While consumer expectations have continuously shaped retailers’ strategies, tech choices and best practices, COVID-19 accelerated this rate of change. The result? The best practices employed by the “leading-edge” and “innovative” brands quickly became the standards for every company to compete against.
Where does that leave retailers today, especially as they develop their holiday plans and finalize their budgets for 2023? OSF Digital’s Digital Strategy team (formerly known as FitForCommerce) developed the 2022 Omnichannel Retail Index (ORI) to establish a benchmark for current practices and, most importantly, provide a set of actions and recommendations for the future.
The report also identified four broad areas that would benefit the most from focused retailer investment:
• The mobile experience;
• Search as a branded discovery vehicle;
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• Social proof for products; and
• Loyalty programs.
OSF Digital ranks capabilities based on “table stakes,” “best practices” and “innovations.” While table stakes capabilities are those that every retailer should have implemented (such as basic site search), best practice capabilities are those that retailers should implement to meet shopper expectations and remain competitive. (Using the site search example, best practice capabilities would include auto-suggest search terms and images in search suggestions.) Finally, “innovative” capabilities would incorporate personalization or tailored results based on consumer context and past behaviors.
This is the seventh year of the Index, and while the company noted that top-performers “aggressively” rolled out optimized content, frictionless checkout and other cross-channel capabilities, there was a sizeable gap between industry leaders and their peers.
“The pandemic certainly accelerated the adoption of core omnichannel and digital capabilities but, more importantly, more and more retailers realize that they cannot ignore what customers are asking for when it comes to shopping,” said Bernardine Wu, Managing Executive Director of OSF Digital Strategy, who will be speaking about the Index in more detail during an upcoming Retail ThinkTank Inspiration Session. “We will likely see some stabilization for certain groups of retailers or even a decline in the adoption of some capabilities, but overall we are expecting the progress to continue — especially as retailers continue to prioritize investments in the digital roadmap, because shoppers expect and demand it.”
The highest-ranking company implemented 85% of designated best practices, a significant increase from the highest score (72%) in 2021. In addition, 12 companies outperformed last year’s leader, with scores ranging from 73% to 85%. However, the overall adoption rate of best practices was 61%, which indicates that there are still plenty of improvements to be made.
“There has always been a gap between consumer demands and retailer execution of seamless shopping experiences,” Wu said in an interview with Retail TouchPoints. “Technology moves at lightning speed and customers get more and more sophisticated and demanding. Many retailers struggle with prioritizing the digital roadmap and ensuring that they are making the right investment decisions to meet customer demands. The technology to support seamless shopping experiences is at their fingertips, but technology is only part of the equation.”
Looking at specific retail verticals, Office & Electronics was the top performer, implementing 70% of best practices. Department Stores (66%) and Home & Houseware (65.9%) followed closely behind, showing that verticals with high SKU counts have the most to gain from omnichannel capabilities.
“Optimizing the customer experience to serve their customers in a seamless, helpful, easy and direct manner is critical,” noted Kathy Kimple, Retail Executive Director of OSF Digital Strategy in an interview with Retail TouchPoints. But for the entire industry, “there are some notable areas of improvement that tie to significant omnichannel trends.”
These key investments and opportunities include:
Mobile experience
Pre- and post-COVID Index results reaffirm the elevated role of mobile in the shopping journey. In 2019, retailers adopted only 57% of mobile best practices. In 2022, that number surged to 76%, beating web, store and cross-channel implementations. Digging deeper, retailers are clearly focusing on the ease of mobile experiences: 80% have persistent search bars on their mobile sites, while 70% make entire element areas clickable so that shoppers can quickly access more information. However, only 43% use geolocation to suggest the closest stores in the header of their mobile experiences, illustrating an omnichannel opportunity that has not been pursued.
“Across generations, we see mobile playing an increasingly important role in the shopping experience,” Kimple explained. “As consumers, we are constantly jumping from one device, and one channel, to the other, and we expect the experience to be consistent and seamless. We used to talk about multichannel, then it was omnichannel. Now it’s really just shopping. Retailers and brands that are able to provide consistency across the entire customer journey, regardless of device, are more successful.”
