Digital Impact on Brick and Mortar Now 100%
Brick and mortar retailers should leverage digital technology to engage with their customers even if they don’t sell their products online, according to new insights from Cambridge, Mass.-based consulting firm Kantar Retail, which suggests that the total impact that digital technology has on retail is 100 percent, even though digital sales are less than 10 percent of total retail spend.
“Digital’s impact on retail is the new reality,” said Anne Zybowski, VP at Kantar Retail. “This past holiday season was evidence of how online retailing 24/7/365 is impacting the bricks and mortar world that we have traditionally understood so well. Think about your own holiday shopping. What percentage was done online? And beyond your purchases, what role did mobile and digital tools play in your shopping and planning process?”
According to the research, traditional stores can take advantage of the effects that digital has on shopping experiences by engaging with customers online and across multiple touchpoints in addition to traditional expertise and service levels to drive sales in the store.
Amid all the alarm surrounding “showrooming” – the trend of checking out a product in a store before finding it cheaper online – analysts from Kantar Retail have found that the process is more likely to work in reverse, as customers scan the internet for reviews, information and price comparison and then go to a store for expert advice and to buy the product.
Digital sales only account for around 8 percent of retail sales in the U.S. and U.K. – and are likely to grow to around 10 percent in the next few years – but studies show that 50 percent of purchases are influenced by online shopping, with consumers searching the web before purchasing in-store.
“Some retailers are concerned that people use their stores just to check out a product that they will later buy online,” added Zybowski. “But one could argue that Amazon is the biggest showroom for bricks-and-mortar retailers.”
The total “impact” of digital on retail is closer to 100 percent, as consumers’ expectations of shopping experiences are shaped by their time spent online. Kantar said that smart retailers try to engage with their customers online, even if their online sales account for only a very small proportion of sales, and then use their expertise and superior customer service once the customer is in the store.
According to Kantar Retail, this “10:50:100” framework of digital – 10% sales, 50% influence, 100% impact – is resonating with retailers who had previously discounted the digital effect on their sales.
Tesco showed that e-commerce does not have to mean home delivery – 5 percent of its half-million food orders in the week before Christmas took advantage of its Click & Collect service.
“What was once a day of rest from commerce is now a leisure activity as consumers use new technology to hit the digital shops,” said Zybowski. “And, that opportunity is open for bricks-and-mortar stores to engage with customers even when their stores are closed.”
Kantar Retail is a shopper and retail insights and consulting business and is part of the Kantar group of WPP. The company works with leading branded manufacturers and retailers to help them transform the purchase behavior of consumers, shoppers and retailers through the use of retail insights, consulting, analytics and organizational development.