Omnichannel – From Buzzword to Investment Strategy in the Nordics
Current market development clearly indicates that the retailer that will win the customer’s loyalty is the one that meets expectations for service and availability through digital channels – while still offering a satisfactory in-store experience. As we see it, the superior strategy for achieving this is seamless integration of both channels – and acquisitions of established brick-and-mortar stores or online retailers are a beneficial means to that end.
In the Nordics so far this year, we have seen almost as many transactions in which dedicated e-retailers have acquired businesses with physical stores as we did in the whole of last year. Pure brick-and-mortar retailers in the Nordics are also starting to acquire e-commerce businesses. We are observing the same trend in other markets as well, with the most recent example being Amazon’s acquisition of the Whole Foods grocery chain.
This trend is fuelled by increasing insight among retailers into integrated sales channels – omnichannel strategy – and understanding of how digital and physical channels are drastically changing. Digital channels no longer provide only a way to buy. They are also product displays, information centres and tools for comparison. Brick-and-mortar stores offer inspiration, emotional connection, test facilities, customer service, delivery points and exchanges. A concrete example of the interaction between the two channels is the increasing popularity of click-and-collect: online purchases collected in-store.
Omnichannel strategy is often used as a marketing term, but has become a wider concept and is now a business strategy. Lacking understanding of how omnichannel can drive sales, it is easy to discredit the importance of bricks-and-mortar when evaluating the sales channels. Physical stores and staff affect brand awareness and sales, both in-store and online.
Acquiring an established ecommerce or store business is an efficient strategy for pure brick-and-mortar or online retailers that want to establish an omnichannel presence with both digital and physical connection points with customers. This is partly because both retail types are battling intense competition and it takes time to expand sales volume, partly because there is valuable specialist knowledge and experience embedded in both business types.
A well-matched omnichannel acquisition will also deliver significant business synergies in areas such as inventory and distribution, while setting new standards for the business as a whole. Purchases made after contact in multiple channels – a product is discovered through advertising, prices compared online, ordered on a mobile device and collected in a store – will erase the lines between in-store and online sales. Conventional metrics that categorise sales as either/or will not reflect reality, for example when it comes to click-and-collect purchases. The omnichannel strategy must also be implemented on this overarching level.
To hear more about how Livingstone views these opportunities and the current market conditions for various sectors, get in touch!
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