Omnichannel Leadership Report: Contactless Engagement
Posted by Amanda McLaughlin on Nov 11, 2020
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There has been a resounding focus on omnichannel in 2020 by both consumers and retail brands alike. The COVID-19 pandemic has flipped the script on buying. Even more, it has elevated the need for a tightly integrated online and in-store shopping experience. Consumers are more purposeful and as a result, brands need to treat omnichannel as the norm.
This is the basis of the 2021 Omnichannel Leadership Report. It is a critical assessment of nearly 200 luxury, premium, and lifestyle brands’ omnichannel competence. The specific focus is on the seamlessness of each function and if brands are using this time to accelerate their digital transformations. In this edition, we review the availability of 14 core omnichannel capabilities across three critical retail categories.
1. Contactless Engagement: Opportunities to engage with and service customers securely without physical contact.
2. Omnichannel Convenience: Solutions that make engaging and transacting across channels simple and easy.
3. Customer Experience: Reimagined capabilities for a mobile omnichannel shopper that boost the overall shopper-brand relationship.
The start of the pandemic ushered in an intense interest in health and safety. In the retail space, this manifested as the contactless customer experience. Seemingly overnight, consumers grew an expectation for touchless or low-touch technologies to avoid physical contact with others. They still wanted to engage with brands, just in a more secure and efficient way.
Here are the key capabilities we looked at for Contactless Engagement.
Online shopping’s share of total retail sales has been on the rise for many years. However, overall shopping behaviors right now favor digital buying. According to Salesforce, consumers now interact online with companies 60% of the time. That’s up from 42% just a year ago.
Ecommerce continues to benefit from consumers choosing contactless or low-contact shopping journeys. But it’s not enough to just get shoppers to your site. You need to provide an experience that encourages them to buy from your brand. This is where live webchat comes into play and is so important. Cart abandonment costs retailers billions of dollars each year and one of the main reasons shoppers “walk away” is because it’s too hard to get answers.
Customers love immediacy. They don’t want to call and wait on hold in a queue. They don’t want to email and wait several days for a reply. With live web chat, customer service agents or even remote store associates can answer any number of questions right away — when the intent is high and customers are engaged.
We found that 63% of brands offer live chat capabilities, up from 38% in 2019 and 33% in 2019. When the focus is on the customer and whatever they might need, the experience is reminiscent of in-store clienteling. Clienteling results in a 4x higher average annual spend by customers so it’s an approach worth transferring to the web. Humanize your online storefront with live chat and turn potential customers into loyal, profitable ones.
Self-service checkout experiences have been growing in popularity in recent years. And a McKinsey survey from June 2020 found 70% of U.S. consumers intend to continue or increase their usage of self-checkout in retail. Why? Because these semi-attended customer-activated terminals give consumers complete and end-to-end control of their shopping experiences.
One reason to implement self-checkout right now is it allows more customers to be served in a shorter time. The pandemic has brought on many restrictions regarding the number of people allowed in any given place at once. This is one way to control headcount and customer movement.
Despite the benefits, we see that only 3% of brands offer self-checkout experiences in their stores. In a recent conversation with NRF about the future of high-tech tools, IHL Group retail analyst Greg Buzek said self-checkout is “20 years in the making” but we’re just now seeing install rates go up.
As shoppers continue to seek out safety, it is important to give them flexibility. Beyond simplifying the checkout process, scan-and-go technologies are a novel experience that can differentiate your store from the next one. This is something to think about as you seek to keep physical retail relevant.
At the start of the pandemic, and again recently in many parts of the world, non-essential stores were forced to close. It’s hard to predict if these ebbs and flows will continue until there is a COVID-19 vaccine. But, what is clear is the interest in curbside pickup — whether stores are open or closed.
Right now, nearly a third (32%) of brands offer curbside pickup. Shoppers love to pull up outside a door and have a bag placed right in the car. But it has to be seamless like that. Consumers don’t want to be met with a line. That’s why they chose to buy online and pick up curbside in the first place. They also don’t want to call and have no one pick up on the other end.
In your quest to satisfy customer demand, don’t falter on experience. McKinsey predicts that consumer behavior shifts related to the pandemic will exist for the long-term. Contactless fulfillment is one core omnichannel capability to focus on. However, it’s not just about introducing it; it needs to continuously improve so it’s easy for both the consumer and your store employees.
One of the first areas we saw pivot in retail at the start of the pandemic was payments. In the first quarter of 2020, half of U.S. consumers used less cash or no cash at all. The same amount began using some form of contactless payment, such as an RFID-enabled credit card or mobile wallet payments like Apple Pay. Whether at the grocery store or in a retail store, it was an easy way to curb consumer concern around touching terminals and engaging closely with store staff.
This shift in the way we pay has been a long time coming. Contactless cards and mobile payments were primarily used by Millennial and Gen Z shoppers before COVID-19. Now, 88% of Americans say digital paying is a relatively easy process to adopt. Not only is it easy to get started with but it also speeds up the overall checkout experience.
In the Omnichannel Leadership Report, we see that 83% of brands offer contactless payment options. We also know that by 2025, 60% of U.S. consumers think shoppers will carry a phone but no physical wallet. As more people look for low-touch ways to pay, it will be critical for brands to not only offer it but also communicate that they offer it.
We found advertisements for contactless pay to be up 152% from last year. Customers will be looking for simplicity, speed, and safety in their buying experiences for years to come. If you can assure your customers of these things before they come to the store, you have their loyalty.
Make sure you download this year’s Omnichannel Leadership Report for further analysis of the state of Contactless Engagement. Specifically, check it out to see where brands rank across our five-point scale: Avoiding, Struggling, Surviving, Evolving, or Thriving. Are they failing to provide what their customers want? Or are they serving customers with excellence? We expect contactless engagement to become ubiquitous in the year ahead. Until then, there are some hurdles for brands to overcome.
Next up is a deep dive on Omnichannel Convenience where we look at the choice and flexibility derived from implementing omnichannel.
