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The State of Retailing Online (and In Stores): Invest in Omnichannel

APRIL 13, 2018

Retail is having a moment. After years of hyperbolic predictions of a brick-and-mortar apocalypse, the industry is riding the wave of a strong holiday season, closing out 2017 with a 3.9% increase in sales that’s expected to continue through 2018. Retailers are looking to capitalize on this turnaround and create lasting differentiation through investments in technology. Some retailers choose to invest in omnichannel capabilities, but many continue to pursue breakthrough tech such as virtual reality, voice assistants, and digital displays. Unfortunately, most cutting-edge investments have yet to prove their lasting impact within the retail environment. The situation is reminiscent of an old Calvin and Hobbes comic:

Just as Calvin’s transmogrification machine sort of works, these technologies effectively capture consumer interest and position the investor as “innovative.” Unfortunately, they often fail to drive sales or customer retention. So, where should businesses turn to find that competitive advantage? The National Retail Federation partnered with Forrester to answer that question. Their annual State of Retailing Online report explores the “attitudes and investments that retailers are making for both their store and their online businesses.” It challenges retailers to invest in tried-and-true practices that have a proven impact on customer experience to avoid getting caught in the shiny-object syndrome.


Their research identified omnichannel as a primary focus for brick-and-mortar. In the pursuit of “synchronizing” in-person and online experiences, retailers are investing in “buy online and pickup in store” processes as well as endless aisles―using in-store kiosks to order products online. In addition, many retailers are looking to update their POS systems. Retailers hope to enable self-checkout via phones and connect store associates to the mobile commerce platforms.

These investments indicate that the shift to online shopping is actually a new retail paradigm: the store existing in customers’ pockets. Brick-and-mortar’s purpose shifts away from physically selling goods to greasing the transaction process. Upon truly connecting the online experience to a store, retailers can more strategically drive traffic and conversions by specializing offers (both within stores and phones) to consumers’ specific needs and desires. While the powers of synchronicity are well-known, retailers haven’t quite mastered the marriage of eCommerce data and human relationships.

In these efforts, retailers are reducing their number of associates per store in favor of self-automated processes. In many cases, however, they are not effectively automating the tasks left behind, leaving their stores vulnerable to a poor customer experience. Associates could instead leverage customer online shopping data to improve the experience. A sporting goods shopper, for example, might search for fishing accessories online. If a store associate had access to that information, they could tailor the customer’s experience by directing him or her to a fishing goods expert. Or perhaps even provide them a coupon for lures. This interaction has a two-pronged effect: An enhanced customer experience and a potential sale. This investment in technology reaps tangible rewards for retailers.


Despite omnichannel’s clear use cases, retailers remain enamored with innovations that get you on the front page of Wired (our platform is built on machine learning, so we understand and generally support the impulse). Forrester asserts that the technology landscape evolves so quickly that it’s risky to invest in unproven use cases, especially when retailers haven’t conquered the fundamentals.

Lowe’s provides an interesting use case for this dynamic. Retail Dive recently reported that Lowe’s is struggling to increase conversions despite “booming” traffic. Their investments in technology include: an augmented reality mobile app that allows customers to virtually place Lowe’s products within their home; a virtual-reality “Holoroom” that provides do-it-yourself project walk-throughs; and the creation of an Iron Man-esque exosuit that assists employees with heavy lifting. Lowe’s Innovation Lab is creating legitimately dynamic and buzzworthy technology, but it has yet to translate into conversions, as the home improvement store’s sales fell 1.8% in 2017 Q4. While Lowe’s maintains a bright future by all accounts, their story is a cautionary tale for retailers who hope that the next big invention will impact their bottom line.

Even as retailers create unique, vibrant customer experiences, the most impactful investments instill a sense of allegiance with the brand.


A forward-thinking mindset is important for retailers, but it needs to be built on a foundation of relationships. Even as retailers create unique, vibrant customer experiences, the most impactful investments instill a sense of allegiance with the brand. Investing in technology that sustains relationships ensures that customers think positively of the brand across all shopping mediums. Brands who invest in omnichannel solutions, specifically, can interconnect various touchpoints and promote relationship growth over time.

In the spirit of fundamentals, however, retailers must sustain the weight of omnichannel with “building blocks” beyond brick-and-mortar. This means the digital experience of their brand should be a top priority. Retailers need a website―desktop and mobile―effectively optimized for shoppers, especially as more and more consumers’ shopping journey begins online. Continuing that positive experience in person is of course the next step to solidifying the relationship. As emerging technology scales toward ubiquity, retailers who synchronize eCommerce with the physical experience will be best positioned to (truly) take advantage of the next wave of innovations and differentiations.


As our demand grand marshal, Sarah leads the marketing team in creating meaningful connections between our company and our audience. After almost a decade in marketing for SaaS companies, she is inspired by finding creative, streamlined ways to communicate complex topics. Her appetite for curiosity pushes her to learn new things that will guide our brand and lead to bigger and better things for Square Root. In her spare time, Sarah enjoys singing in rock and roll bands and exploring Austin in her relentless pursuit of the best burger, taco, sushi, etc. Sarah graduated from West Virginia University with a bachelor’s degree in business administration.