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Are Small Retailers Behind the Omnichannel Curve?
A new survey from GoDaddy finds small retailers falling short of delivering a convenient online experience — at least to younger consumers — with many lacking today’s digitally driven tech tools.
The GoDaddy survey found smaller retailers lagging in the following areas:
- BOPIS (buy online, pickup in-store): 73% of Gen Z and 83% of Millennials said BOPIS is important to them, but only 34% of small retailers offer it.
- Digital payments: 85% of Gen Z and 82% of Millennials believed it’s important for small retailers to accept contactless digital payments, but 27% do not accept them.
- E-commerce: 55% of Gen Z and 61% of Millennials said it’s very important they can make purchases directly from a retailer’s website, but 28% of small retailers do not have an online store.
- Social media storefronts: 80% of Gen Z and 75% of Millennials said it’s important small retailers have storefronts linked to their social pages, but only 25% have social shopping storefronts.
Overall, 91% of the 1,000 surveyed small retailers think they offer a convenient online experience, but only 21% of 1,000 consumer respondents agreed. Younger consumers overwhelmingly (73% of Gen Z and 75% of Millennials) would shop more at small businesses if they offered the same convenience as larger chains.
GoDaddy said in a press release, “While small businesses identified Gen Z and Millennials as top target audiences, their current practices tend to cater more to older generations.”
Other surveys, however, show that smaller retailers are far from technophobes.
A survey of 2,000 small- and mid-sized businesses from Data Catalyst Institute found that 72% of small and medium retailers get almost half of their revenue online, with 68% having a web store and 68% participating in some third-party online marketplace (i.e., Amazon, Etsy, eBay, etc.)
A recent study commissioned by CCIA Research Center based on U.S. Census Bureau data in the 2010s found a resurgence in the growth of small and medium-sized retail businesses amid the fast-track adoption of e-commerce.
CCIA Chief Economist & Director of Research Trevor Wagener said in a statement, “Before the 2010s, retail was dominated by the ‘Big Box Effect’ whereby homogeneous large retailers outcompeted smaller retailers. In the 2010s, the ‘E-commerce Effect’ reversed the trend, as widespread availability of digital tools and marketplaces reduced barriers to entry and provided diverse smaller retailers with cost-effective means to compete against incumbents at scale around the world.”
Discussion Questions
Have the online-driven offerings cited in the GoDaddy survey (BOPIS, digital payments, e-commerce, and social media storefronts) become an expectation, even for smaller businesses? Where do you see smaller stores at a disadvantage to larger chains in digital-facing technologies?
Poll
Loading …BrainTrust
Dave Wendland
Vice President, Strategic RelationsHamacher Resource Group
Kai Clarke
CEO, President- American Retail Consultants
Across all of the things assessed, a majority of small retailers offer digital tools and services. This includes the fact that 73% have an online store. As such, it’s hardly fair to say small retailers are falling short. The majority are not. Indeed, from my conversations with many small retailers, a lot are very savvy when it comes to online and increasingly rely on the channel to bolster sales.
There are some, of course, who don’t have a fully developed digital presence and this can be a lost opportunity. It would have been good if the survey identified barriers and reasons for this.
Small-Mid size retailers offer physical and digital, so in that sense they are “current”. But the majority are not taking advantage of the tools, technologies, and channels that could lower their CAC, increase traffic/conversions (online and off) and deliver experiences that consumers now see as table stakes.
The statistics are not dismal. I believe that the omnichannel expectations from the small retailer are lower than that of medium and large retailers. The small retailer typically has a niche product and develops unique relationships with its customers. On the other side, fairly powerful, affordable, SaaS software solutions are available to small retailers that enable them to compete on a more level playing field with large retailers.
Small retailers need to provide an Amazon type experience to compete. They need to make it easy and convenient for customers to shop wherever, whenever, and however they choose. They clearly can’t compete on delivery capability, but they need to make the order one click and showcase what distinguishes them from the competition.
Many larger retailers, too, need to up their omnichannel games. Surveys point to a disconnect between customer expectations and small retailers’ omnichannel setup. But the idea that anyone is aiming at the wrong generation suggests a lack of customer focus.
We’re not in an era when retailers just need to spray and pray for business. This is for small, medium, big, and monolithic size retailers. Instead, we now have micro-targeting functionality online and, increasingly, offline, too. This is what retailers of any size need to remember. Then they need to do something about it, and fast.
It’s not shocking to me that a lot of small retailers lack the financial bandwidth to implement the same kind of online experience as large retailers with deeper pockets. But while it may be understandable, that doesn’t mean it’s workable in the long term. The 91/21 spread between what small retailers think and what shoppers expect is the problem. That would be a definition of being behind the curve.
