Retailers need to bridge the gap between online and offline

By Declan Kennedy, CEO, StitcherAds.

This article is brought to you by Retail Technology Review: Retailers need to bridge the gap between online and offline.

2017 was tough for retailers who faced the constant challenge of reducing costs and increasing efficiency whilst trying to stabilise in-store transactions and improve their online sales. And with recent high profile store closures, retailers are now re-evaluating where their brick-and-mortar shops fit in a market where online continues to outperform.

That said, pundits are predicting that 2018 could be a better year for UK consumers as inflation is set to reduce and wages may start to rise. Less of a squeeze on consumers should be good news for retailers, but rising costs will continue to exert pressure on margins and force retailers to focus on cost reduction and operational efficiency even as demand starts to pick up.

So why is there so much pressure on retailers? Today we live in a world where consumers are bombarded by choices across multiple channels, so habits are changing. The store still has a key role to play. In fact, recent research shows that 81% of UK consumers still want to go in-store for a shopping experience, but without a doubt there will be fewer stores. Retailers need to continue to invest in online, refresh core systems, and develop smarter, personalised offers in addition to rethinking the role of their stores.

We know that shoppers are now making more frequent but shorter visits to stores, meaning brands have a smaller window of time to influence purchasing decisions. Additionally, shoppers make quick decisions. According to recent Smurfit Kappa research, an average of 12 seconds is spent searching and selecting each item. Unsurprisingly, a lot of this is done either subconsciously or at speed, with shoppers reacting instantly to what they see in front of them.

The store has a great future but it will be different to its past. So how can retailers reimagine the store?

• Be more than a store – Retailers need to ensure that their stores remain relevant and are places that consumers want to keep coming back to. This was part of the problem that Toys R Us experienced, where the store was nothing more than a glorified warehouse. Experience is more important than ever, and retailers' stores need to be more than just places to transact.
• Put digital in your physical – Retailers are realising that the biggest impact that digital can have on their business is in-store. Some of the most innovative and compelling stores make digital a core part of the store experience.
• Bridge the gap between online and offline –Retailers are using their in-store sales information to help grow their online sales and vice versa.

To this point, Facebook has just announced a new ad product called Store Sales Optimisation (previously known as Offline Conversions Optimisation). The new feature is helping retailers bridge the gap between online and offline. Back in 2016, Facebook released offline conversion tracking, allowing retailers to measure the impact of Facebook ads on in-store sales. In 2017, Facebook allowed retailers to build custom audiences using their offline data to re-engage and retarget in-store customers based on behaviour. With these custom audiences, retailers could also create prospecting campaigns using lookalikes of their in-store customers. Now in 2018, Facebook has released a machine learning tool to target users most likely to head to a store location to make a purchase.

Facebook's focus on retail is no surprise. As noted, bridging the online to offline gap and creating a seamless experience for consumers is a key topic in the retail space. Through pixel and mobile data, Facebook had already built ad products that accurately interpret online customer behaviour. With the added resources of retailers' in-store conversion data and third party offline data, Facebook can now connect the dots fully, analysing customer patterns with online, mobile, and in-store behaviours.

As a Facebook marketing partner, we were able to beta test Store Sales Optimisation with our retail clients and we were suitably impressed. So if you are looking to test the Store Sales Optimisation, here are three key considerations:

1. Place adequate budget against your test – Facebook's algorithm works best when provided with enough data to learn and improve its user and product matches.
2. Match your creative and messaging to the campaign objective – Utilise Facebook's map card to provide directions to the users' nearest store. Make sure messaging is clear, concise, and focused on an all-channel purchase.
3. Localise your products – Segmenting product groups by region can better personalise a prospecting campaign. Serve ads with best-selling products for your target customer's location.

Today retailers need to build omnichannel strategies for online advertising. That's because according to Deloitte's 'The New Digital Divide', 56% of all store purchases are influenced by digital. And it's easy to see why. Consumers spend five hours a day on mobile, with 92% of that time dedicated to apps and 19% of that time dedicated to Facebook.

My advice to retailers is that they need to implement Facebook marketing strategies targeting users at all points of the purchase funnel across online, mobile, and offline channels. Facebook already empowers advertisers to make smarter marketing decisions with online-to-offline measurement, now it is giving retailers the tools to act on these insights. So retailers, now is the time to get creative with digital.