This coming Christmas season will be a very strong indicator of the impact and direction of social commerce on the marketplace. I look for this year to be a confirmation and expansion of the growth and strength of social commerce shopping and purchasing and continued leveling and decline of the retail store sales as a result. We are seeing the signs across the marketplace now with major legacy department store retailers closing more stores along with other mall based retailers struggling as well. In the meantime we really are not seeing a decline in overall retail sales so while the purchasing remains, the consumers are purchasing in other ways. In the short term this means that retailers need to expand and improve services in the eCommerce channel and then realign their focus in the stores to become a showroom and increase consumer shipments from the stores.
Large home improvement retailers have always marketed themselves as a warehouse in a store and department stores need to embrace this concept to take advantage of their wide array of locations and products to ship more directly to the consumer from the store. This would allow more efficient inventory utilization and would also allow additional service for the store shoppers by offering free delivery for retail store purchases over $50. I think this is a great option for volume shopping periods like back to school, and Christmas, a reverse service offering delivery if you purchase in the store. Retailers are currently offering the reverse; order online and pick up in the store and this would be a paired service where the customer could purchase in the store and have their purchases delivered so they don’t need to worry about carrying bags around with them. This could be done tomorrow by retailers without a lot of effort and would improve the in store shopping experience; malls are offering valet parking, why not offer valet delivery of your purchases?
This could be offered without a lot of start-up effort however it does require process and service improvements in the stores. The stores must improve their overall inventory accuracy and they must improve the delivery service levels across the board. Last December we ordered a dress for one of our daughters online from one of the major department store chains because we could not find a dress in the store and the package was not delivered for 9 days. This is ridiculous and a key reason why Amazon is a category killer in the retail marketplace! Large retailers must provide two day delivery service for all orders when inventory is in stock and especially if delivered from a store. Large department store chains have a distinct advantage in this area because their stores are within 2 day shipping service for most of the country.
These types of service offerings can change the relationships between retailer and customer. This type of thinking is required to realign retailers in a manner that provides some support while they change the big things to support social commerce shopping and purchasing.
And now for the audience participation portion of the show…
ECommerce will have wide ranging impacts on both the retail and manufacturing sectors. How can you focus these abilities to improve the consumer's experience? Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes. In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas. How can you support these continuously changing requirements?