media in Retail Group (IMRG) reported that economic constraints saw E-retail annual growth was just 8.2%, the lowest ever recorded by the Index. However when put into wider context total retail sales grew by just 0.8%, according to the British Retail Consortium, and retail footfall to stores slumped by 5.1% compared to the same month last year, as reported by the Retail Traffic Index. In terms of annual growth ecommerce is still ten times higher than the High Street.

The IMRG Capgemini Index has recorded a staggering growth of over 5,000% since its launch in April 2000. During the same period the ONS Retail Sales Index, which tracks UK High Street sales recorded a growth of just 21%. While, in the past nine years UK Internet shoppers have spent an estimated 200 billion online rising from 0.8 billion in 2000 to an estimated 43.8 billion last year. It is estimated that by 2020, that 90 per cent of transactions will either be over the internet or influenced by the internet. Besides this, it has been announced that the Woolworths brand, which disappeared in January, is to be relaunched as an online retailer.

These statistics reveal how important it is for retailers to have a strong web presence that is equipped to deal with growing customer demands; and with so many customers putting the Internet at the heart of their shopping experience it is critical retailers are prepared.

Ready to invest

So with Internet sales rocketing and the High Street stumbling, rather than panic about where their customers are going, retailers can tackle the problem head on and use technology to make the most of the multi-channel opportunities.

According to research by Maginus, 76 per cent of online retailers have increased their sales over the last 12 months. The survey found that almost half of respondents (46 per cent) have increased their sales by over 20 per cent.

As a result, 76 per cent of those questioned in the survey already have a plan to renew or revamp their website in the next 12 months. However, this should not be the only area of concern to retailers. Companies should also be better prepared for an upsurge in traffic as their businesses grow. Slow server response or downtime on an e-commerce website may result in a lost sale, or even worse a poor customer experience may mean a customer never visits your site again.

These statistics show that it is important for retailers to have a scalable website that works alongside its business. Retailers need their systems to fully integrate across all divisions of the business into all processes, including fulfilment and warehousing. Companies must spend money in the areas of their business that are growing or are expected to grow.

Value for money

The Maginus research found that companies are seeing benefit from consumers who shopped via more than one channel. 84 per cent of businesses found that they gained more revenue from their multi-channel customers than shoppers that only use one channel. As consumer demands continue to increase organisations need to make sure that they are catering for their every need. Consumers have so much choice available to them that retailers must make sure they allow customers to shop by their preferred channel.

However, it is also likely that stores as we know them will change and customers will receive a multi-channel experience in the store. For example retailers could invest in kiosks for their stores, which will allow them to sell products that they dont physically have in the store. Goods can then be despatched directly to the home. Eventually it may be that stores become showrooms or are used as pick-up points, and one day it may be that collection centres could be hosted for multiple retailers so costs could be shared between a number of businesses.

The one sticking point, however, that does remain for many online retailers is replicating the same customer service environment for online customers that traditional bricks and mortar customers expect. This is an area where investment is essential. Currently a number of successful online retailers dont have call centres. Therefore if customers have a problem or a query, they may be forced to communicate via email and responses may be delayed. For retailers to deliver the optimum online service experience, they must ensure that they have a high level of CRM for all of its customers.

One such business which understands the value in delivering a strong customer service experience is Tobar. The company is a complex multi-channel business, selling inexpensive and simple presents in both B2B and B2C environments. It trades via mail order, wholesale, over the web and through a number of expanding retail shops. The company uses technology to allow it to offer slick customer service by ensuring that whichever sales channel a customer uses there is access to relevant information such as stock availability, order status details and returns. This has helped the business grow without having to increase the number of staff in the call centre, allowing technology to be the heartbeat of the organisation.

Consumers have so much choice available to them that retailers must make sure they offer customers the choice of shopping via multiple channels so they can buy goods in the preferred way. Businesses must not rest on their laurels and think that having an online store is enough. Companies need to continually develop and adjust their offering to make the most of business opportunities in a difficult economic environment. By using technology to underpin the business it will pay dividends in the long run and could be the differentiator in standing out from the competition.