During the last decade, the ubiquity of mobile devices in our lives and the digitalization of communication channels have radically transformed the landscape of B2C, especially in retail. Consumers have become more sophisticated and demanding, forcing brands to find new ways to delight their customers.
This has led to the rise of a new approach to marketing, sales and customer service: omnichannel intelligence. Omnichannel intelligence consists in using artificial intelligence (AI) technologies to offer an integrated, seamless and personalized customer experience. It is about providing customers with the right content independently from the device they are using or when they are reaching out.
Indeed, AI allows marketing departments to tailor their content to each customer’s behavior, preferences, and context, to increase campaign effectiveness and customer loyalty. By placing their focus on the user’s digital digital experience, businesses across all industries can gain crucial competitive advantages and the retail industry has offered some very interesting omnichannel intelligence success cases.
Omnichannel intelligence helps retailers attract customers to their physical stores and reduce the impact of new retail players like Amazon Prime. Companies that fail to offer a delightful omnichannel experience missing a key opportunity.
To help you figure out how you stand in comparison to your competitors, we made a list of relevant statistics that will help you understand the state of omnichannel intelligence in retail. We divided the statistics in 7 categories that we believe provide an honest overview of the future of omnichannel intelligence in retail. You can access each distinct category directly from here:
- The state of omnichannel intelligence in retail (2019)
- The Amazon Effect
- Brick and Mortar Stores are not dead
- Consumers demand engaging omnichannel experiences, especially younger generations
- Artificial intelligence is the key to successful omnichannel strategies but most brands still struggle
- Mobile is the device that influences retailers’ omnichannel strategies the most
- The challenges of Omnichannel intelligence in the retail industry
Omnichannel intelligence trends in retail: looking beyond 2019
- Omni-channel shoppers have a 30% higher lifetime value than those who shop using only one channel. (Source: Google)
- Businesses that adopt omni-channel strategies achieve 91% greater year-over-year customer retention rates compared to businesses that don’t. (Source: Aspect Software)
- Companies with strong omni-channel customer engagement experience a 9.5% year-over-year increase in annual revenue, compared to 3.4% for weak omni-channel companies. Similarly, strong omni-channel companies see a 7.5% year-over-year decrease in cost per contact, compared to a 0.2% year-over-year decrease for weak companies (Source: Aberdeen Group)
- 51% of firms use at least eight channels within their CX programs (Source: Aberdeen Group)
- 31% of the brands interviewed in the Gartner L2’s Omnichannel: 2019 report defined themselves as omnichannel leaders, up from 9% the previous year (Source: Gartner L2’s Omnichannel: 2019 report)
- 70% of German, Austrian and Swiss retailers rate their omnichannel strategy as insufficient, while 80% still don’t combine offline and online channels to offer a better customer journey (Source: Roland Berger)
- in 2017, only 10% of retail executives felt they have refined their omnichannel delivery to the point where they were able to meet demand and make a profit. (Source: JDA PWC 2017 Retail CEO Survey)
These statistics suggest the benefits of omnichannel intelligence for retailers are well documented and the vast majority of brands is aware of competitive advantages it could get from this approach. This is confirmed by the fact that more and more companies offer a wide variety of channels to meet customer expectations.
Further, Gartner L2’s Omnichannel: 2019 report highlights that more and more retailers are making efforts to fully embrace the omnichannel approach. Indeed, during the last year, many retailers have been adopting innovative approaches to customer interactions, such as in-store pickup during check-out and Buy Online, Pickup in Store (BOPIS) services. This element is reflected by the higher number of businesses that define themselves as Omnichannel Leaders.
However, while the higher number of channels and services offered obviously appeals consumers, it also increases the complexity of retail omnichannel strategies. Omnichannel requires all channels to be fully integrated, which can be challenging. Unsurprisingly, despite many efforts, the vast majority of retail executives are not satisfied with their current omnichannel strategy.
As such, more and more retailers are investing in digitalization to increase the efficiency and efficacy of their strategies. Big Data, Artificial Intelligence and automation technologies provide decision-makers with meaningful insights to take better decisions and optimize interactions, returns and inventories.
