Digital Influences More than $1 Trillion in Retail Sales

Digital interactions influence 36 cents of every dollar spent in the retail store, or approximately $1.1 trillion, according to the latest study from Deloitte Digital. By the end of 2014, that number will climb to 50 percent, or $1.5 trillion of total store sales.

The study, “The New Digital Divide,” quantifies the extent to which consumers’ use of desktop and laptop computers, tablets and smartphones influences brick-and-mortar store sales. 

“Many retailers make their strategic digital decisions based on the sales contribution of their company’s e-commerce initiatives,” Jeff Simpson, director, Deloitte Consulting LLP and co-author of the study, told Progressive Grocer. "In reality, 36 percent of sales made in the store are impacted by some type of digital experience.”

Such a narrow focus on online transactions, while ignoring the contribution of other digital activities to in-store sales, can actually hurt retailers. “Mobile and online transactions represent only a sliver of total retail revenue potential,” said Kasey Lobaugh, principal, Deloitte Consulting LLP and Deloitte Digital’s chief retail innovation officer. “Retailers that narrowly focus on digital commerce – rather than the full journey that leads to a purchase – often fail to recognize how their customers shop and make decisions in the store. The result is a digital divide between what consumers do and what retailers deliver. This gap not only threatens overall revenue, but requires retailers to reset the way they measure and invest in digital efforts.”

Looking solely at smartphones, industry estimates put mobile commerce sales at roughly $40 billion today. By comparison, Deloitte Digital’s data indicates that mobile-influenced sales in the store have reached $593 billion, suggesting that smartphones’ influence on store sales has far surpassed the rate at which consumers make a purchase directly on their phones.

Digital shoppers bring higher store traffic, conversion and spending

Consumers using a device during their shopping journey convert – meaning they make a purchase - at a rate 40 percent higher than those who do not use a device. Additionally, Deloitte Digital found a dramatic impact on traffic, spending and loyalty from digital shoppers:

• 84 percent of store visitors use their devices before or during a shopping trip.
• 22 percent of consumers spend more as a result of using digital; just over half of these shoppers report spending at least 25 percent more than they had intended.
• 75 percent of respondents said product information found on social channels influenced their shopping behavior and enhanced loyalty.

“Each interaction is an opportunity for a retailer to enhance the customer experience and tell its brand story,” said Simpson. “However, retailers often measure success solely on how many widgets they sell through their web or mobile sites.  For example, retailers might regard online shopping cart abandonment as a failed conversion when in reality, it may represent a customer who started their wish list in the online basket, but chose to purchase the items in the store. In that case, digital engagement may have led to a sale in the physical store. This impact is much higher when measured holistically across the organization and regardless of channels, rather than force-fitted to a single point of purchase.”

Eight in 10 shoppers prefer DIY; specialty stores most digitally-influenced

Currently, more than 90 percent of retail sales occur in brick-and-mortar stores, but the surging digital influence calls upon retailers to redefine marketing, the store associate’s role and in-store technology, the report found.

Consumers largely prefer to navigate the aisles and the checkout without a store associate’s help. Eighty percent of the respondents in Deloitte Digital’s study said they prefer to obtain product information on their own device or from an in-store device like a kiosk, rather than ask a sales associate. 

However, digital interactions are not “one-size-fits-all,” and vary significantly by store category, with the highest influence occurring in specialty stores. At the top is the electronics/appliances category, where devices influence 58 percent of store sales, followed by furniture (56 percent) and sporting goods (50 percent); the impact falls lower in categories like health/personal care/drug (35 percent), grocery (29 percent) and general merchandise/department/warehouse club (23 percent).