It is going to take quite some time for retailers to overtake pre-pandemic level foot traffic. Retailers have also been seeing a decline in sales at physical stores for years, prior to COVID. So the question we ask is – why not turn physical stores into live stream sites? A recap of how we got here, as well as a discussion of the pro’s, con’s and the opportunities that exist for retailers in digitizing brick & mortar with live stream commerce.
Physical Retail, Pre-COVID
Prior to COVID, physical stores were closing at an unprecedented rate. Countless department stores, retail chains & SMBs were facing Chapter 11 bankruptcies, restructurings, or leveraged buyouts from PE firms. This was all happening due to the fact that malls & traditional retail were seeing a substantial decline in foot traffic. Consumers were shifting to more convenient shopping experiences. I.e, eCommerce, as retailers rolled out seamless ways for shoppers to engage with their brands online.
The chart below says it all. Since 2016, Brick & Mortar has not been able to increase sales. In fact, sales at physical retail have continued to decrease at a steady rate. On the other end, we see an inverse relationship with eCommerce sales. Hence, the reason why a great like Barney’s New York – a former partner of Omnyway – had to liquidate its retail business & sell its brand to ABG. “Barney’s New York” now exists as a brand on the Saks 5th Ave website – it really breaks a lot of people’s hearts, including ours! Going to a Barney’s New York store was a classic experience.
Physical Retail, During COVID
In March 2020, stay-at-home orders exacerbated the issue for physical retail. Stores closed, the US workforce left major cities & as a result, consumers shifted to online shopping – exclusively. To survive, retailers had to quickly adopt, or increase the use of, technology in order to drive revenue & cater to the new normal we faced. That was – social distancing or the extreme situation of not leaving our homes.
Speaking from a personal experience – while grocery stores remained open, my parents (mid 60’s) immediately shifted to buying their groceries via Instacart. The convenience it provided, as well as the security it offered (protection from COVID), was a no-brainer for them. Why would they risk going into a physical store if they are fortunate enough to be able to use a platform like Instacart. The behavior change is incredible – I’ll quote them from a get-together this spring – “I never see myself going grocery shopping again. Instacart saves me time & allows me to see the entire store inventory from the comfort of my home, and ultimately an ability to buy that inventory with the click of a button”. It’s amazing what my phone can do for me.”
Just think of what’s at our disposal from our physical phone, and the power of it:
What do all of these apps have in common? They provide you with the convenience and the ability to buy things from physical stores with your iPhone. These services also deliver you what you order without you having to leave your house. So for my 60-some-year-old parents – apps like these are awesome! They want to spend their time doing other things!
“A new survey finds that responses to COVID-19 have speeded the adoption of digital technologies by several years -- and that many of these changes could be here for the long haul. - McKinsey”
So What Did Other Retailers Do? Going Beyond Food & Beverage
In the above paragraph, we highlighted an example as to how grocery stores or restaurants responded to the pandemic. They went fully digital and doubled down with technologies like Door Dash, Instacart, etc … that allowed consumers to buy directly from their locations via an iPhone.
But how did other physical retailers respond? Did the infrastructure to support them exist? Was there a solution that could empower consumers with an ability to buy directly from other types of retailers’ physical inventory?
The short answer is no. But in February 2020, clothing retailers responded by offering virtual consultations via Facetime and or Zoom. These technologies provided retailers with an ability to clientele, answer shopper questions & show those shoppers inventory within the store. However, Facetime and Zoom did not contextualize or complete the experience for shoppers. Shoppers were not able to buy seamlessly or directly from within these experiences.
Enter the Omnyway team – who realized this problem and in a matter of weeks, quickly started developing a solution to address it. By September of 2020, Omnyway released a solution – VISX. Short for Virtual in-Store eXperience Service. VISX started empowering retail stores with an ability to launch their own live streams with integrated checkout for shoppers. Shoppers were able to buy directly in these experiences, and the stores were able to close orders & fulfill them directly on-site.
We thought – if consumers can buy directly from a restaurant or a grocery store in Manhattan with the click of a button – why shouldn’t they be able to do the same from their favorite retail store?
Physical Retail & Live Streaming Commerce, Post-COVID-19
Thankfully, we see the light at the end of the tunnel when it comes to COVID-19. I know that’s a fact because here in San Francisco, I no longer have to wear a mask in a physical store! When California has ended a mask mandate, we’re pretty much done with the pandemic. (Hopefully!)
So what does that mean for live stream commerce as it applies to retail locations? Consumers are super eager to get back to normal life. And it’s safe to say that this summer we should see a drastic increase of people movement + in-store foot traffic.
Well the answer to that question is: No one exactly knows – we are unable to predict the future. However, when looking at retail trends, data, & the massive growth we have seen in eCommerce, I do believe that live stream commerce, or digitizing the physical store, is here to stay. In fact, CoreSight Research predicts that Livestreaming revenues in the US alone will be $11 billion by the end of 2021.
That said, the real questions we should be asking are: how can retailers seamlessly test & add a channel like live stream to their business? Should retailers use their physical stores as sites to host live streams? Is a marketplace application the best way to build out live stream for your brand? Or should you use a white label product that allows you to scale this channel across physical stores? Is it realistic to ask Store Managers to host live streams on behalf of brands?
Here at Omnyway, I’ll share some of our perspectives:
- VISX is an Over the Top solution that works immediately in-store, you should test it out!
- Sales growth at brick & mortar has been declining for years – retailers need to continue to adapt to survive by leveraging technology like live stream
- Marketplaces disintermediate the brand/shopper – a white label product like VISX is the best way for a retailer to manage customer experience
- Retail is the 2nd largest industry for employment – Gen Z has already entered the workforce – they were born with iPhones in their hands!
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