Search as a branded discovery vehicle
Brands and retailers realize that if they don’t want to lose their shoppers to Google or Amazon, they need to perfect their search experience. That is why 92% include auto-suggest search terms and 73% offer suggestions for empty search results. The search bar is an entry point for consumers to discover products and get inspired; if companies aren’t investing in this real estate, they’re missing out on big revenue opportunities.
Social content and influence
Consumers want to feel confident that they’re making the right purchase decisions, which is why they rely so heavily on user reviews. It’s no surprise that 87% of brands and retailers now have reviews on product detail pages, but there are clearly under-tapped components such as ratings (58%), user-generated content from social media (52%) and user-generated Q&A (40%). While these social elements help create influence, social proof messaging is another easy and effective way to drive ecommerce sales. These bursts of messaging spotlight number of items sold, overall rankings and number of happy customers to help consumers validate products quickly. Social proof messaging is extremely easy to implement, presenting a unique opportunity for retailers and brands to differentiate the shopping experience across channels with immediate results. As consumers spend more time on Instagram, TikTok and other social platforms, brands and retailers have a unique opportunity to reuse and amplify social proof messaging across channels.
Loyalty programs
Despite store closures, omnichannel businesses were able to acquire new customers through digital advertising, marketplaces and branded ecommerce experiences. Following this acquisition wave, brands and retailers are shifting their marketing focus from acquisition to retention and, ultimately, loyalty. However, with most retailers (74%) offering “earn and burn” loyalty programs, there is plenty of room for improvement.
“When we look at loyalty, it really depends on the retailer’s goals and how well loyalty is integrated,” Wu noted. “But some of the more innovative loyalty programs that we’re starting to see are more engagement- and experiential-focused; get points for coming to the site and writing a review, get points for coming to the site and interacting with the site, get points for posting a user-generated image with a certain hashtag. You can use loyalty to create repeat visits to the website and increase awareness by leveraging your customers.”
Setting a Foundation for Omnichannel Success
While the study reveals that positive progress has been made, there’s plenty of room for brands and retailers to improve their omnichannel strategies, Wu noted. Many companies created “Band-Aid solutions” during the pandemic to meet an immediate consumer need. While this led to a surge in adopted best-practice features and services, it does not necessarily follow that retailers created an optimal experience — often a rude awakening when consumers engage with these capabilities.
“When we are benchmarking for ORI, we look at whether a particular feature has been implemented, but we do not evaluate the execution of that implementation,” Wu explained. “As an example, curbside pickup exploded during COVID. We went from 4% to 77% adoption among omnichannel retailers. Many didn’t have existing backend technology or store resources to quickly activate this capability, but because it became a must-have capability so quickly, many had to think creatively, fast. This enabled retailers to offer the service to customers, but the experience was not always optimal.”
Not to mention that the standards for omnichannel success are constantly being revisited and rewritten as new consumer behaviors emerge. The OSF Digital team reviews and evaluates 250 criteria that are benchmarked every year. Although these criteria are always intact to observe year-over-year trends, the best practice of today may be the table-stakes functionality for tomorrow.
“Yesterday’s innovation is today’s best practice, and today’s best practice becomes table stakes tomorrow,” Kimple said. “Obviously during COVID, retailers doubled down on standard omnichannel capabilities as well as nice-to-haves such as curbside. Today, with the supply chain challenges facing most brands and retailers, inventory management and visibility as well as customer transparency become much more important.”
Many projects struggle due to lack of strategic direction, proper integration, processes and resources, and poor execution. To set a path for future investment and innovation, retailers should map their consumers’ shopping journeys to “fully understand what a seamless experience means to them,” Wu recommended. “Use that process to start defining the user experience and focus on technology that supports the strategy.” Beginning the process with a clear, customer-focused and data-driven strategy can set businesses up for future omnichannel success.
Click here to access the interactive digital report now.