No room for complacency yet...

29. April 2020
by Bob Chermin

The Dutch statistics agency has established that multi-channel retailers grow double the pace of online pure plays in the online channel, already growing to about one third of total online market value. Great news for multi-channel retailers... or is it?

The category advantage

With increased emphasis of traditional retail on the online channel, categories that are inherently more challenging for online pure players are now also shifting to the online channel. Think Food, DIY, Furniture, and other categories that require distinctly different models to serve. Omni-channel retailers should (and prove to) be able to leverage their advantage in these categories.

The (lack of) online category expertise

Having said that, proprietary EY-Parthenon consumer research shows there is still a massive gap to bridge for traditional Dutch retailers before their online proposition is at par with the online pure plays (see picture for an extract of results - Blue lines are online pure plays, grey lines are omni-channel retailers). The gap is most prominent for the support in the purchase decision offered online. This is probably no surprise when looking at the user experience: the online presence and experience looks and feels almost identical to that of a pure player, and it is often a (slightly worse) me-too version.

Yet the thing is, it should be a surprise. Consumers should expect an omnichannel category killer to be able to better support them in finding the right product online than a (generalist) pure player. With scores being 20 - 30 %pt below those of pure players retailers it becomes evident that to date these incumbents have been unable to translate these offline skills into their online equivalents.

So what, who cares?

The life of the CxO of your average omni-channel retailers has not been particularly easy. Footfall is declining, growth in online is challenging to make as profitable as brick & mortar, and costs in your brick & mortar are not decreasing as fast as you would hope. Why is this a problem that deserves your attention? The answer is twofold:

- It helps drive sales across channels: Research and buying trips are increasingly channel agnostic; consumers research across channels. Consequently, the ability to influence the consumer – regardless of the channel she ultimately buys her products – is omni-channel. Put differently, performing better in decision support online will help drive sales offline

- It can potentially differentiate versus online generalists: The winners in the market to date are mostly generalists (e.g. Amazon, We see the emergence of (online) specialist retailers that are able to claim a sizeable position in the market by beating these players on decision support in the online channel. What is even more interesting is that this is especially valued by a younger group of consumers. Omni-channel retailers currently fail to reap full benefit from their category expertise

So what’s next?

As with many things that need to be done profitably, the first step is setting priorities. What is the consumer’s consideration and decision process in your category, where should you aim to influence for maximum impact, and how can you best organize this to do so in a profitable manner. After that, the iterative process of developing a differentiated online presence for your category starts. Because, let’s be honest, do we really believe the optimal presence and user experience for buying that great new robot kitchen blender is the same as that of buying that new DIY floor?

“The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.”

Multichannel retailers groeien dubbel zo hard als pure players