What:  Reviewing omnichannel and the costs associated to such a strategy which went from nice to have to must have in one year.

Why it is important:  Stores remain central in the omnichannel set up as they allow saving costs. However, they will also need to transform to bring in something else than shelves filled with products.

Customers used to be in the past acting as unpaid labour for retail industry, by taking care themselves of the ‘last mile’, driving to the store, purchasing products from shelves and going home. Following the pandemic, this era is now over, as most customers grew accustomed to order digitally and either get the product delivered at home, or, at minimum, be available by pick up at the store.

The Retail Industry Leaders Association and McKinsey remind that pick up orders grew by 103% in 2020, while online sales supported by physical stores rose to 37% from 32% in 2019. The problem is that being able to fulfil digital orders (either from a warehouse or from a store) has a cost, which was in the past supported by customers: software costs, logistics, workforce, costs of shipping and returns, seriously indenting profits.

Ironically, these costs explain why stores will remain central for retailers in the future, as they are still a cost-saving point of product returns, especially in the case they manage to trigger a new purchase while customers are present (this is exactly the reasoning made by Magasin du Nord when they decided to expand their pickup service points surface, leading to 15% additional purchases made by customers coming in to pick up goods and parcels).

The omnichannel age is here — and it's expensive