The imminent arrival of Amazon has seen the Australian retail landscape shape up for a major disruption. This, in addition to a reduction in retail consumer spending, has already caused large retailers such as Dick Smith, Payless Shoes, David Lawrence and more to close down.

For retailers to remain successful, many have adopted omnichannel strategies that create multiple channels of engagement in order to improve the shopping experience. Data released by the International Council of Shopping Centres (ICSC) in 2016 showed that shoppers of omnichannel retailers were significantly more likely to visit stores – indicating that these different channels are supporting each other instead of cannibalising each other.

A promising statistic from ICSC was those who purchased online and picked up in store, 61% made an additional purchase in-person. Three quarters of those Click and Collect customers were millennials. Millennials use their mobile to enhance the shopping experience and they integrate a day at the shops with other experiences including the cinema or eating out.

Even though major retail players are adopting this strategy, will it be right for every business?  Does this strategy mean greater profits?

Researchers at Temple University worked with a Chinese department store to understand how channel behaviour could be influenced by marketing. They identified loyalty program members that shopped either in the store or online, but not both. Then they used targeted promotions to encourage shoppers to adopt shopping in the alternative channel. They also factored in the distance from the customer to the store to see how that affected behaviour. The results showed that, those who lived close to the store, no coupon made huge significance in shopping profits.

However, for customers who lived further away and had only shopped online, the in store promotions generated twice as much profit. Conversely, when shoppers living further away that had only shopped in stores in the past were given online-only promotions, profits dipped by a half. Encouraging online customers to visit a store increased profits, but incentivising in-store customers to shop online decreased them. The theory behind the research was that customers shopping online are more likely to pick what they need, compare prices and are unlikely to make impulse buys. Those shopping in stores have a tendency to buy additional items and are less likely to compare prices.

Although most retailers want customers to shop in both channels, the in store experience and human behaviour cannot be ignored. Having an omnichannel strategy gives your customers another means of connecting with you. At the end of the day, retailers should not take away the in store experience but adopt strategies such as click and collect to incentivise customers to go in store will fuel greater purchase profits.

The research shows that omnichannel strategies are effective for most retailers. Check out Resonate’s eBook on Moving Towards Omnichannel Customer Experience. 

The above research was originally published in Harvard Business Review.