Chief financial officers are putting their money where their mouths are. As the industry comes to terms with the value of the in-store shopping experience, as well as the inevitable need for an omnichannel strategy, retail companies are upping their investments into these areas of focus.
According to the BDO Retail Compass Survey of CFOs, capital investment into e-commerce channels is on the decline — only nine percent of CFOs plan to invest the largest share of their money into e-commerce channels, down from 22 percent the year prior.
In-store redesigns, meanwhile, are seeing aggressive spending throughout the industry. In 2015, only nine percent of CFOs devoted the largest portion of their funds to in-store remodeling. In 2016, that figure will jump to 31 percent.
In most cases, this redesign will focus on building a modern retail floor that features mobile touchpoints and a shift toward showroom selling. Omnichannel infrastructure may also be installed — Target, for example, plans to retrofit some of its department stores to better support online order fulfillment.
According to the survey of retail CFOs, mobile will remain a top priority. But the emphasis on physical shopping, mobile experiences, and omnichannel strategy shows that retailers are catching up to changing consumer mindsets, and they’re confident enough to make whatever investments will keep them relevant to their consumer base.
“Convenience, Customization, And Interactivity”
Some of those physical store changes come with growing pains. BDO’s report notes that many major retailers are looking to right-size their stores to better-equip them for the changing retail landscape. Retailers like Target, Wal-Mart and Kohl’s are looking to invest in store locations that feature less square footage and improved e-commerce features.
Those features are designed to directly engage consumers and enhance their experience. A range of strategies, from the use of clienteling and mobile POS tools to more advanced features like smart dressing rooms and even augmented reality features, are being used to build a physical store experience that creates a deeper connection with a consumer base.
“The smart money is now going towards bringing the convenience, customization and interactivity of e-commerce to the stores,” says Natalie Kotlyar, a partner in BDO’s Consumer Business Practice. “Savvy retailers are looking to supplement customers’ online shopping habits with tactile, engaging in-store experiences.”
It’s important to note that these shifts in spending aren’t a dismissal of online retail sales. But after years of aggressive work to build a strong online shopping experience, retailers are recognizing that the physical store has been badly neglected. Changes in budgetary allocations are a response to the realization that brick-and-mortar experiences are lagging behind consumer expectations.
In fact, CFOs included in the survey expect online sales to continue their growth by almost 10 percent in the coming year. But as omnichannel selling becomes a primary focus for brands, those executives recognize the brick-and-mortar role in sustained online success — and vice-versa.
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