November 12, 2014
Digital channels influence half of brick-and-mortar sales
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.
Digital channels influenced up to 50 percent of all in-store retail sales in September 2014, up from 36 percent in September 2013, according to a study commission by L2. This coincides with the growing number of shoppers who showroom (72 percent) and webroom (78 percent).
Also boosting the trend is mobile’s influence on in-store purchases, increasing nearly four-fold from 2012 to 2013 and now accounting for over half of digitally influenced sales.
The 2014 Omnichannel Retail report, done in partnership with RichRelevance, examined omnichannel data across 100 retailers and investigates retailers’ efforts to drive customers into stores.
Despite a greater emphasis on omnichannel retailing, only six brands provide real-time inventory visibility online, while an additional six brands offer in-store pickup. As many as 62 percent of retail executives cited that customers already expect omnichannel capabilities, and 55 percent believe their competitors have already made investments in technology to enable these seamless experiences across all channels.
Ensuring inventory visibility across all channels can have a tremendous impact on consumers’ buying processes as it allows them to commit to a purchase before entering a store. In fact, 42 percent of consumers noted that they are "very likely" to visit a store when they confirm inventory availability online, with an additional 31 percent reporting that they would "likely" visit a retailer under the same circumstances.
All seven of the big box brands spotlighted in the 2014 Omnichannel Retail survey offer real-time in-store visibility, while 75 percent of department stores provide this detailed access to information. These figures drop off significantly for the next highest category, sportswear retailers, in which 40 percent offer visibility through every channel.
Retailers have different strategies for crediting omnichannel sales, preventing them from completely settling on an accepted best practice. Up to 31 percent of retailers credit the e-Commerce channel for a sale in which a customer buys online, then picks up the order in-store, while 21 percent of retailers fully attribute those sales to the physical store. Thus far, only 16 percent of retailers have a single profit and loss (P&L) report that spans across all channels.
There are multiple challenges for retailers wanting to join the omnichannel fray: Half of the respondents noted that they are limited by their company’s business model, while 40 percent said they were limited by a lack of in-store associate training and had difficulty integrating back-end technology across channels.
BrainTrust
Recent Discussions
Discussion Questions
Does it make sense that digital is now influencing half of brick & mortar sales? What are some of the urgent challenges stores face meeting digital’s influence this holiday season?
Poll
We have reached the “tipping point” where it is no longer a question of either/or—it is now both in the eyes of consumers.
A “sale” is no longer a result of a click online, or a credit card swipe in-store. The sale is a purchase moment in time that can occur anywhere, any time in the consumer’s omni-channel purchase path.
Aside from the challenge of technology and systems required to execute real time inventory availability for webrooming consumers, the biggest challenge that retailers face is continuing to count sales as “either/or.”
It no longer matters whether the sale was made online or in-store. The most critical metric is the consumer relationship that resulted in a purchase for the retailer, whereever it occurred.
My read on this is INVENTORY! Good prices, cool websites, supporting multimedia ads, etc., are all great but the INVENTORY available where the shopper wants it, especially the stores, is critical.
Retailers MUST be able to share with online shoppers that the item they want is AT which store in their area.
A recent online shopping effort for me said that a select retailer HAD the item in stock at a store near me. Was it there? No. I asked the manager about this issue and he said—well, the system is not always right. I will not trust their online shopping site again.
Inventory is the gig. Focus on it and win.
The L2 study is in line with similar findings from Forrester and Deloitte, so it’s very believable.
The fact that half of all sales are digitally influenced should be a wake up call to many shopper marketers, but the even bigger realization is that in the very near future 100 percent of all sales are likely to be digitally influenced.
Digital has fundamentally changed the path to purchase. Thanks to digital, social proof (such as ratings and reviews) is now higher on the consumer’s decision tree than brand, yet very few in-store experiences offer social proof.
Digital makes it possible for virtually every purchase to be a considered purchase. It’s time to stop thinking about digital shoppers as a different segment than non-digital shoppers and instead think about digital as a component of every shopping experience.
Yes. Consumers use digital to research and purchase products. They expect that a retailer’s website will be optimized for mobile. They expect online purchase and in-store pick up. They expect real-time inventory and uniform, cross-channel pricing. And they expect sales associates who can seamlessly blend online and in-store.
