Retailers who developed an omnichannel strategy thrived in 2017

Many retail businesses experienced growing pains due to the market’s shift towards e-commerce and the omnichannel shopping experience. Some businesses are facing massive closures and potential bankruptcy. Many others, however, thrived through 2017 and can expect success in the months ahead.

The holiday season provided an indiction for many market analysts which retailers would survive well into 2018 and which would fall. For instance, Sears and Kmart both saw sales drop somewhere between 16 and 17 percent while announcing plans to make multiple cuts worth $200 million in the near future, according to CNN. The company accrued up to $10.4 billion in losses since 2014 and currently has 1,400 stores.

Many market analysts and those within the company feel as if Sears may not make it through the year before declaring bankruptcy. But multiple legacy retailers have already done so in markets that traditionally thrived in brick-and-mortar locations. For instance, Toys R Us declared bankruptcy in September of last year and Payless ShoeSource Inc. did so in April.

 

Other retailers haven’t fallen to the same fate as companies like Sears and Toys R Us. Target, who may be within Amazon’s sights, saw sales from November to December rise above expected levels to 3.4 percent. In addition, Target’s online sales grew by 25 percent. The company has a new focus on e-commerce as they purchased Shipt in December to bring same-day delivery to a majority of their stores by this year’s holiday shopping season.

“We will also remain focused on rapidly scaling up new fulfillment options including Same Day Delivery, which will be enabled by our acquisition of Shipt, and our recently launched Drive Up service.”
Brian Cornell, CEO and chairman of Target Corp.

New technology and business methods have allowed many companies to create an optimal omnichannel shopping experience for customers while at the same time boosting sales. Walmart recently built online order kiosks in some of their stores which allows customers to pick up their online orders in-store. Mobile payment options have also been popular for many retailers and customers alike. The platforms allow customers to pay for their products in-store from their phone. By capitalizing on the rise of m-commerce, retailers have put preference into the hands of the consumers to make payments in the method of their choice.

Many companies are attempting to reach the same destination: a complete and comprehensive omnichannel for their customers. But such a business model isn’t exclusive to large corporations. Dirxion online catalogs give both retail and B2B companies a tool to create an omni channel approach for their businesses and aids any e-commerce operation. Both versatile and optimized with HTML5, Dirxion online catalogs ensure cross-platform and multi-browser performance standards are met.

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Retail stores undergoing era of adaption, aided by online catalogs and e-commerce

The physical retail marketplace continually changes due to its susceptibility to multiple variables such as consumer preferences and the automation movement. The initial emerging narrative spelled doom for legacy physical retailers and constructed a future in which e-commerce dominates the retail marketplace. However, new studies and data suggests retailers who have learned to adapt to market trends will persist as consumers find a middle ground between e-commerce and physical retail options.

Against the common narrative, more retail stores are opening than closing according to a study conducted by IHL Group. The type of stores experiencing closures provide an explanation for the direction in which the market is headed. Radio Shack’s bankruptcy and fashion retailers account for a large percentage of the closures.

Many legacy retailers could afford to remain out of touch with their customers before the rise of the internet and prevalence of e-commerce. Consumers now use e-commerce, especially m-commerce options, as research tools to supplement their shopping experience. Such shifts in consumer expectations increased the rate at which certain retailers declined, yielding the retail apocalypse narrative.

 

“The mediocre brands that were protected by scarcity of information, distribution and access are getting blown apart as the customer can now get the same product anytime, anywhere, anyway — and often for less money.”
Steve Dennis, Forbes, 2017

Legacy retailers have had difficulty changing as compared to newer businesses who have leeway to build their business model structured around trends and shifts within the market. E-commerce and the influence of the internet within business is far from a trend as consumers have become accustomed to unlimited information and price comparisons that e-commerce offer. But the majority of retail sales, roughly 80 percent by 2025, will continue to be done in-store according to Forbes.

