Omnichannel Retail: Why it Matters.
7 minutes 35 seconds read
How Walgreens is finding success, and how you can get there
Today there are more devices than people in the world, and devices are growing in number five times faster than people. This onslaught of tablets, phones, fitness trackers, and other gadgets provides more ways for consumers to interact with brands. Toss in email, social media, instant messaging, and the many other communication means, and retailers have the daunting task of how best to talk, sell, and market to consumers across endless channels. A strong omnichannel strategy is crucial to success.
Why omnichannel is important to retail
When shopping, consumers want to blend digital with physical, and retailers who support that desire will succeed.
CONSUMERS SHOP AT BRICK AND MORTAR.
According to an intelligence report from L2, the “showrooming” trend where consumers visit a physical store to see a product but ultimately buy online (usually at a cheaper price) is waning, and “webrooming” is replacing it. For example, a study from Deloitte reports that consumers today often “pre-shop” online, doing their research through the retailer’s website but ultimately buying the product in the store.
A Forrester report notes that consumers want to shop the store’s offerings online before making the trip:
- 71% (of consumers) expect to view in-store inventory online, while 50% expect to buy online and pick up in-store.
- 39% of consumers are unlikely or very unlikely to visit a retailer’s store if the online store does not provide physical store inventory information.
DIGITAL CHANNELS IMPACT IN-STORE PURCHASES.
L2 reports that half of offline retail sales across all categories touch digital channels at some point in the shopping process. And Deloitte notes that these shoppers are converting at a much higher rate:
- Consumers who use a device during their shopping journey convert at a 40% higher rate.
- 22% of consumers spend more as a result of using digital—with just over half spending at least 25% more than they had intended.
RETAILERS ARE BEHIND.
Forrester and Deloitte report a major gap between what consumers want or expect and what retailers are actually offering. The gap is caused by hard costs such as technology required to create connected experiences (e.g., showing store inventory online, building mobile apps, etc.) but also by retailers’ understanding of what omnichannel is. Forrester suggests that many retailers have a “false state of omnichannel comfort,” thinking they’ve done enough to meet consumers’ wants.
This reality presents a great opportunity for retailers who can succeed in this area. Having a great omnichannel experience will set you apart from your competitors.
Walgreens: Omnichannel strategy at its best
Let’s take a look at a retailer that has mastered omnichannel (and is still trying out new ideas). Tim McCauley, Sr. Director, Mobile Commerce for Walgreens, reports that multi-channel Walgreens customers spend 3.5-6x more than in-store-only customers. That’s some serious motivation to convert customers on multiple channels, but how do you do it?
Walgreens offers many options, ranging from the obvious but practical to the downright clever.
A large part of Walgreens’ business is its pharmacy. Likely the most common user behavior with the pharmacy is refilling prescriptions. Traditionally, consumers would first have to remember when to refill their prescription and then either call in the refill or drop it off at a physical store. Today, consumers can refill multiple ways:
- Respond to an email from Walgreens. Consumers receive an email that they’re due for a refill. They click “reply” and then “send.” Done. Prescription is scheduled for a refill and the consumer is notified when it’s ready for pickup.
- Refill by scan. With the Walgreens app, users can scan the barcode on their medicine bottle to start the process. McCauley reports that every second Walgreens fills a prescription from a refill by scan!
- Refill by phone. Consumers can still refill by calling the pharmacy.
Screenshot of how to refill a prescription through the Walgreens app or through email.
Walgreens’ photos business allows users to print copies of their digital photos. This can be done through a kiosk at the store, the Walgreens website, and now also through the Walgreens app. In 2010, only 1% of photo print orders came from mobile. By 2014, 40% of orders were coming from mobile.
Graphic that shows the growth in Walgreens photo print business via mobile.
LOYALTY PROGRAM: GEOFENCING, PASSBOOK, AND IBEACONS
Walgreens’ loyalty program, Balance Rewards, lets consumers earn points through purchases and use those points like cash in a store. Consumers receive a physical Balance Rewards card or they can use a digital card through the Walgreens app. With the app, consumers can add coupons to their card to be used at checkout in the store.
A barrier to this program was the simple process of opening the app while in the store. Walgreens now uses geofencing to reduce this barrier. When consumers are near a Walgreens, they’ll receive an alert that when swiped opens the app directly to their rewards card and list of coupons. Quick, simple, and a great reminder of what coupons they’ve already saved and coupons available now. Walgreens is also currently piloting a program that uses iBeacons to make this experience even better.
Additionally, the Walgreens app offers the option to add the rewards card to Passbook, Wallet (Samsung), or Google Wallet. Consumers can easily open their card to scan it at checkout without opening the Walgreens app.
Screenshot of Walgreens app and how it uses geofencing and Passbook.
Through their Steps app, Walgreens lets consumers earn Balance Reward points for their progress tracked by a health device, such as a FitBit tracker. This experience supports Walgreens’ commitment to health by encouraging consumers to be more physically active. They’re rewarding good health with essentially free money.
Graphic of Walgreens Steps app.
VIRTUAL DOCTOR VISITS AND PHARMACY CHAT
Through a partnership with MDLive, Walgreens is piloting the option to allow consumers to schedule a virtual doctor appointment through the Walgreens app. For around $45 consumers can talk to a doctor about their ailment and even receive a prescription without going into a doctor’s office. And through the app today, consumers can chat with a pharmacist. With pharmacy chat, users can talk directly to a pharmacist about their medication questions.
This kind of innovation is particularly special, because it’s promoting wellness by making it convenient to anyone. It’s viewed less as a direct sales marketing tactic and more as a way to make the world better. This is supporting Walgreens’ broader market of helping people get to “the corner of healthy and happy.”
Omnichannel must be a company philosophy
To build a great omnichannel strategy, the whole company must be dedicated to the effort. It’s not enough to have “buy online, pick up in store.” It’s not enough to have a seamless experience across touchpoints.
“Digital channels should no longer be considered a separate or distinct business. Instead, digital is fundamental to the entire business and the entire shopping experience, in and out of the store.” (Deloitte)
- Brands must think about each platform and tailor the experience to the platform and what the user is trying to do (i.e., where are they in the customer journey?)
- Store sales associates must be trained and given the power to help consumers when a product is not available in store.
- Analytics teams must understand what a conversion online really looks like (fewer “add to cart” clicks may not be a failure after all).
Considering these examples, teams have to work together–across the organization–to build a truly cross functional strategy.
At Launch, we understand how important omnichannel is, and we design and build digital products that support your strategy and help move it forward. We never design in a vacuum but rather consider the holistic view of your consumer journey. We design products that fit together with the other pieces in your strategy, to reduce friction between channels and touchpoints.
The following reports offer more in depth information about the stats and topics discussed in this article.
- Intelligence Report: Omnichannel 2014 L2
- The New Digital Divide: Retailers, shoppers, and the digital influence factor Deloitte Digital
- Earning Customer Loyalty in a Mobile World Tim McCauley, Sr. Director, Mobile Commerce for Walgreens (via Mobile Marketer)