2. The Amazon Effect
- 9 out of 10 US consumers price check a product on Amazon (Source: CNBC)
- $1.4K is the average spent by Amazon Prime members each year (Source: Statista)
- Each month more than 197 million people around the world get on their devices and visit Amazon.com. That’s almost like the entire population of Nigeria, the seventh most populated country in the world (Source: Statista)
- In 2018, Amazon handled 49% of total US ecommerce sales and 5% of all combined offline and online US sales. (Source: TechCrunch)
- In 2018, Amazon controlled 35% of the US apparel market, but only 8% of the same market in Western Europe (Source: Forbes)
- More than 50% of all Amazon sales come from third-party sellers. (Source: Quartz)
- 80% of sellers also sell on other platforms outside of Amazon (Source: Vox)
Do you remember when Amazon used to sell only books? Barely, I guess, as Bezos’ company has grown so much it became the largest ecommerce platform in the world. Today, the so-called “Amazon effect” is often cited as the main reason behind the rise in customer expectations and the increased level of competition in the retail industry.
However, the Amazon effect is not impacting on all markets in the same way. Amazon’s market share is considerably lower in Europe than in the US, as European retailers have been able to evolve quickly enough to meet their customers’ expectations.
By integrating new digital technologies in their stores, like social media-friendly displays and smart changing rooms, and offering new services such as in-store coffee shops, European retailers have been able to engage and delight their customers, attracting them to their physical stores. They offer a kind of experience Amazon can’t provide because it requires a physical infrastructure.
For instance, European fashion brands still get the majority of their revenue from online sales, but take advantage of their stores, allowing customers to easily try clothes on and collect or return their online purchase. As a result, Europeans tend to see Amazon as a transactional site, rather than a clothing destination, and fashion retailers can keep their margins competitive.
3. Brick and Mortar Stores are not dead
- Google search volume for “Store Near Me”—a proxy for multichannel behavior— has skyrocketed +1,553% over the past four years, with mobile representing 80% of searches (Source: Gartner L2’s Omnichannel: 2019 report)
- Only 9.6% of Gen Z reports buying items in a physical store –– considerably less than their older generations (Millennials at 31.04%, Gen X at 27.5%, and Baby Boomers at 31.9% respectively - Source: The Global Omni-Channel Consumer Shopping Research Report - 2018)
- 56% of US online shoppers say they still appreciate the in-person experience over digital retailers (Source: NPR/Marist)
- 76% of US consumers prefer shopping in-store for their holiday shopping needs (Source: Geomarketing)
- 78% of holiday shoppers who visited a store turned to online search before going into a store (Source: Google)
- 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 (Source: Forrester)
- Shoppers who buy from a business both in-store and online have a 30% higher lifetime value than those who shop using only one channel (Source: Forrester)
- 50% of shoppers expect that they will be able to make a purchase online and pick up in-store (Source: Forrester)- Amazon owns over 400 Whole Foods stores in the US and plans to build 3,000 Amazon Go physical locations (Source: Gartner L2’s Omnichannel: 2019 report)
Despite the explosion of personalized e-commerce, brick and mortar stores are still one of the top three buying destinations for consumers, together with Amazon and brand-owned e-commerce websites. Indeed, as omnichannel intelligence is about integrating the physical and digital world, physical venues still have an important role to play.
One key point to keep in mind is that different channels appeal to different groups of consumers and for different reasons. Gen Z might not find physical stores attractive, but Boomers surely do. Older generations get a lot of value from their physical experience, mainly because they can touch or try on items before their purchase, while are less intrigued by new personalized e-commerce experiences.
Further, while it is true that they spend the majority of their shopping dollars on products they find on Instagram and Snapchat, Millennials and Gen Z don’t disdain shopping in brick and mortar stores. As new technologies are integrated into physical venues and the border between physical and digital gradually dissolves, younger consumers are becoming more and more engaged. Speed and convenience are the two most cited reasons for shopping in-store among young consumers.
All things considered, new technologies, like live in-store inventory, localized search results or drive-to-store display ads, have created a new business environment where online and in-store must complement each other. This is absolutely critical for the success of any omnichannel strategy. Think for instance about order fulfillment. How could an omnichannel fulfillment strategy bring the desired results without closely integrating the physical and the digital world?
Consumers check prices online and then head to the store to touch, feel and, sometimes, purchase products. Others buy online but also demand for services that can’t really be offered online. As such, it shouldn't sound surprising that the same company that disrupted traditional retail with its obsession for client satisfaction is now planning to build physical locations.
One company that really understands modern consumers and nailed this aspect of its omnichannel strategy is Home Depot. Home Depot offers options like in-store pickup and customer support, but this is just the tip of the iceberg. What is really driving their profits is their ability to focus their stores around “e-commerce unfriendly” products, i.e. those items that consumers want to touch and feel before purchasing.