Businesses have begun to develop an omni channel shopping experience to tap into new trends and the presence of e-commerce. An increasing number of retail sales are influenced by digital avenues,over $2 trillion according to Forbes. For some retailers, this meant re-opening, re-investing or completely revamping their catalog experience. Business such as Patagonia underwent a more journal-styled catalog whereas Restoration Hardware focused on a refined aesthetic.

Dirxion online catalogs have successfully combined the aesthetic and familiar feel of a print catalog with the connectivity and versatility of the e-commerce experience. Dirxion offers custom features such as minimal UI and embedding within an existing domain to create a seamless transition from website to digital publication. And because these online catalogs live within a website URL that is accessible anywhere with an Internet connection, shipping costs are essentially eliminated. Most decisions are a matter of how and when to send an e-mail blast or promote the material on social media sites — an opportunity cost, but not heavy expense.

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Simplicity raises consumer responsiveness to e-commerce, online catalogs

Whether or not consumers enjoy having many product choices has been a question businesses, especially in the e-commerce market, have struggled with. Businesses refer to this as the “paradox of choice” and “choice overload” — the relationship between consumers and the amount of choices they’re presented with. It has been under scrutiny in recent years. Studies from the Harvard Business ReviewNPR and Stanford have alluded to a connection between the two in which the less likely a consumer is to be overwhelmed, the more likely they are to build loyalty with a brand or company.

Studies from the Harvard Business Reviewdeveloped a metric for determining the effectiveness of consumer engagement and how that translates into how “sticky” a consumer is (how likely they are to remain loyal to a particular brand, product or company). The metric is a “decision simplicity index” and gauges how easy it is for consumers to navigate and understand information about a company or product, how much a consumer can trust the information they find and the readiness of comparable options. The higher the decision simplicity index, the more effective the brand is at making a consumer connection. The studies concluded that brands ranking in the top quarter of the study were 86 percent more likely to be purchased, 9 percent more likely to be repurchased and 115 percent more likely to be recommended to others.

“The next thing we looked at is in which case were people more likely to buy a jar of jam? Now we see the opposite effect. Of the people who stopped when there were 24, only 3 percent of them actually bought a jar of jam. Of the people who stopped when there were six, well, now we saw that 30 percent of them actually bought a jar of jam.” — Sheena Iyengar, NPR 2017

Sheena Iyengar, in an NPR TED Radio Hour, explored the paradox of choice in an experiment involving different types of jam and consumer choices. The experiment looked at two different scenarios: a display with 24 types of jam and a display with six different types of jam. It took into consideration two different variables: how many people stop at a display and how many people purchase jam. The studies discovered the two variables were inversely related to each other. More people stopped at the displays when there were 24 types of jam (60 percent as compared with 30 percent) but more people bought jam when there were six types of jam (30 percent as compared to six percent).

While large amounts of content and information might attract larger audiences and drive more traffic to a company’s e-commerce website, conversion rates lower at a marginal rate because of that. However, Dirxion online catalogs can deliver content in a simple, easy-to-use format that doesn’t overwhelm users, especially when developed around Dirxion’s Minimal UI. The interface was designed with online catalogs in mind, giving an emphasis on the pages and information and eliminating potentially distracting factors.

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Stories of brick-and-mortar struggles don’t account for e-commerce adaption mindset

The retail industry in the past two decades has seen a myriad of changes due to the evolving expectations of consumers and the persistent rise of the Internet. Reports and articles across the market have highlighted layoffs, foreclosures and bankruptcies of some of the industry’s biggest players, essentially constructing a narrative where online-exclusive stores will eventually phase out the brick-and-mortar experience. These reports, however, don’t account for the costs associated with e-commerce development and implementation and how stores are finding new ways to create an omnichannel experience for their customers.

There’s been no end of stories lately about retail store closures, layoffs and bankruptcies, but the real story isn’t about physical retail dying. It’s about evolution — and that outlook is very positive.
Ifti Ifhar, CEO, ComQi

E-commerce growth has been somewhat misleading in recent years when analyzed in an isolated scenario. For instance, according to ComQi, e-commerce sales have grown by 14.7 percent in the past four quarters and physical stores have grown by 4.3 percent in the same time period. But when converted to sales, e-commerce brought in $13.5 billion whereas brick and mortar reeled in $47 billion.

