Many people were surprised when Gemvara, a company that defines itself as “the revolutionary leader of custom-made, fine jewelry shopping online,” announced that it would be opening a storefront on Boston’s Newbury Street. I was not surprised by Gemvara’s move and was even less surprised when competitor BlueNile, “the largest online retailer of certified diamonds and fine jewelry,” followed suit, announcing a partnership that will allow prospective brides to try on select wedding jewelry in Nordstrom stores before buying online at BlueNile’s site. Why would two companies, built as pure ecommerce plays suddenly decide to dip their toes into the world of brick-and-mortar? One word: omnichannel.
Bringing it Back to the Store
As we mentioned previously, omnichannel is such a new term it hasn’t technically been defined, but according to Wikipedia is “the evolution of multichannel retailing, but is concentrated more on a seamless approach to the consumer experience through all available shopping channels, i.e. mobile internet devices, computers, bricks-and-mortar, television, radio, direct mail, catalog and so on.” Retailers chasing after this seamless experience are experimenting with unique combinations of these all channels with a focus on the digital ones, but to me, to truly achieve omnichannel retailers must include the in-store experience.
Clearly, after years of being online-only, BlueNile and Gemvara share my thoughts on the approach. Consumers often go shopping to do more than just buy things; they go to be in an environment that they love, to physically see and touch products they are interested in, and to have fun. So while online shopping and showrooming are very real threats to brick and mortar channel sales, the brand experience shoppers get when they are in a physical store has its own unique strengths that retailers have to leverage to make the total shopping experience better.
Traditional mail-order companies like L.L. Bean already know this. Over the past 20 years, ecommerce has transformed their business with a massive shift in sales from the catalog to online, and yet they still do a ton of catalog mailing. Why? Because the physical catalog still has unique strengths from a brand and marketing perspective, and these companies have learned that the biggest boost to online sales comes from sending out a new catalog. In this same vein, omnichannel retailers will come to realize that the brand experience and marketing halo created by a great in-store experience will grow sales on all touch points. For BlueNile and Gemvara, adding the in-store experience doesn’t necessarily mean increased sales through brick and mortar; many shoppers will visit and still make their purchases online. For these retailers, it simply means increased sales overall.
Meet the 21st Century Storefront
It is not enough, however, to just keep business as usual in stores. It has to really be a great brand experience. Check out this video from IBM to see what we mean.
I love this video, as it shows exactly what CQuotient is working on with our omnichannel customers. I will argue, however, that IBM is way off on their timing. It should not and will not take retailers five years to realize that, by adding the personalization tactics of online to their in-store experience, they can create an omnichannel experience that is so personalized and relevant to their shoppers, it keeps them coming back. Most retailers I speak with know this now and the leaders are actively engaged in making this a reality for 2014. Frankly, those that don’t start now may not last 5 years!
I will also argue with their theory that local stores need to fight back and overtake online shopping. That is the wrong way to frame the issue. Omnichannel retailing is NOT about one channel vs. another. It is (and always has been) about total share of a customer’s wallet for one retailer vs. another. And that share of wallet can be gained in whatever manner possible – store, web, mobile, carrier pigeon, etc.
It All Comes Back to Measurement
I’m a self proclaimed geek for data measurement, so I love when the answer leads back to it, and for retailers looking to go omnichannel, it will. Let’s take BlueNile, for instance; they realized they had a hole in their omnichannel strategy: brick-and-mortar. They’ve now filled that hole, but they aren’t banking on huge in-store sales. Rather, they are banking on huge overall sales gains. BlueNile doesn’t care where the sale happens, as long as it happens. Believe it or not, I still have discussions with retailers where the store execs have veto power over ecommerce initiatives they fear will hurt in-store sales. These retailers need to change ( fast!) and evaluate success not by channel sales, but by omnichannel sales. Just because your in-store sales were low and online were high this holiday season, doesn’t mean those shoppers didn’t visit your store, talk to your sales team, play with products, and then go back to their laptops and purchase. If you want to be omnichannel, you must measure omnichannel.
So, should we expect to see more online-only retailers buying up storefronts over the next few years like Gemvara and BlueNile? Maybe and maybe not as it is not clear what the correct execution formula will be. But I think it is clear that the in-store experience has unique advantages and will play a prominent role in any omnichannel strategy. You should expect to see a lot of experimentation over the next couple of years on this front, like what BlueNile and Gemvara are trying. It will be fun to watch, and should result in some great shopping experiences!