Consumer expectations have certainly heightened and small retailers may indeed be disadvantaging themselves by not expanding their digital options. Too many small retailers simply launch Facebook pages or rudimentary e-commerce options and feel that is enough to extend their physical store’s footprint. As cited in this research, the chasm between consumer and retailer perceptions is vast … and should be a top priority for 2024!
Small and medium retailers will always be behind the expectations of the most digitally savvy customers with the highest expectations. The large marketplaces and retailers are in a constant state of innovation, testing multiple new digital services continuously. The keys for the small and medium retailers are to be aware of their competitive context and the expectations of their most important target customers. For example, ff a majority of their sales are in-store and people want more payment options, then looking into ways to accept apple pay or other popular forms of payment would be the obvious investment.
Small and medium retailers don’t have the luxury of doing everything at once – but they have an obligation to understand the one thing that they need to do next digitally to improve the customer experience and generate more revenue. These retailers can be at a disadvantage of being able to do all things digitally but are small enough to focus on doing the right things.
I think that’s the wrong question. The numbers seem to say that there are expectations for those services.
My father was an independent retailer. He had a lot of trouble adapting to technology, which was odd, given that he was a smart guy. If he was still around today, he’d find a way to brute it through.
And his trusty daughter would say “That’s why God made Shopify.” GoDaddy can help you build a website. Shopify can take you pretty far (and no, they are not a client of mine).
Love this
Omnichannel is hard, whether your business is large or small or global or local. Retailers struggling to pace with shopper expectations is practically universal, apart from the very few brands with deep pockets and/or visionary leadership. What is alarming to me in the research, however, is the massive disconnect between the experiences retailers think they are delivering and the experiences consumers report: “Overall, 91% of the 1,000 surveyed small retailers think they offer a convenient online experience, but only 21% of 1,000 consumer respondents agreed.” To me, that’s the headline.
“omnichannel” isn’t hard. It’s just adding a new channel. “Unified Commerce” unifying, connecting and harmonizing those channels is harder, but with the right strategy and usage of affordable tech and tools almost any size retailer can do it.
It is logical to expect small retailers to be behind larger retailers in their omni-channel experiences, especially since a fourth of them don’t have an online presence. As a consumer, I cut smaller businesses some slack and don’t expect them to have omni-channel services and, in many cases, I don’t expect them to have an online store. Maybe I am too “old school.”
Retailers should be laser-focused on their customers and their value proposition. Omnichannel capabilities are a way to extend that value proposition. That may very well mean they need to provide digital capabilities. And, they may not- see Trader Joe’s for reference. The good news for small retailers is that there are a number of tools available at their scale that can provide many of the services their larger competitors offer. This can include BOPIS, Curbside, and home delivery. The bottom line is they need to evaluate for themselves if these services are important to their customers and react accordingly. For many small businesses, the right answer is a hybrid of the most valuable services.
Younger consumers in particular have come to expect online options for retail businesses of all sizes. It’s stressful for small stores to stretch their resources to manage omnichannel operations.
E-commerce enablers level the playing field. B2B solutions designed for smaller retailers include online payment and delivery with Shopify integrating Amazon Buy with Prime. Also, QR codes can modernize local businesses by allowing consumers to “shop the window.”
How many electronic cash registers are still in existence? My guess, based on the amount of ipad supported “cash registers” (who pays in cash anymore?) is the number is dwindling, fast.
As vendors get stronger at positioning these offerings so they are plug and play, the smaller stores will only be disadvantaged if they want to be.
It’s one thing for consumers to report that they feel a way, but it’s another to look at their shopping habits. Maybe in theory consumers expect certain things, but in practice, I don’t know that they care that much when shopping small.
I have one set of expectations and purposes for shopping at Amazon et al and another for small / indie retailers who I patronize for their unique offerings and overall value prop. While I suspect many others similarly do the same, all retailers need to have core Omni-channel capabilities.
The beauty of independent retail is the in-store experience.
GoDaddy’s survey finding younger generations want more technology from small retailers makes sense since the company sells ecommerce websites. But we’ve all also read surveys that find Gen Z likes to shop brick and mortar, too.
Independent retailers rise to their chosen level of technology. Not every retailer is meant to compete online with the likes of Walmart, Target, and Amazon. And as Paula pointed out, there are vendors like Shopify available who help indies easily sell online if that’s what they want to do.
I think the core premise of this article is accurate; small retailers are behind on omnichannel integration. Rather than debate the specific number/metrics, I think the key discussion is to help them catch up.
First and foremost, they need to educate themselves on digital retailing, how it works, and how it impacts the customer experience. Then, they can engage with solution providers from a position of strength, rather than being at the mercy of those who may or may not have their best interests at heart.
