In our three-part blog series, RSM’s senior industry analysts explore back-to-school shopping trends and the impact on consumer businesses.
In the not-too-distant past, companies rigidly divided their operations into digital and physical retail segments. This separation extended to sales teams, investments and even inventory and product strategies. However, a significant shift in consumer behavior has revealed a crucial insight: Customers do not differentiate between being physical goods buyers and digital buyers. They seek a seamless, integrated shopping experience.
Historically, by partitioning company resources and strategies, businesses missed the mark on understanding the holistic customer journey. Today, as strategies evolve to meet customer demands, the distinction between digital and physical retail is dissolving.
Integrated shopping experiences
Concepts like buy online pickup in-store (BOPIS) and buy online return in-store (BORIS) have become industry standards, reflecting the merging of digital and physical shopping experiences. But the integration goes further. Digital systems are increasingly being incorporated into physical stores, transforming the shopping journey into a blended experience.
For many consumer brands, physical stores now serve more as brand experience centers rather than just sales and distribution points. Interestingly, companies have found that opening new physical store locations often boosts digital sales within the surrounding area. This phenomenon highlights how brand awareness and the convenience of a physical store can drive increased sales across both digital and physical channels.
Back-to-school shopping focus
The back-to-school shopping season perfectly exemplifies this blended retail experience. Parents and students are increasingly looking for convenience and efficiency, combining online research and purchases with in-store visits. A family might start their shopping journey online, comparing prices and reading reviews, before heading to a physical store to see and feel the products, try on clothes, or pick up their online orders.
Retailers that have embraced this seamless approach see significant benefits. For example, a parent might order school supplies and clothes online but choose to pick them up in-store to save on shipping costs and ensure everything is correct. Alternatively, if an item bought online needs to be exchanged, doing so in-store provides immediate resolution, enhancing customer satisfaction.
And while brick-and-mortar locations may drop to 66% of total retail sales by 2030 from 75% last year, according to Bloomberg, we expect retailers to keep transforming their physical footprints, visual appeal and technology to drive in-store conversion.
Challenges and investments in blending channels
For this back-to-school season, achieving this integrated customer experience is not without challenges. Companies must make substantial investments in technology to blend these channels effectively. Key considerations for middle market retailers include:
- Point-of-sale systems: Modern POS systems must seamlessly integrate with online platforms to provide a unified shopping experience. This includes real-time inventory updates, customer data synchronization and seamless transaction processes.
- Distribution networks: Efficient and flexible distribution networks are crucial for supporting BOPIS and BORIS. This requires advanced logistics solutions that can handle the complexities of cross-channel fulfillment.
- Inventory management: Accurate and real-time inventory management across both digital and physical stores ensures that customers have a consistent experience, whether they are shopping online or in-store. This involves sophisticated inventory tracking and management systems that can handle dynamic changes in stock levels.
For more insights, read our latest retail sector outlook.