How many retailers can meet these expectations? Very few, and that’s a problem.
If digital isn’t influencing half of brick-and-mortar sales, it’s pretty close. Besides researching products online, as stores just don’t carry as much detailed product information to assist in the buying decision, buy online pickup in-store (BOPIS) is also starting to establish itself.
The key challenge is making sure store-specific inventory is reflected online in (near) real-time. This is a significant challenge and one that many retailers are working towards, but this will take time. Nothing worse than a customer thinking an item is in stock locally and then heading to a store to find out that false expectations were set.
I’m sure Kim Kardashian influences a lot of brick-and-mortar purchases too, but measuring her increase over the year before isn’t the point.
The short answer is everything is influencing our purchases. We could’ve said this about catalogs, TV shows or even newspaper ads not long ago.
What is new for me is when I go by beautifully-created stores, with lots of digital signage and signs encouraging people to “like” them on social media, and where it really matters—converting a browser to a customer—is left to chance.
So many retailers are choosing DIGITAL as their solution and abandoning the whole reason they have a brick-and-mortar store: To engage the customer as a human being, not a piece of data. Such surveys seem to miss the point.
These results are not surprising. In fact, they may underestimate the influence of digital on brick-and-mortar sales. Unfortunately this research does not include any traditional food retailers. The only retailers that have food as an option in this study are Target, Walgreens, and Walmart. However, the noted barriers to omni-channel maturity highlighted in the L2 study would be applicable to food retailers as well. In fact, the issue of who gets credit for the sale is not new to food retailers. Recall the debate when food retailers began to cross-promote merchandise. Who was to get credit for the baked potatoes displayed next to the rib eye steaks? The key is to focus on the customer and not get distracted by store policies.
I have to believe it’s under-reporting. I just don’t know that many people who start their shopping trip in a store anymore—truly go into a store with the intent of awareness, education, selection and purchase all in one trip. And I think it has huge implications for the holiday season.
Retailers persist in trying to put all their eggs in one basket: Black Friday weekend. In doing so they create an unnatural amount of demand in too small of a time frame, so they must open earlier and earlier on Thanksgiving. When in reality, I’ve already seen the Black Friday flyers for Target, Walmart, Home Depot and Toys ‘R’ Us. News agencies are investing time in reporting on how Black Friday deals are actually the worst kind of deals, and using enterprise-level price-tracking tools to help consumers know the best times to buy (which happens before Thanksgiving, by the way).
The store is no longer the be-all end-all of the shopping journey. It’s still the largest chunk, but I suspect more battles for shoppers are won online long before they make it to the store, and I bet that opportunity is actually larger than 50 percent.
I agree with Bob—the digital world we are living in influences us on every step of the buying journey, and there’s the rub. Selling may be digital but buying is still an analog process that requires consumers to see, touch and in the case of apparel, try on before they make their final buying decisions.
Retailers need to understand that when a customer makes the effort to visit their stores they do not want to be met with another touchscreen or a robot. They want to engage with people and the merchandise they are interested in purchasing.
Retailers need to remember this when developing in-store technology solutions to customer pain points. Removing people from the analog process of buying should not be the goal. Reducing buying pain with technology that facilitates face-to-face engagement, information and product should be the goal.
I was recently in Milan on Corso Como, one of the fashionable shopping streets. I noticed a small store with a large QR code and the words “Shopping online in the store.”
I went in the store and asked how they operate. Their inventory was limited in sizes and colors, but all the fashions were there. They said that people come in, and if they can’t get what they want off the shelf they step into another small room and buy it online. The salesperson added, “of course they don’t have to come to the store, and many people just look in the store then buy online.”
Here is yet another discussion that is both revealing and thought-provoking. The question of how to measure sales success in the digital age can be overwhelming for company management that has a tool box full of mid-20th century business practices and a 21st century collection of technologies that still remain arguably effective and traceable.
Reporting methods and measures from both marketing and finance departments rarely support one another and change measuring practice and standards too often for decision makers to feel confident moving into unfamiliar markets. Add to that things like security issues, very short technology lifespans and rising investment costs and you will see every executive’s nightmares. The key to taking control of these issues is one of the most obvious strategic deficits that retailers refuse to acknowledge and move to improve—effective employee training programs at all levels.
