Can Traditional Retailers Compete with Digital Brands? (And Can Outsourcing Help?)


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Day after day, name brand retailers are making the news with extensive closures of their brick and mortar stores. Bed, Bath, and Beyond is set to close 60 locations. Forever 21, now filing for bankruptcy, is closing 350 stores worldwide. And American Apparel, Payless Shoes, and a long list of others have made headlines with their own colossal closures. 

Whether retailers hope to streamline operations or are shuttering for good, many attribute these high-profile closures in part to the rise of competition from digital direct-to-consumer (DTC) brands. eCommerce has been steadily growing for years. In 2018, consumers spent $517.36 billion of their hard earned money on online purchases (that’s 14% of all retail sales), and worldwide eCommerce is expected to hit triple digit growth by 2021.

For traditional retailers to compete with digital brands, many organizations need to overhaul their approach to support, sales, and the entire customer experience. Here are the challenges and opportunities for brick and mortar retailers – and how an outsourced retail contact center can help you overcome barriers.  

Why Going Digital is Tough for Some Brands

There’s no question about it: young companies that started as digital DTCs are inventive with their use of digital platforms in ways that established retailers are not. It’s a struggle we can trace through history and technological revolutions. When electricity was introduced in the early 20th century, long-standing manufacturers only thought to replace steam and coal power sources with electricity. However, as best-selling authors and thought leaders Andrew McAfee and Erik Brynjolfsson put it in Machine, Platform, Crowd: Harnessing Our Digital Future, the largest gains came from “the redesign of the production process itself,” with electrical unit drive in individual machines.

Though it seems like a no-brainer to a modern audience, they suffered from what is often called the “curse of knowledge.” When you’ve grown your business through existing processes, models, or mindsets, it’s difficult to imagine a new paradigm. The same way a 60 year old often gets skunked by a six year old trying to learn a new gadget, established companies without help get left in the dust by digital native competitors. Fortunately, traditional retailers can get past this functional fixedness – especially if they implement specific digital strategies and partners to help them adapt.

The First Step? Changing Your Mentality

In our experience, competing with digital retailers requires a complete reset of some core assumptions and mentalities. For starters, digital should not be separate from your in-store strategy. It’s not an add-on to your customer experience, but part of a unified whole. What has hindered traditional retailers as they adopt social media customer service or digital sales strategies is that they keep these platforms siloed from in-store strategies. That’s a mistake because a segmented approach to the customer experience makes consumers feel like they’re interacting with divisions of a business rather than a unified brand.

Digital brands don’t have that obstacle. All of the platforms they use to interact and engage with customers feel like interconnected channels rather than separate divisions. Traditional retailers that are thriving these days have learned to treat in-store interactions as another extension of the omnichannel customer experience. The big picture goals and customer data are shared, only the approaches vary. Working with the right outsourced contact center partner (especially one that prioritizes your goal), can ensure that the goals and experience are especially effective across all channels.

How One Retail Brand Is Crushing the Omnichannel Approach

Want some examples? Here are a few traditional retailers that have managed to erase the divisions across their business and provide a seamless experience on par with the best digital brands:

Ulta Beauty

When other brick and mortar companies have experienced sales slumps, Ulta Beauty has steadily increased their revenue by over 20% each year since 2015. What’s their secret? One significant element of their success is the personalization and seamlessness of their omnichannel interactions.

Ulta takes an agnostic approach to their customer experience. In-store interactions can send products to customers’ homes through their store-to-door program and online purchases can be picked up at the store. On the customer service side, Ulta allows customers to use their app to engage with customer service without switching channels. And they are pioneering new advancements with their chatbot program Madi to answer questions and provide hair color shade recommendations based on selfies texted to the bot.

Behind the scenes, all of these interactions are tied together in their central CRM. “The various teams within the Ulta organization are connected and constantly in communication. It’s one experience for the guest, no matter the department, whether it is a supply chain problem, inventory problem, merchandising problem,” said Jeff Hamm, senior director, e-commerce operations at Ulta, at a Retail Digital Summit. This mentality turns Ulta’s customer base into omnichannel shoppers, who routinely spend “four times more than its single-channel guest.”

Final Thought

Though the above brick and mortar retailers have managed to adapt to the digital landscape, they didn’t do it alone. Partnerships with experts in various elements of the digital space have been crucial to their construction of an omnichannel process that wows customers with remarkable experiences. And technology is only one element.

Traditional retailers often find that having the right people in their corner, (i.e. contact center agents that are empowered to connect across the omnichannel) helps level the playing field with digital competitors and distinguish their brand as one capable of delivering seamless experiences.

Are you ready to work with an outsourced retail contact center? We’ve created a guide to help you to simplify your decision, find the right partner, and boost your bottom line.

Thomas Moroney
Thomas P. Moroney has worked in the contact center industry since 1990.He began his career with American Express where he worked his way from Associate to Director of Credit Operations.In 1999, Mr. Moroney joined PRC, LLC, as Director of Client Services.He went on to lead PRC’s international expansion, as SVP Global Services, reporting to Mr. Cardella.Mr. Moroney also worked as EVP Business Development for TRG Global Solutions and more recently as CEO of Donnelly Communications, an Atlanta based boutique contact center provider focused on the retail and catalog industries.


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