The increased costs of running online retail operations in the ‘post-omnichannel’ era mean the in-store channel is becoming more competitive and offers an opportunity for retailers, according to a new report.
In the 2024 edition of its Omnichannel report, GlobalData states: “We now believe that online has moved into a post-omnichannel era,” which it suggests was prompted by the Covid-19 pandemic.
“When retail entered the omnichannel era, operators moved from siloed online operations to integrated channel operations,” it says, noting that retailers invested in website functionality, click & collect, curb-side pickup and online returns in-store to achieve this. The post-omnichannel era requires that retailers recognise a customer’s context at any given time and understand their behaviour accordingly as key.
GlobalData notes that demand for online shopping has remained high since the pandemic, with the channel accounting for a forecast 15.6% of total global and 25.3% of global non-food spend in 2024. It adds, however, that the global recession triggered by the pandemic followed by high subsequent global inflation due to the related disruption of supply chains has meant that many retailers can no longer afford to subsidize their online operations with their physical operations.
“The rapid increase in delivery costs, labour and fuel has meant that free delivery and returns are hitting already tight margins for online purchases,” the report explains. “So, retailers are being forced to increase delivery fees, thresholds for free delivery and some are charging for online returns …
“For online shoppers, these margin-protecting measures – increased delivery costs, thresholds for free delivery and charging for returns – are not desirable. But store shoppers may get a better deal as prices no longer have to be inflated by omnichannel costs, so the physical channel will become more competitive with online.”
The prominence of discounters in stores has lent an advantage to the in-store channel, it adds.
Due to the continued price pressures faced by consumers, it is suggested that retailers need to put value at the core of their proposition and promote products that can help customers save money.
GlobalData’s report also points to the growing adoption among retailers of digital apps that span the online and physical channels to gain insights into consumer behaviour and data. This can help retailers to understand the profitability of each channel and inform pricing strategies.