Shopping a number of different solutions, and posing tough questions to potential suppliers, is the best route to success. Integration with existing systems is also important…
i hesitate to jump too quickly here. For a small retailer to become fully online, they need a fully integrated system of inventory with a website to access it. This is non-trivial. So the serious question continues to be: how much profit potential is there for a small retailer to fully rework their systems? Despite millennial protests, there will be many where the juice isn’t worth the squeeze.
With every amazing retail experience you have, the bar is raised for all other retail experiences you have – irrespective of size.
It is unfortunate for the smaller organisations who perhaps have a bigger challenge to replicate the service because there is an overhead in terms of adding the capability.
One has to consider the question as to why GoDaddy commissioned this research – is there an opportunity for them to provide some of these services on behalf of small retailers – or pave the way for another provider.
This could really help the small retailers compete and provide service that aligns with expectations.
As my Law of Equivalent Experience states: “The best service standards experienced anywhere are instantly expected everywhere.”
High shopper expectations present a tough reality for small retail and direct-to-consumer businesses who want to serve customers the ways they want to be served at each and every encounter. Same-day delivery is one huge hurdle. Mobile app features may fall short. Same for social media presence. Oh – and did I mention competitive prices?
Still, it’s great to read the conclusion that digital commerce lowers the barriers to entry for new retail businesses. Starting a Shopify boutique is fairly easy. Scaling the business is another matter.
Smaller retailers are savvy and cater to their customer base. You can’t out-amazon and beat loyal amazon customers hooked on Prime. You go after a different customer base with different expectations in merchandising selection or crave in store experiences
Yes, BOPIS is an expectation where it can be offered, by retail category leaders, large or small. Online, smaller stores are not at a disadvantage, since size is not a factor online. Digital facings have nothing to do with actual real life size, so smaller stores can demonstrate a larger online digital appearance, and capture a greater share of attention (and sales) this way.
The technology for the retail omnichannel experience is far less expensive than it used to be, but not every retailer, including smaller boutiques, hasn’t yet adopted the idea. That said, is it really necessary? It may be if you’re trying to compete head-to-head with larger retailers, but if not, “teach” your customers how to get the best experience from you. Explain the differences about why you instead of them (the competition). Even if you don’t adopt a total omnichannel experience, you must still be easy to work with. And remember, you are going to be compared to the best experience your customers have received from any other retail, large or small. That’s just the way customers think.
Consumer behavior and expectations are changing, and retailers need to remain up to date with their offerings to deliver against those expectations. These demands will force all retailers, including small businesses, to remain dynamic, or they will risk losing potential customers. Having an online presence is a necessity for all retailers big or small, but to be successful, retailers need to invest to remain competitive and visible to consumers. This presents a hurdle for smaller retailers since they do not have the resources or funds to continuously update their technology and marketing channels. Hiring individuals with the right expertise or training can be an additional hurdle for smaller retailers as they adopt new technologies. And lastly, data privacy and fraud protection measures are crucial to a small retailer’s online success. They need to implement an even more robust security protocol compared to larger retailers.
I believe a healthy amount of smaller retailers now have ample digital tools and services invested in websites, digital payments and social media. But the gap against consumer expectations and perception might be in comparison with medium sized to large stores, who have greater resources.
For most small retailers, the upside and opportunity for greater digital usage often falls into several issues:
The ROI doesn’t (yet) amply prove out against platform costs. So going slow and testing is the best option now.The digital platform partner company may optimize tools and cost options more for mid to larger sized retailers, with fewer aligned options for small retailers.Resources and staffing are often more focused on great customer service and product curation, with the leap to broader digital usage as something to do after hours if there is time.
In my opinion, the digital offerings highlighted in the GoDaddy survey have indeed become expectations, even for smaller businesses. Young customers, especially Gen Z and Millennials, prioritize conveniences like BOPIS, digital payments, eCommerce, and social media storefronts. The disparity between small retailers’ perceptions and actual customer experiences suggests a critical gap, as many smaller stores face a disadvantage compared to larger chains when embracing these digital-facing technologies.
Although some smaller businesses excel in online revenue, the survey underscores the importance of aligning with younger consumers’ tech expectations. Eventually, closing this gap will be crucial for small retailers to thrive in this evolving retail landscape and cater to the diverse preferences of the digital-savvy demographic.
Small retailers must prioritize digital tools for an enhanced competitive edge. While many small businesses already have a booming online presence, many are missing out on opportunities by not fully building out their digital footprint. To stay relevant, small businesses should strive for a customer experience that is seamless, convenient – and most importantly – tailored to their customer’s individual preferences, even if they can’t match larger chains’ delivery capabilities. In the era of micro-targeting, aligning omnichannel strategies with evolving customer expectations is crucial for retailers of all sizes to thrive.