Yes, this does make sense, as I blogged about this recently. Fulfillment has been, and still remains, the key element of this cross-channel process to optimize. There are tools available today to take the gut feel out of the decision-making process. Retailers large and small need to leverage these capabilities in order to minimize shopper disappointment.
The rising influence of digital on in-store purchases isn’t really a question, it’s today’s reality! Some of the urgent challenges this presents to retailers this holiday season include:
The ability to reconcile online pricing in-store. After all, it’s the online reference point that counts vs. in-store, since online is where the majority of shoppers are starting their purchase journey.
Price transparency at the point of purchase: Retailers know all too well that they must be right priced or they will fail to convert, and the proliferation of smart phones and tablets brings this challenge directly to the cash register. Retailers need to ensure their store associates are well prepared with a real-time view of the competitive pricing landscape including out-of-stocks, shipping, and available “like” products including private brands.
Leveraging new opportunities to connect with customers: Omnichannel pricing success is not about offering the same price across all channels, it’s about offering the same price to the same customer across different channels. This is a real opportunity for retailers to leverage personalized online pricing to drive store traffic and purchases; and, to use store loyalty to drive online traffic and purchases.
Most urgent is to make order online, pick up in store options convenient and speedy. Forcing customers to collect online orders at multi-purpose customer service desks, or requiring them to travel deep into the bowels of a store during the holidays is a recipe for frustration. Retailers should set up dedicated spaces for in-store pickup, preferably close to the front entrance. Even better, why not set up temporary curbside structures for that purpose or partner with companies (like Curbside) that will make it happen?
Yes. As digital starts to influence more and more sales at the brick-and-mortar stores, retailers have an opportunity to bring digital experiences into their store. This allows a retailer to provide truly consistent channel experience to its customers. An example of a retailer that continues to do this well is Burberry. They initiated the use of RFID technology throughout the Burberry product lines to assist with stock and quality control, while also enhancing the customer experience in selected stores. RFID technology enables customers to view multimedia content specific to different products and ranges on in-store display screens. Whether it is in its flagship store in London or in the recently opened store in Shanghai, Burberry has successfully brought the digital world to life in a physical space.
Related to inventory visibility…every retailer talks about making the right product available thru the right channel at the right time and at the right price. However, we all know that this is easier said than done. The other way to look at inventory management is how to entice a customer to choose a channel that has the right level of inventory. Can I persuade my customer to buy online if I have more inventory at my warehouse than at my physical store.
The possibilities for the retailers are endless when it comes to physical-digital integration. And, many of them are just embarking on this exciting journey.
Price matching. Customers will be informed about better pricing elsewhere and more so than ever before. Further, the price match will be something presented to the front-line staff with high urgency. The protocols to empower the staff will have to be in place or the customer will walk….
The digital channel is having more influence for several reasons:
1. Consumers are turning to their mobile devices as “first screens” more than ever.
2. Transparency is the keyword for retailers to watch. Transparency impacts, pricing, product comparison (impacting the purchase decision) and convenience.
3. As to convenience, the mobile (digital) channel is a time saver for people and time might be a commodity on equal value par with money.
For those retailers whose business model is creating obstacles, its clearly time to examine the root cause and make some changes. Issues with technology and associate training are easier to solve, though will require time and money.
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We have reached the “tipping point” where it is no longer a question of either/or—it is now both in the eyes of consumers.
A “sale” is no longer a result of a click online, or a credit card swipe in-store. The sale is a purchase moment in time that can occur anywhere, any time in the consumer’s omni-channel purchase path.
Aside from the challenge of technology and systems required to execute real time inventory availability for webrooming consumers, the biggest challenge that retailers face is continuing to count sales as “either/or.”
It no longer matters whether the sale was made online or in-store. The most critical metric is the consumer relationship that resulted in a purchase for the retailer, whereever it occurred.
My read on this is INVENTORY! Good prices, cool websites, supporting multimedia ads, etc., are all great but the INVENTORY available where the shopper wants it, especially the stores, is critical.
Retailers MUST be able to share with online shoppers that the item they want is AT which store in their area.
A recent online shopping effort for me said that a select retailer HAD the item in stock at a store near me. Was it there? No. I asked the manager about this issue and he said—well, the system is not always right. I will not trust their online shopping site again.
