Truly successful omnichannel retailers merge the best of the digital and physical worlds. Darrell Rigby, who leads Bain’s Global Retail practice, shares how traditional retailers are expanding to digital to provide quicker service for customers, while digital retailers are establishing physical stores to create a rich customer experience.
Read the transcript below.
DARRELL RIGBY: There are a lot of multichannel retailers out there, and by that what I mean is retailers that operate in multiple channels. So they have stores, they have websites, they have mobile apps, they have call centers. But there are really very few good omnichannel retailers. And by that what I mean is retailers that have learned how to merge the best of both worlds, the best of the digital world with the best of the physical world. They bring in, from the digital world, that rich data, the convenience, the ability to order anything they want anytime they want.
But they still have that rich customer experience in stores, the ability to try, and taste and experience the new products, to deal with real people inside stores. It's a social experience. It's a sensuous experience. And the retailers that are learning how to do that are creating customers that are two to five times more profitable than a customer who shops in a single channel. So as a result, there are a lot of companies now racing for the omnichannel high ground.
We have the digital players that are now learning to add stores: Alibaba, Amazon. Alibaba now has tens of thousands of physical stores. And at the same time, we have physical retailers that are adding digital capabilities. I think the challenge is that it requires a pace of innovation that traditional retailers are not accustomed to. For a lot of the digital retailers, agile innovation is kind of second nature for them, and they move at a very rapid pace.
But the more traditional retailers are going to have to pick that up substantially, because what we're finding is that omnichannel retailers are really the only way to go forward. They create happier customers. They create better economics. We know that omnichannel retailing is better than either digital retailing alone or physical retailing alone. And it's a lot better than trying to do both of those but in separate silos. It's the path forward.