28 Oct 2020 | 01.35 pm
Guest Blog: Niall Savage, KPMG Ireland
‘Retailers who fail to embrace online may fail to survive’
28 Oct 2020 | 01.35 pm
Retailers will have to pay at least the same level of attention to their online presence as to their offline stores, writes Niall Savage (pictured), consumer markets specialist at KPMG Ireland
Not much more than a half a century ago, shopping meant walking into a store and handing a list to a shopkeeper. Many argued that people would never sacrifice those service levels for the modern supermarket experience. They were, of course, completely wrong.
Many consumers have been similarly reluctant to ‘go online’, but as reported in September’s KPMG Consumers and the new reality report — based on 60,000 global interviews — the penetration of online retailing has doubled in the last six months. This reflects the global challenges posed by Covid-19 for physical retail. Consumers need more reassurance regarding personal safety, and online shopping habits have changed permanently.
More than just a website
Consumers who have been reluctant to shop online due to security fears and preferences for a personal experience have been forced into it, and in many cases they have been pleasantly surprised. In these circumstances retailers without an online presence and/or delivery channel are unlikely to survive in the medium to long term.
In this new world, retailers will have to pay at least the same level of attention to their online presence as to their offline stores. And for many Irish retailers, that may well involve moving into the digital world for the first time. And a website is just the shop window. It needs to be underpinned by slick payment capability, merchandising, inventory management, procurement and the critical ‘last mile logistics’.
Poor performance in any of these areas could result in severe damage to a retailer’s brand. Consumers, accustomed to a smooth online purchasing experience, will walk away if the experience is in any way sub-optimal.
Strategic routes to online markets
For retailers and brands looking to grow online, there are two strategic routes – launching their own brand store and using existing marketplaces. Successful retailers are carefully mixing both. The brand store is a retailer’s own online channel, integrated with existing offline operations. This allows for greater engagement and a consistent experience for existing loyal customers and control of service levels. However, they can be expensive to establish and maintain, and may take time to launch.
Existing marketplaces such as Buymie, Deliveroo, Amazon and eBay provide a rapid online market presence for a low initial outlay. They can allow retailers trade at volume and open up international markets. Many require strict adherence to defined, challenging service levels at the mercy of seller ratings. The competition for visible shelf space can be intense for those who don’t have a strong brand presence or a unique offering.
The Green Jersey
At the local SME level, the ‘click and collect’ or ‘shop here’ services can and do work perfectly well as simple, low cost offerings and puts order fulfilment back in the hands of the consumer (with significant grant funding available). A key trend identified in the Consumers and the new reality report was a desire to shop local and support the community, and retailers should nostalgically remind their customers of their years of community service.
That said, nostalgia will only succeed if backed by reliable service, and retailers will need to invest in e-commerce at some level. The future of retail is moving online, and those that fail to embrace it may fail to survive.
To find out more about how KPMG perspectives and fresh thinking on retail issues can help your business or organisation thrive, visit kpmg.ie.