Inventory is the gig. Focus on it and win.
The L2 study is in line with similar findings from Forrester and Deloitte, so it’s very believable.
The fact that half of all sales are digitally influenced should be a wake up call to many shopper marketers, but the even bigger realization is that in the very near future 100 percent of all sales are likely to be digitally influenced.
Digital has fundamentally changed the path to purchase. Thanks to digital, social proof (such as ratings and reviews) is now higher on the consumer’s decision tree than brand, yet very few in-store experiences offer social proof.
Digital makes it possible for virtually every purchase to be a considered purchase. It’s time to stop thinking about digital shoppers as a different segment than non-digital shoppers and instead think about digital as a component of every shopping experience.
Yes. Consumers use digital to research and purchase products. They expect that a retailer’s website will be optimized for mobile. They expect online purchase and in-store pick up. They expect real-time inventory and uniform, cross-channel pricing. And they expect sales associates who can seamlessly blend online and in-store.
How many retailers can meet these expectations? Very few, and that’s a problem.
If digital isn’t influencing half of brick-and-mortar sales, it’s pretty close. Besides researching products online, as stores just don’t carry as much detailed product information to assist in the buying decision, buy online pickup in-store (BOPIS) is also starting to establish itself.
The key challenge is making sure store-specific inventory is reflected online in (near) real-time. This is a significant challenge and one that many retailers are working towards, but this will take time. Nothing worse than a customer thinking an item is in stock locally and then heading to a store to find out that false expectations were set.
I’m sure Kim Kardashian influences a lot of brick-and-mortar purchases too, but measuring her increase over the year before isn’t the point.
The short answer is everything is influencing our purchases. We could’ve said this about catalogs, TV shows or even newspaper ads not long ago.
What is new for me is when I go by beautifully-created stores, with lots of digital signage and signs encouraging people to “like” them on social media, and where it really matters—converting a browser to a customer—is left to chance.
So many retailers are choosing DIGITAL as their solution and abandoning the whole reason they have a brick-and-mortar store: To engage the customer as a human being, not a piece of data. Such surveys seem to miss the point.
These results are not surprising. In fact, they may underestimate the influence of digital on brick-and-mortar sales. Unfortunately this research does not include any traditional food retailers. The only retailers that have food as an option in this study are Target, Walgreens, and Walmart. However, the noted barriers to omni-channel maturity highlighted in the L2 study would be applicable to food retailers as well. In fact, the issue of who gets credit for the sale is not new to food retailers. Recall the debate when food retailers began to cross-promote merchandise. Who was to get credit for the baked potatoes displayed next to the rib eye steaks? The key is to focus on the customer and not get distracted by store policies.
I have to believe it’s under-reporting. I just don’t know that many people who start their shopping trip in a store anymore—truly go into a store with the intent of awareness, education, selection and purchase all in one trip. And I think it has huge implications for the holiday season.
Retailers persist in trying to put all their eggs in one basket: Black Friday weekend. In doing so they create an unnatural amount of demand in too small of a time frame, so they must open earlier and earlier on Thanksgiving. When in reality, I’ve already seen the Black Friday flyers for Target, Walmart, Home Depot and Toys ‘R’ Us. News agencies are investing time in reporting on how Black Friday deals are actually the worst kind of deals, and using enterprise-level price-tracking tools to help consumers know the best times to buy (which happens before Thanksgiving, by the way).
The store is no longer the be-all end-all of the shopping journey. It’s still the largest chunk, but I suspect more battles for shoppers are won online long before they make it to the store, and I bet that opportunity is actually larger than 50 percent.
I agree with Bob—the digital world we are living in influences us on every step of the buying journey, and there’s the rub. Selling may be digital but buying is still an analog process that requires consumers to see, touch and in the case of apparel, try on before they make their final buying decisions.
Retailers need to understand that when a customer makes the effort to visit their stores they do not want to be met with another touchscreen or a robot. They want to engage with people and the merchandise they are interested in purchasing.
Retailers need to remember this when developing in-store technology solutions to customer pain points. Removing people from the analog process of buying should not be the goal. Reducing buying pain with technology that facilitates face-to-face engagement, information and product should be the goal.