But that’s not to say that e-commerce hasn’t taken some of the market away from physical stores. From 2009 to 2017, the percentage of total sales accounted for by e-commerce grew from 4 percent to nearly 9 percent. Consumer preferences across generations have continually preferred to make physical purchases. According to BigCommerce,across all generations, an average of 54 percent of all purchases are made in-store.

Physical stores have been in an adaption mindset, returning to old concepts and evolving them to work in this new market. Most recently, many large brands such as Patagonia and Athleta found success after bringing back or revamping their print catalogs. However, at the same time, other businesses found print to be too expensive, with high printing and shipping costs as well as the risk of shipping out catalogs with very low returns on their print investment. The market eventually found a comfortable medium in online catalogs, as the demand from consumers for companies to deliver a coherent, on-brand omni-channel shopping experience rose.

Dirxion online catalogs have successfully combined the aesthetic and familiar feel of a print catalog with the connectivity and versatility of the e-commerce experience. Dirxion offers custom features such as minimal UI and embedding within an existing domain to create a seamless transition from website to digital publication. And because these online catalogs live within a website URL that is accessible anywhere with an Internet connection, shipping costs are essentially eliminated. Most decisions are a matter of how and when to send an e-mail blast or promote the material on social media sites — an opportunity cost, but not heavy expense.

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Ulta Beauty showcases CRM, e-commerce strategy at conference

Dirxion customer Ulta Beauty spoke at the annual CRM Conference in Chicago earlier last week,as reported by TotalRetail. Ulta Beauty’s SVP of Marketing Strategy Eric Messerschmidt spoke on the company’s CRM and e-commerce strategies and how they increase customer loyalty.

The presentation focused on how retail businesses can adjust their customer retention strategies in order to attain loyalty membership and revenue growth. Such skills were emphasized in an era where e-commerce sites have been taking away some of the market share of physical stores. According to the article, Ulta saw a 24 percent increase in sales, a 28 percent increase in earnings and a 27 percent growth in their loyalty program. Messerschmidt revealed that their customers buy a third of their beauty needs from the company, partly in thanks to their strong commitment to a loyalty program. He then reveals the keys to achieving a high level of CRM:

Ulta Ultimate Rewards

1. Align on a trusted measurement methodology for your CRM program. Customers respond to transparency. According to the 2016 Label Insight Transparency ROI Study, conducted by Label Insight, 81 percent of surveyed customers would be willing to sample more of a brand’s products if they were comfortable with its level of transparency.

2. Implement a cycle of continuous learning. “If you haven’t failed, you’re not trying hard enough,” said Messerschmidt. Ulta adopted a trial and error mentality when it comes to trying new campaigns.

3. Employ a diverse set of offers and approaches. In partner with its brands, Ulta offers a variety of deals, offers and samplings. Other premium experiences, such as early access for new products, are extended to members of their Ultimate Rewards program.

4. Build and leverage a knowledge base. Ulta is constantly conducting market research and collecting data about their customers. By being in tune with the evolving habits and methods of their customers, Ulta can better market their offers and products. Often times, this is done through target campaigns on target audiences as opposed to a control group.

5. Staff consultative “account managers.” Certain employees are responsible for managing Ulta’s relationships with their brands to get the most out of their partnership. However, special attention is given to brands that “move the needle,” according to Messerschmidt.

Partnered with Ulta Beauty, Dirxion has provided Ulta new avenues to connect with their customers with Dirxion’s e-flyers. The e-flyer gives Ulta customers a new way to browse and purchase Ulta’s products in a format that can be sent to their customers at anytime from anywhere. This format also increases the efficiency in which Ulta can interact with and extend new deals to their customers. Integrated into their Google Play and Apple iTunes store applications, Ulta’s e-flyers receive a high level of exposure to their mobile customers.

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New minimal user interface offers online catalogs a clean look

Online catalogs publishers looking for a simple but complete interface can switch to Dirxion’s new minimal UI. The interface design stores its tools and features within a menu that opens and closes with one click.

