It’s Time to Reinvent Your Retail Organization and Break Down Silos

By Publicis Media InSites Archives
Cover image for  article: It’s Time to Reinvent Your Retail Organization and Break Down Silos

Through the power of specialties, organizations have built silos.  Those silos are now crippling the opportunities for sales in the world of consumer-led commerce.  Retail teams sat comfortably within sales organizations, designing and delivering a consumer’s point of sale experience and doing so with great success.  Marketing teams sat comfortably in brand experience outside of the store.  It was a relay race of baton passes which worked in the world of yesterday.

Customers’ online shopping used to consist of consulting a website to compare products before making an in-store purchase.  Now, shoppers complete an entire transaction solely online -- from product and price comparison to purchase completion.  The online journey is now central to sales and directly connected to how attractive the customer finds a brand.

As the e-commerce industry evolved and expanded, retail companies began to recognize the chasm upon which they now sit at the edge: a strong organization mastering offline activities, struggling with the new media world and a siloed marketing organization focused on digital and innovation that is, in reality, much closer to the consumer.

While the market-breaking change was an evolution of technology and consumer preference rather than a revolution in time, four aspects continue to impact the marketplace and contribute to the challenges marketers face today.

1)  Consumer Shift in Habits

Consumers are in control.  It’s a line we have all embraced for years.  Today, marketing is more actionable and accountable to sale and market share than ever before because of access through technology.  In a $25 trillion retail industry, e-commerce represents 12% of that total, growing six times faster than retail.  By 2020, e-commerce will represent 20% of total retail.  Let that sink in.  A $2 trillion shift is roughly the size of the GDP of Canada.

This growth has a direct impact on where e-commerce sits on the CEO priority list and provides an opportunity to grow faster in a more dynamic environment.  E-commerce does not represent the biggest share of sales today, but it is undeniably the fastest growing channel in a world where many brands are struggling to show strong growth. If brands are to command the e-commerce space the same as they do offline, they need to start improving their digital shelf from an experience and visibility standpoint and make sure they are getting, at a minimum, their offline share online.

2)  Advertisers Realize Media Can Drive Tangible Business Results

Retail teams inside brand or client organizations typically sit on their own budgets, closely correlated to sales performance.  With big retailers, the motto is “win with the winner.”  What is unique about these budgets is that they are typically cut last, as they’re a key reason for growth.  Marketers, on the other hand, along with agencies, have struggled with some of the shortcomings of the industry -- lack of sales, measurement, agreement on digital standards, etc.

As these two industries evolve, they cannot continue to live, or succeed, in silos.  Retail interactions need to be closely audited to be as transparent as media investments, going beyond yearly commitments to agile, shorter planning periods.  Media, on the other hand, needs to continue to be more accountable, driving tangible business results and, most importantly, be the growth driver -- not the first dollar cut in economic downturns.

3)  Players Orchestrating the Industry

Tech players are given much of the credit in accelerating the consumer and digital media industry, but a higher proportion of the e-commerce credit goes to the pure players like Amazon or Alibaba.  Ad revenue continues to be the fastest-growing category for these players, with Amazon announcing a whopping $2 billion in ad sales in Q2 2018.  As pure players continue their domination and strong players like Walmart become real contenders, commerce and media dollars become simply inseparable.  To drive the most out of retailers, you need to think about them as commerce and media partners: driving awareness down to sales across the consumer journey.

4)  Attention as a Commodity

By 2019, Zenith estimates that consumers will spend 170.6 minutes, or nearly three hours a day, online.  Often, that time is dedicated to scrolling through a social media feed, and those social platforms trade attention and eyeballs for advertising dollars to the tune of $13 billion at Facebook alone.

However, social media is not the only place getting a share of attention; online retail platforms, like Amazon, receive increasing amounts of face time with online browsers scrolling for a good deal.  The lesson here is simple: to make the most of an online retail platform, it should also be seen as a media space, offering brands the opportunity to capture the attention of their shoppers.

The e-commerce industry will move much faster than media, driven by all parties.  Consumers want more convenience and speed, advertisers are seeking higher growth channels and retailers want a share of the $300 billion digital ad business.  This is forcing tech players to invest heavily to make their platform more accountable, but in many cases pushing hard to invest in e-commerce.  In this fast-paced retail environment, we all need to make sure it is built on solid ground.  It’s time for tech players to play catchup and for marketers to focus on how to move their products off the shelves in this dynamic industry.

Photo credit:  Rawpixel/Unsplash

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