I was recently in Milan on Corso Como, one of the fashionable shopping streets. I noticed a small store with a large QR code and the words “Shopping online in the store.”
I went in the store and asked how they operate. Their inventory was limited in sizes and colors, but all the fashions were there. They said that people come in, and if they can’t get what they want off the shelf they step into another small room and buy it online. The salesperson added, “of course they don’t have to come to the store, and many people just look in the store then buy online.”
Here is yet another discussion that is both revealing and thought-provoking. The question of how to measure sales success in the digital age can be overwhelming for company management that has a tool box full of mid-20th century business practices and a 21st century collection of technologies that still remain arguably effective and traceable.
Reporting methods and measures from both marketing and finance departments rarely support one another and change measuring practice and standards too often for decision makers to feel confident moving into unfamiliar markets. Add to that things like security issues, very short technology lifespans and rising investment costs and you will see every executive’s nightmares. The key to taking control of these issues is one of the most obvious strategic deficits that retailers refuse to acknowledge and move to improve—effective employee training programs at all levels.
Yes, this does make sense, as I blogged about this recently. Fulfillment has been, and still remains, the key element of this cross-channel process to optimize. There are tools available today to take the gut feel out of the decision-making process. Retailers large and small need to leverage these capabilities in order to minimize shopper disappointment.
The rising influence of digital on in-store purchases isn’t really a question, it’s today’s reality! Some of the urgent challenges this presents to retailers this holiday season include:
The ability to reconcile online pricing in-store. After all, it’s the online reference point that counts vs. in-store, since online is where the majority of shoppers are starting their purchase journey.
Price transparency at the point of purchase: Retailers know all too well that they must be right priced or they will fail to convert, and the proliferation of smart phones and tablets brings this challenge directly to the cash register. Retailers need to ensure their store associates are well prepared with a real-time view of the competitive pricing landscape including out-of-stocks, shipping, and available “like” products including private brands.
Leveraging new opportunities to connect with customers: Omnichannel pricing success is not about offering the same price across all channels, it’s about offering the same price to the same customer across different channels. This is a real opportunity for retailers to leverage personalized online pricing to drive store traffic and purchases; and, to use store loyalty to drive online traffic and purchases.
Most urgent is to make order online, pick up in store options convenient and speedy. Forcing customers to collect online orders at multi-purpose customer service desks, or requiring them to travel deep into the bowels of a store during the holidays is a recipe for frustration. Retailers should set up dedicated spaces for in-store pickup, preferably close to the front entrance. Even better, why not set up temporary curbside structures for that purpose or partner with companies (like Curbside) that will make it happen?
Yes. As digital starts to influence more and more sales at the brick-and-mortar stores, retailers have an opportunity to bring digital experiences into their store. This allows a retailer to provide truly consistent channel experience to its customers. An example of a retailer that continues to do this well is Burberry. They initiated the use of RFID technology throughout the Burberry product lines to assist with stock and quality control, while also enhancing the customer experience in selected stores. RFID technology enables customers to view multimedia content specific to different products and ranges on in-store display screens. Whether it is in its flagship store in London or in the recently opened store in Shanghai, Burberry has successfully brought the digital world to life in a physical space.
Related to inventory visibility…every retailer talks about making the right product available thru the right channel at the right time and at the right price. However, we all know that this is easier said than done. The other way to look at inventory management is how to entice a customer to choose a channel that has the right level of inventory. Can I persuade my customer to buy online if I have more inventory at my warehouse than at my physical store.
The possibilities for the retailers are endless when it comes to physical-digital integration. And, many of them are just embarking on this exciting journey.
Price matching. Customers will be informed about better pricing elsewhere and more so than ever before. Further, the price match will be something presented to the front-line staff with high urgency. The protocols to empower the staff will have to be in place or the customer will walk….
The digital channel is having more influence for several reasons:
1. Consumers are turning to their mobile devices as “first screens” more than ever.
2. Transparency is the keyword for retailers to watch. Transparency impacts, pricing, product comparison (impacting the purchase decision) and convenience.
3. As to convenience, the mobile (digital) channel is a time saver for people and time might be a commodity on equal value par with money.
For those retailers whose business model is creating obstacles, its clearly time to examine the root cause and make some changes. Issues with technology and associate training are easier to solve, though will require time and money.