4. Consumers demand engaging omnichannel experiences, especially younger generations
- 98% of Americans switch between devices in the same day (Source: Google Research)
- 89% of customers get frustrated having to repeat their issues to multiple representatives. (Source: Accenture)
- 77% of consumers stop using an app within three days (Source: Andrew Chen)
- Companies with the strongest omni-channel customer engagement strategies retain an average of 89% of their customers, as compared to 33% for companies with weak omni-channel strategies (Source: Aberdeen Group)
- 86% of buyers are willing to pay more for a great customer experience and 65% find a positive experience with a brand to be more influential than great advertising (Source: Temkin Group)
- Consumers who interact with online reviews and opinions are 97% more likely to convert with a retailer than customers who do not (Source: Business Insider)
- AI-powered recommendations yielded 14% higher average order value during the 2018 holiday season (Source: Salesforce)
- 65% of Millennials prefer interacting with bots over talking to live agents (Source: IBM)
- 70% of US Millennials, and 62% of Millennials in the UK, say they would appreciate a brand or retailer using AI technology to show more interesting products (Source: Forbes)
- 80% of Gen Z reports being more likely to visit a store that offers entertainment. 80% also states the same about stores offering VR and AR technology (Source: Forbes)- 79% of Gen Z are more likely to visit stores that offer interactive experiences that help customize products too (Source: Forbes)
Modern consumers expect and demand omnichannel intelligence and companies who want to stay relevant must do their best to meet those expectations. Indeed, customer experience has become a critical element of brand differentiation for consumers, which is why we expect retailers to focus most of their future competitive efforts on CX.
This implies first and foremost one thing: companies must get to know their customers and know how to engage them. What’s the goal of creating an app if users uninstall it after 72 hours?
Further, as people nowadays use several different devices everyday, brands must be able to reach and be reached by every individual through his/her preferred channel. However, offering a multi-channel customer service isn’t enough anymore. All channels must be seamlessly integrated, easy to use and offer consistent (but tailored) content.
Luckily, AI can empower marketers by providing them with the information they need to take smarter decisions. Further, investing in this type of solutions can bring great business advantages. AI can predict the shopper’s buying intentions and deliver personalized interactions.
Unsurprisingly, when engaged and delighted, users are more likely to convert and customers spend more. Integrating AI in stores is also an effective way to drive younger generations to brick and mortar stores, which could be a very important factor for brands targeting that group of customers. This leads us to the next section.
5. Artificial intelligence is the key to successful omnichannel strategies but most brands still struggle
- By 2020, 85% of customer interactions in retail will be managed by artificial intelligence (Source: Gartner)
- By 2020, 30% of all B2B companies will employ artificial intelligence (AI) to augment at least one of their primary sales processes (Source: Gartner)
- By 2020, more than 40% of all data analytics projects will relate to an aspect of customer experience (Source: Gartner)
- Only 25% of retail and consumer goods marketers are leveraging some form of artificial intelligence today, though this figure is projected to grow to 70% over the next two years (a 176% increase - Source: Salesforce)
- 67% of retail and consumer goods marketers currently do not personalize communications in a truly contextual way (Source: Salesforce)
- 67% of customers reported hanging up on an automated system out of frustration at not being able to reach a live person (Source: Glance)- 80% of retail and consumer goods marketers say balancing privacy and personalization is a priority, yet only 28% of them are completely satisfied with their ability to do this (Source: Salesforce)
Artificial Intelligence can be the source of many competitive advantages. It provides a complete picture of each customer and meaningful insights about every stage of the customer journey. In other words, AI guides marketers and salespeople in identifying the best way to approach each customer based on the contextual data you have access to.
Indeed, contextual data is essential for success in today’s fast-moving economy as it allows for effective contextual personalization. In other words, by sending different messages to (potential or actual) customers in different contexts, brands can maximize their communication conversion rates.
The same message, even when sent to the same person, won’t produce the same effect if its recipient is surfing the brand’s website, standing outside of a store or going back home after shopping. Similarly, the same content will produce different results depending on the device that supports it: would it make sense to use the same concepts and phrasing in a newsletter, on social medias and on all the other channels the brand is using? Probably not.
Dealing with each of these moments as a different stage of the customer journey helps marketers leverage context to effectively reach conversion goals. However, two thirds of marketers are grappling with this shift from mass marketing to personalization. This is not completely their fault: most of them are aware of the challenges they’ll face, but their organizations lack the know-how, tools and resources to tackle those problems.
Nonetheless, despite all current struggles, analysts forecast that most companies will soon embrace AI to predict and manage all their customer interactions. And given the recent rise of chatbots in customer service, the large amounts of data that retailers can already turn into actionable insights and the fast development of new engaging technologies such as AI-powered visual search, these predictions shouldn’t shock you.
