Digital Disruption: Store-based Retailers Fight Back

Strategy Briefing

About This Report

Dec 2018

Home and garden store-based retailers have been slow to react to the online onslaught. Only recently have leading store-based retailers implemented digital strategies (e.g. online sales, augmented reality and virtual reality etc.) to counteract pure play internet retailers. Innovation doesn’t just stop there, with store-based retailers using Bluetooth technology and mobile apps to quicken customer check-out times and order out-of-stock items in-store.

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Digital Disruption: Store-based Retailers Fight Back

Key Findings

Online onslaught in home and garden

Despite a relatively low percentage share, internet retailing was the fastest growing distribution channel over 2012-2017. Numerous home and garden pure play internet retailers (e.g. Casper, Pepperfry etc.) emerged over the period, operating as marketplaces or direct-to-consumer companies. Online players are putting pressure on store-based retailers and wrestling away market share.

Store-based retailers fight back with omnichannel strategies

Home and garden store-based retailers, particularly home improvement and gardening stores, have been slow to react to the online onslaught. Only recently have leading store-based retailers implemented digital strategies to counteract pure play internet retailers. Omnichannel strategies (including online sales, augmented reality and virtual reality) are no longer a choice, but a necessity for store-based players to compete for share of wallet.

High delivery costs lead to click & collect

Improving delivery services remains a key priority for online and store-based players alike in the home and garden industry. But, fast and efficient delivery comes with a hefty price tag. Heavy or bulky products can be costly to transport, so store-based retailers have focused their efforts on click & collect strategies, while also investing in distribution warehouses to facilitate speedier delivery times.

If you can’t beat’em, join’em

Mergers and acquisitions are becoming more commonplace between store-based retail giants and smaller online set-ups in the home and garden industry. Store-based players anxious about the popularity of online brands, particularly amongst millennials, have sought to partner with these brands or acquire them outright.

Introduction

Scope
Key findings

Online Onslaught in Home and Garden

Internet retailing the fastest growing channel in home and garden
Emergence of pure play internet retailers in home and garden
Pure play online retailers go offline to boost customer engagement

Store-based Retailers Fight Back

Home and garden store-based retailers adopt omnichannel strategies
Walmart transforms into an online destination for the home…
…and makes shopping in-store easier at its Lawn & Garden centres
Home Depot buys The Company Store and installs pick-up lockers
Ikea invests in distribution centres to grow online sales in Australia
Unbounded retail: Qumei partners with JD.com in the home space
If you can’t beat’em, join’em: Serta Simmons buys Tuft & Needle
Macy’s mixed reality furniture experience launches in-store in 2018

Key Takeaways

Key takeaways for store-based home and garden retailers