Written by Daniel Poole, Vice President, Strategic Partnerships for the EMEA region at Cover Genius who is responsible for the development of strategic partnerships that drive the growth of embedded protection in the retail sector.
As the retail landscape evolves and the economic downturn continues, businesses in the DACH region (Germany, Austria, and Switzerland) are facing unprecedented challenges. The rise of e-commerce and digital transformation has forced many offline retailers to rethink their strategies and adapt to changing online consumer behaviours. The DACH e-commerce market alone is set to generate more than USD 135 billion in 2024. As such, those who have built their business strictly offline have fallen behind and incorporating online purchasing options is no longer a choice, but a necessity.
The shift to digital
Despite the projected growth in e-commerce, brick-and-mortar shopping is not dead. In Germany, nearly 80% of fashion purchases are still made in-store. In Austria and Switzerland, offline shopping is still alive and well with approximately 75% of shoppers projected to continue shopping offline, because retail shopping is more than a simple purchase – it’s an experience.
The COVID-19 pandemic was the catalyst that accelerated the shift to digital, with consumers turning to online channels for all their shopping, entertainment, professional, and informational needs – virtually overnight. Now that consumers have returned to enjoy in-store experiences, they don’t necessarily want to choose one experience over the other, nor should they have to. Consumers seem to want an integrated experience between online and in-store worlds – and brands need to cater to that demand.
The importance of building an omnichannel ecosystem shouldn’t be overlooked by retailers in the DACH region if they want to stay relevant in today’s digital age, especially with tech-savvy competitors in neighbouring Netherlands and Denmark. E-commerce sales have grown significantly in DACH. The German e-commerce market has been forecasted to generate approximately USD 119.76 billion in revenue in 2024, in Switzerland it is projected to reach approximately USD 14.22 billion in 2024, and Austria’s e-commerce market continues to evolve with a predicted revenue of USD 13,136.8 million. Retailers who fail to adapt to this digital shift risk being left behind, losing market share, and ultimately, going out of business.
Thinking digital-first
Digital-first players, like Amazon, have expanded their businesses, and their bottom line, by creating broader retail experiences with additional ancillary services as value-adds for their customers. This extends into protection solutions, like guarantees, warranties and others.
These digital businesses are recognizing the value of embedded protection as a product in its own right, which can be monetized and sold to customers as a value-added service. Insurtechs are enabling retailers to offer protection products that are tailored to their customers’ needs so businesses can increase customer satisfaction, reduce churn rates, and ultimately drive revenue growth.
Digital-first companies are taking a proactive approach to protection by anticipating what their customers might need through data, products and the experiences they provide. These retailers are thinking about their customers as an audience that they can serve at multiple touchpoints during their customer lifetime, not just with one product or purchase. This long-term approach is allowing businesses to create a seamless experience for their customers, who are increasingly expecting more from the companies they interact with.
The importance of omnichannel experience
Today’s customers are evermore digitally-minded and still want an integrated experience. Omnichannel is no longer simply a buzzword; it’s a necessity.
Traditional retailers still stuck in the mindset of maximizing revenue opportunities by simply tacking on products to their existing offerings are missing out on the vast potential of becoming service-oriented, omnichannel businesses. By not adopting this approach, they’re failing to provide a holistic experience for their customers who expect multiple touchpoints throughout their customer journey.
An omnichannel strategy is about creating a seamless experience for customers across all touchpoints, from online to offline, and back again. For example, when shopping in-store, consumers are often seeking out information about the products they’re considering purchasing through their smartphones. This means that in-store retailers must ensure their online presence is consistent with their offline brand identity, products, and services. The goal is to create a cohesive experience that treats customers like individuals, not just transactions, and offers them value-added solutions that address any hurdles they may face ahead of their purchase.
For example, when shopping for clothing items in a shop, some stores offer dressing rooms with mirrors that scan the clothes and the shopper for an augmented reality. Not only can they “see” themselves in the various garments they’ve selected, they can still touch and feel the fabric. Or, they can search for more information about the product or similar products before they purchase through a QR code on the tag or in the display.
To cater to customer needs with an omnichannel strategy, insurtech Cover Genius has partnered with the Movado Company Store to offer US-based shoppers product protection that helps alleviate any concerns with post-purchase damages or repair costs, leading to more confident purchases on their luxury items. The Movado Company Store sales teams explain the protection offering to customers and complete the enrollment automatically in their existing transaction flow. Customers not only receive the 1:1 shopping experience in-store with the brand they already trust but Movado Company Store adds additional value by removing the barrier to protection by providing access to an online policy catered to their customer’s specific needs at point of purchase.
Benefits of early omnichannel ecosystem adoption
Online protection is only one option of ancillary experiences added to the check-out process. For example, shoppers now have the option to add Buy Now Pay Later options, donations for various charitable initiatives or home delivery options. Adopting an early omnichannel ecosystem in retail brings several significant benefits that can enhance a retailer’s competitive edge and drive long-term success. It can lead offline retailers to:
- Increase customer engagement: By providing a seamless experience across all touchpoints, retailers can increase customer engagement, loyalty, and retention. Omnichannel ecosystems often allow for better engagement through loyalty programs, targeted campaigns, and continuous communication across channels, building stronger relationships with customers. Omnichannel experiences also lead to more flexible and convenient choices to enhance their experience, like delivery or product expansion choices, leading to more engagement in various channels.
- Enhance customer experience: Retailers can offer personalized services and insurance solutions, improving the overall customer experience and setting them apart from competitors. Customers skip the inconvenient second step of finding additional protection or services for their purchase and instead benefit from seamless communication between the offline retailer’s systems and an insurtech platform, providing customers with a smooth and efficient experience.
- Drive revenue growth: By increasing customer engagement and loyalty, retailers can drive revenue growth and stay competitive in the market. Omnichannel retail creates multiple pathways and value-add services for customers to make purchases, leading to more opportunities for conversion. This is also an opportunity to cross-sell and upsell across various channels. Loyalty programs that include protection, for example, help build value and subscriptions.
- Stay ahead of the competition with data: By embracing digital transformation, retailers can stay ahead of the competition and maintain their market share. The analytics of a digital platform provide retailers with valuable insights into customer behaviour, preferences, and purchasing patterns, enabling them to make informed decisions about their business. Working with a digital platform for protection solutions, like Cover Genius, offers customers bespoke protection solutions based on their purchases and preferences.
Conclusion
As the retail landscape continues to evolve, retailers in the DACH region must think digitally to stay relevant – it’s time for offline retailers to adapt and thrive in the digital age. Building an omnichannel ecosystem is no longer a choice, but a necessity. By partnering with an insurtech like Cover Genius, offline retailers can create a seamless experience for their customers to obtain product protection which may increase customer engagement and drive revenue growth. Our platform provides personalized insurance solutions, real-time integration, and data-driven insights, enabling retailers to stay ahead of the competition and maintain their market share.
The future of retail is digital. By embracing omnichannel retailing, retailers can create a digital ecosystem that treats customers like individuals, not just transactions.
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