Navigating the Complexity of Omnichannel Retail: Stories of Success and Lessons Learned
According to Forrester, 43% of business leaders see omnichannel retail experiences as a growing need, pushing more digital-era companies to invest in retail locations.
Forrester’s research also predicts that 72% of total US retail sales will occur in brick-and-mortar stores by 2028.
Based on this data, it seems simple: Click-and-mortar is growing, and retail companies need to adapt.
But is the online-to-offline transition so easy?
Take it from these megabrands: There’s a lot to learn.
Amazon: A Case Study for Not Quite
Over the last 20 years, Amazon cemented itself as the go-to destination for online shopping.
Since then, the ecommerce giant rapidly expanded its offline presence to try and establish an omnichannel retail strategy.
(One Door CEO Tom Erskine chatted about it here.)
In 2015, Amazon opened its first physical store, Amazon Book, in Seattle as a “physical extension of Amazon.com”.
In 2017, it acquired upscale grocery store chain Whole Foods, giving the company an instant brick-and-mortar presence across 400 stores.
Amazon further invested in the multibillion-dollar grocery industry with Amazon Go, a first-of-its-kind convenience store chain where customers could scan a QR code when they walked in, pick up a basket, and start shopping.
When they were done, they could walk out.
Amazon Go involved zero customer service interaction, differentiating Amazon from its competition – including, ironically, the grocery company it acquired.
By January 2023, Amazon planned to scale this “Just Walk Out” technology into multiple retail sectors: fashion, big-box grocery, drive-up grocery pickup, and more.
However, this cashierless experience – and synergizing offline-online success – was not the futuristic shopping success Amazon hoped it would be.
In a few short years:
- The company closed all 68 of its bookstores, 4-star shops (a store where all items stocked had to be rated four stars or above on Amazon’s site), and pop-up shops.
- Amazon closed all drive-up grocery locations and its Amazon Style apparel stores after only two years in business.
- It reconfigured its no-checkout shopping experience into scan-and-go smart cart technology, hindering its originality in the retail space.
- Amazon paused all expansion plans, resets, and renovations for new stores.
So, even with its hyper-success in ecommerce, why hasn’t Amazon gotten a handle on omnichannel retail?
The company faced operational, financial, and technological challenges as it tried to scale its physical-store footprint:
- The high cost of implementation. Amazon is an ecommerce leader, but setting up shop proved to be more complicated than creating digital storefronts.The company ran into operational problems, like setting up heavy network infrastructure and deeply complex security technologies to prevent retail theft.It also developed proprietary identity recognition via AI, sensor fusion, and computer vision for its Just Walk Out tech.(However, the “tech” turned out to be manual labor anyway, delivering another blow to Amazon’s reputation as an innovative and ethical retailer).Each delay disrupted business operations and bottom-line revenue.
- The lack of store planning software. Amazon didn’t invest in visual merchandising software for its physical stores.Amazon store associates complained about setting up brand-new shops using manual processes and disjointed planning processes, and Amazon headquarters didn’t have visibility into ground-level problems, like incompliant fixtures and materials.This lack of agile planogram software led to disorganized stores, a poor in-store shopping experience, and damaged and out-of-stock products.
- The assumption of consumer behavior. It’s very hard to translate – or elevate – that breezy online shopping experience in a brick-and-mortar space.When opening its physical stores, Amazon assumed that its customers would prefer high-tech shopping experiences, like Just Walk Out.However, many people said it made them feel like they were stealing, or they didn’t understand the technology – even if it was meant to simplify the shopping experience.They described the physical Amazon grocery stores as “clinical” and said they wouldn’t do big shopping trips there.That’s a stark difference in consumer behavior from online to offline shopping, a concept Amazon didn’t seem to consider.
Years ago, Amazon.com was the catalyst for a conversation about the death of retail, but the reality of Amazon shaking up the brick-and-mortar retail sector has yet to materialize.
As the company continues to tinker with its operational and technological processes to improve their physical presence, here’s hoping visual merchandising software tops their list of priorities.
Wayfair: A Scalable Single Store Success
Wayfair, a popular direct-to-consumer furniture brand, opened its first physical store in a Chicago suburb earlier this year.
Born out of necessity, thanks to rising online advertising costs and low purchase frequency, Wayfair’s inaugural store was strategically set up to provide a seamless home shopping experience.
In short, Wayfair designed its store with its customer in mind, first and foremost.
And it paid off.
Wayfair’s store offers the stylish, affordable furniture, decor, appliances, and home improvement items that its customers know and love, plus free expert design consultations, fast delivery, and free same-day curbside pickup.
The Robin Report conducted a field analysis and concluded that the store “occupies a very specialized niche in the home furnishings retail spectrum.”
The report noted that Wayfair’s store is “significantly bigger than any Williams Sonoma or … Bed Bath & Beyond,” and it’s “only eclipsed in scale and scope by IKEA and the super home stores operated by Nebraska Furniture Store.”
So, did Wayfair have beginner’s luck in a massive store space?
Not exactly. Wayfair’s omnichannel retail strategy was highly calculated:
- The priority of visual merchandising. Better Homes & Gardens completed a review of the new Wayfair store and described it as a visual merchandising success:“Wayfair’s store offers a hands-on, enjoyable alternative to online shopping, combining practical product testing with a pleasant atmosphere.”Unlike IKEA’s store planning strategy to display items by room, Wayfair’s consumers can visualize how furniture and decor will look in their homes, with items organized by type, style, and color for easy browsing.Wayfair’s in-store Home Project Studio showcases appliances, cabinets, and tiles, letting customers see how these elements work together. The Dream Center even offers a peaceful space to try out various mattresses, invoking a deeper physical experience to a physical store.
- The synergy of online and offline shopping. Wayfair didn’t abandon its ecommerce strategy for a physical store. The furniture company prioritized “click-and-mortar,” ensuring the two shopping experiences complemented each other.For example, Wayfair’s flagship store has video screens and digital price tags just in case shoppers need to access any SKU that’s not in store.Wayfair also heavily invested in augmented reality and generative AI in 2023. The company launched the free web-based Decorify application.Now, tentative in-person shoppers can go home, search for any furniture they love in the store, and see it in their own home before buying.It’s a full-circle shopping experience that alleviates the shoppers’ pressure of leave-it-and-lose-it, while retaining revenue potential for the overall business.
- The importance of consistency in scaling store operations. Wayfair prioritized technology in visual merchandising and production from the start.Because of this, store associate teams will have an agile, streamlined process of setting up, resetting, and configuring fixtures and layouts.Visual merchandising software makes it easier to scale the business, adapt to fast retail trends and seasonality, and reach company goals from headquarters.(In fact, directives will likely have better visibility and communication loops with individual stores, so the strategy is already more cohesive.)
Wayfair developed a consumer-first, data-driven omnichannel retail strategy. The home goods company used their inaugural store as a launchpad opportunity before opening dozens more.
In fact, co-founder and CEO of Wayfair, Niraj Shah, said Wayfair was “only launching a couple of stores for each of our brands [including Joss & Main and AllModern] then iterating to make sure that we really dial it in before we then scale.”
The common denominator in both case studies is that visual merchandising plays an integral part in the DTC transition into physical stores.
It’s pivotal to implement this technology as soon as possible to make scaling your business easier and faster.