6. Mobile is the device that influences retailers’ omnichannel strategies the most
- More than 50% of all website traffic in the world in 2017 and 2018 was generated through mobile phones (Source: Statista)
- Between 2015 and 2017, we’ve seen +150% growth in mobile searches for “___ near me now”, +900% growth in mobile searches for “___ near me today/tonight” and +200% growth in mobile searches for “Open” + “now” + “near me” 82% of shoppers use smartphones as shopping assistants in store (Source: Google)
- 44.7% of all e-commerce retail in the US for 2018 came from mobile purchases (Source: Statista)
- Mobile drove 68% of ecommerce visits and 46% of orders for the 2018 Christmas holiday season (Source: Salesforce)
- 71% of in-store shoppers who use smartphones for research say their device has become more important to their in-store experience (Source: Google) and 82% of shoppers use smartphones as shopping assistants in store (Source: Google)
- 88% of retailers analyzed year over year offered an app, up from 72% in 2017. However, by 2019, 20% of brands will abandon their mobile apps (Source: Gartner)
- 67% of smartphone users are more likely to purchase from companies whose mobile sites or apps customize information to their location (Source: Google)
- 90% of customers say they have had poor experience seeking customer support on mobile (Source: Software Advice).- 52% of customers are less likely to engage with the company because of bad mobile experience (Source: Superoffice)
Mobile is king. It allows people to find quickly and exactly what they want whenever they want it. Further, the global amount of queries through mobile is already much higher than the total number of desktop queries, especially for shopping research. Unsurprisingly, a few years ago already, Google decided to shift its focus from desktop to mobile websites.
A bad mobile customer experience can seriously harm brands. Overlook mobile and you will lose revenues both online and in-store. Hence, if you want to build a successful omnichannel strategy, mobile must be one of your top priorities.
Any business claiming to be customer-centric must offer a delightful experience on mobile. Nonetheless, companies have been slow to adapt. While apps are more popular than ever, both among customers and retailers, not every business has understood how to develop a successful app.
The goal of any app is to engage users. Therefore, retailers can’t limit themselves to offering a few basic features anymore and must make sure the app is seamlessly integrated into the brand’s omnichannel strategy. As a result, many have not obtained the results they expected and are thinking about abandoning this approach. However, well-developed apps will remain a great source of competitive advantage for the years to come.
7. The challenges of omnichannel intelligence in the retail industry
- 49% of consumers expect a page to load in less than two seconds (Source: Digital Commerce 360)
- 57% of users will abandon a site after 3 seconds if the page hasn’t rendered, and 85% will drop off if it hasn’t rendered after 5 seconds (Source: Digital Commerce 360)
- 46% of users said they would never return to a site after just one bad experience (Source: Digital Commerce 360)
- 61% of customers have not been able to easily switch from one channel to another when interacting with customer service (Source: Pedowitz Group).
- 69% of marketers perceive the fact that their technology platform doesn’t support a single customer view as one of their 3 main challenges (Source: EvolveIP)
- 67% of marketers declares their budget is insufficient to carry out the required changes (Source: EvolveIP)
- 61% of marketers consider the presence of siloed business processes one of their 3 main challenges (Source: EvolveIP)
- The lack of strategy and vision about omnichannel is also a common challenge for retail marketers and affects 52% of them (Source: EvolveIP)
Marketers face several barriers when developing and implementing omnichannel intelligence strategies. Further, as the aforementioned statistics clearly indicate, modern consumers are very demanding and not much sympathetic to corporate mistakes. This poses some serious challenges and retailers should definitely prioritize their efforts on delighting their customers.
One general advice we feel is important to share is to start from the simplest features you can include in your communication channels, then gradually integrate more complex solutions. Also, make sure your site loads fast enough on all devices, provides information about your stores and gives enough visibility to important elements like store hours, contact numbers and customer service tools (FAQs, live chats, shipping guides…). Finally, try to to present your information in innovative visual ways that will engage your audience. Eventually, all this will help you provide a smooth customer experience and build customer loyalty.
[Extra: if you are still hungry for omnichannel data, check this cool video made by Gartner which cites many statistics we didn't include in this article!]
We hope these statistics helped you get an idea of what the future of omnichannel intelligence in the retail industry will look like.
There are many companies that currently help retailers fully embrace the omnichannel approach. Tyco, Carto and Ispira are probably the most famous, but other smaller players are emerging as well thanks to their innovative approaches. These tools can really empower your team, so make sure you choose the solution that most fits their needs.