The interface was designed with online catalogs in mind, in order to give greater focus on the catalog pages and the product images published within. Publishers with an emphasis on image quality and art direction have shown the greatest interest.

A recent example is retail apparel company American Giant. Its online catalog interface uses Dirxion’s new minimal UI with a menu in the bottom-left corner. When the online catalog loads, only the catalog pages, side-panel page arrows and bottom-left menu can be seen. Products throughout the catalog are linked to American Giant’s corresponding e-commerce pages, in order to drive sales.

American Giant Online Catalog

 

Once the menu button is clicked, American Giant’s custom interface design is displayed. They chose to have a toolbar set at the bottom of the interface — for basic navigation features, a high-res thumbnail strip and a link out to the consumer’s shopping cart. American Giant also has three tabs on the left panel of the interface, where users can access previous catalogs, a table of contents and search results that can be requested through the search field below.

Dirxion is currently showcasing its minimal UI to new and existing customers to accommodate a variety of preferences. In addition to the minimal UI, customers can explore other custom designs, like Restoration Hardware’s modern look, Brady Corporation’s content library or Uline’s toolbar header.

Dirxion’s goal is to provide unique branding and interface design to all of its customers, through the manipulation and addition of templates that are built with HTML5, CSS and Javascript. No two online catalogs interfaces should look exactly the same.

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Even online retailers are using the print catalog to attract consumers

For some catalog printers, Internet commerce is actually helping to create new business, a recent article in the Portland Press Herald points out. The story focuses on a major printer in Freeport, Maine — The Dingley Press — who now prints catalogs for many online retailers.

The message of the article is clear, that despite not having brick-and-mortar stores, online retailers still rely on print material to drive consumers to their digital storefronts. The influx of print catalogers has even encouraged The Dingley Press to expand, investing $17 million in a new press, robotics and other equipment.

The company’s president, Eric Lane, does consider the overall demand for printed catalogs to have declined over the past decade or so, but it is the new print catalogers entering the market that are dictating some growth.

Lane is quoted in the Press Herald article stating that, “in order to reach prospects, to bring them to your website, you need a tool for that.”

For many catalog publishers, not just printing but also postage can be a major cost in fulfilling the campaign, especially for companies who want their catalogs mailed directly to consumers (like many retailers demand). The article goes on to describe methods that printers have developed over the years to streamline postage and shipping and drive costs to a bare minimum. The technology employed is an impressive display of automation and organization that delivers pallets of catalogs to specific post offices, meaning only the mail carrier has to touch the catalogs in process of delivery.

Dirxion and other online publications companies offer an additional method of delivery, this method being via email, website links and advertising campaigns that link out to online catalogs. Some of Dirxion’s customers use this alternative method to mitigate some of the costs of printing and shipping, as well. Of course, Dirxion’s business is largely centered on the online publication of printed material. This creates a synergy between printers and online publishers.

A good example of this is the work Dirxion does with high-end furniture retailer Restoration Hardware. The print team works with its e-commerce team to find a balance between printing, shipping and online delivery. Today, RH’s online catalogs reach millions of consumers each year, providing a boost to its impressive print run for their large collection of source books. RH’s stock is up nearly 87 percent since the beginning of the year, and the company continues to focus on the production, printing and online publishing of its source book collection as it prepares for future releases.

RH Online Catalogs

 

Perhaps it is companies like RH, who is well known for placing high-praise and importance on its printed source books, that have inspired online retailers like Wayfair LLC, a Boston-based online retailer that sells furniture, housewares and other items, to embrace printed catalogs. In the Press Herald article, Paul Miller, vice president and deputy director of American Catalog Mailers Association, acknowledges that Wayfair has “gotten into catalogs quite heavily.”

“The catalog used to be much more of a self-standing mechanism than it is today, (whereas now it) serves as a springboard to get the customer to buy from that company,” Miller said in the article.

“The catalog still carries the identity of the company, of the retailer.”Dirxion Contact Us