Why retail faces an omni-channel revolution
As consumers demand faster service delivery and a seamless shopping experience, stores will become showrooms or “experience destinations”, reveals a new report from CBRE.
Move over multi-channelled retailing. It’s no longer enough to complement a physical store with a website.
According to CBRE, ‘omni-channel’ channel retailing is here – bringing with it one seamless shopping, advertising, delivery and payment process and a unified buying experience for the customer.
CBRE’s new research report, Australia’s Omni-Channel Revolution, highlights the transformation of retail markets as the world embraces 24/7 shopping across interconnected channels.
“The retail goal posts are shifting, and as a result, businesses need to transform entirely – not just update their website,” says Kate Bailey, CBRE’s associate director of research.
“The evolution of the omni-channel retailer requires the involvement and transformation of the entire business, from advertising and merchandising to payment, fulfillment and delivery.”
By 2019, 90 per cent of the world’s population will have fast internet access on a mobile device. This has driven growth of purchasing online, and enables customers to comparison shop at any time.
Online spending in Australia currently accounts for around nine per cent of all retail trade, with this figure expected to rise to 12 per cent by 2022. This represents an 80 per cent spike in annual volume from AU$24.4 billion to AU$43.1 billion.
Matt Haddon, CBRE’s senior managing director for advisory and transaction services, says the traditional retail store is not becoming obsolete, but its purpose is changing.
“Stores will become display spaces, showrooms or experience destinations that represent a brand’s story or objective,” Haddon explains.
Online shopping may be the preferred purchasing method of millennials, but CBRE’s Asia Pacific Millennial Survey also found they frequent bricks and mortar stores more than any other generation, underpinned by a personal preference for feeling and experiencing goods physically.
“The future success of retail will hinge on interconnection between both online and bricks and mortar – it is unlikely that one will survive without the other,” Haddon adds.
At the same time, intensifying demand for same-day delivery is challenging the traditional retail model.
CBRE’s head of supply chain for the Pacific, Christine Miller, says Australians have “relatively low” expectations of delivery times compared to international customers, but this is changing.
As fast delivery becomes a crucial element for a seamless omni-channel strategy, warehouse and distribution locations close to customer bases will be vital to minimise costs and honour delivery timelines.
In Australia, growth in e-commerce sales will generate demand for an additional 3,000 sqm of distribution space annually.
“With transport accounting for at least per cent of total supply chain cost – compared to five per cent for occupancy – the right location for both distribution and last mile delivery is imperative,” Miller adds.