consumers are using digital more for inspiration and idea generation earlier in their shopping process, and not simply as a price comparison vehicle. In many ways
While it was our belief that this hypothesis was true, what we did not expect to find was such a drastic digitally-driven change in both consumers and retailers. Digital influence – that is, the degree to which in-store sales are influenced by digital at some point in the shopping journey – is growing at an increasing pace. We are fast approaching a day when we can assume 100 percent of shoppers will be connected 100 percent of the time. To survive and thrive in this environment, retailers need to start preparing for that day now, as the data tells us that this time will be here sooner than many think.
Since 2012, we have confirmed the existence and acceleration of this digital influence phenomenon, and the rapid pace in which it is impacting in-store shopping and purchase behavior.
What is more, we also found that consumers’ digital behaviors and expectations are evolving faster than retailers are able to deliver, a gap we refer to as the ‘new digital divide.’ Some of the biggest players in retail have been reluctant or slow to understand or acknowledge this widening gap.All in all, Deloitte’s research confirms the view that retailers and the market continue to dramatically underestimate the impact this onslaught of digital is having on the retail industry. In 2014, 6.5 percent of retail sales were online – or roughly $305 billion, with the remaining 93.5 percent happening through traditional brick-and mortar stores.
The Dawn of Mobile Influence, Our ( Deloitte Research) first effort at studying and defining digital influence in 2012, came at a time when the market was fixated on the idea of “showrooming” – viewing products in a physical retail store only to use a digital device to buy from a cheaper, online competitor. Our data debunked the showrooming myth when we found that, in fact, customers who use a digital device in-store as part of their shopping process were actually more likely to make a purchase – not less. At a time when retailers were just starting to make investments in mobile, we projected mobile’s in-store influence to grow exponentially to between 14 and 15 percent by 2015. These projections, which seemed to many to be quite bold at the time, were actually exceeded by the reality just a few years later. This illustrates further our view that the larger trend will likely continue and the new digital divide will continue to expand.
What does success look like?
Indexing volatility Based on our findings, we would assert that, “Our eCommerce sales are growing by 30 percent!” likely isn’t the answer to how retailers will win and remain relevant over time. The majority of retailers in the market are putting up aggressive eCommerce growth numbers between 20 and 30 percent and sometimes more. This growth, however, is coupled with a flat to declining store business. In many cases, the only real growth is coming from the online channel; therefore, this does nothing to revive the health of what could be construed as the most critical asset – the store base. The answer to the question of how to win has to go further, and has to address the new competitive environment. We think our research is telling and reveals a clear imperative:
“retailers must combine the best of physical and digital experiences in new ways that matter to the customer”
In a world where nearly everyone is always online, there is no offline. So it is not about the digital business, it is just business. It’s not about eCommerce, it is simply commerce. While many are starting to give this concept lip service, in our observations, few have fundamentally embraced this in terms of their retail strategy and operations.
Among consumers who use digital devices to shop – almost one-third of consumers say they spend more due to their use of digital during the shopping process. Most often, these shoppers end up spending more because they either perform product research (leading to the purchase of a complementary or higher-priced item) or take advantage of a discount or coupon found online, which causes them to buy more overall. We also found that people who use digital while they shop in-store convert at a 20 percent higher rate compared to those who do not use digital as part of the shopping process.
consumers are using digital more for inspiration and idea generation earlier in their shopping process, and not simply as a price comparison vehicle .Due to the proliferation of avenues through which consumers can find inspiration, browse, validate, purchase, and service their purchases, the types of digital interactions that matter most vary by product category. Comparing digital usage data across all categories indicates, directionally, where retailers should increase their focus on category-level digital strategies and investments.
Inspiration as a point in the digital journey is assumed to be critical if more consumers use social media to shop than the average of thirty-two percent across all categories. Among consumers who use digital devices to shop:
- 56% of consumers shopping for baby and toddler products consult social media at some point during their shopping journey.
- 40% of consumers shopping for furniture, home furnishings, and home improvement products use social media to gather inspiration or shop.
- Conversely, only 21% of food and beverage shoppers use social media to shop, the lowest of any category.
Similarly, the inspiration step is assumed to be critical if consumers are less aware of the products to start off with and do not know where they want to buy them. As previously mentioned, only 30 percent of consumers are getting their initial inspiration from a retailer or brand’s advertisement or communication.
- Forty-two percent of baby and toddler consumers start their shopping journey due to an advertisement or communication from a brand or retailer advertisement.
- Over 15 percent of apparel shoppers are unaware of the product until they see a brand or retailer advertisement that makes them want to buy the item, compared to an average of only nine percent across all categories.
- Over 67 percent of shoppers in the food and beverage category already know what they want to buy and from where, compared to an average of 56 percent across categories – this is a less important decision point for shoppers in this category.
Electronics 31% Home Furnishings 40% Automotive 32% Entertainment 18% Baby/Toddler 56% Apparel 29% Health/Wellness 33%
Across the browse/research and select/validate steps, consumers shopping for baby and toddler, electronics, and furniture and home furnishings products are heavy users of digital functionality. Shoppers in these categories perform general searches using search engines and browse retailer sites and apps more often than the average digital shopper. In addition, while two-thirds (67 percent) of shoppers are using product reviews, usage rates were particularly high in these same three categories, with around 80 percent of shoppers consulting reviews prior to making a purchase decision. Grocery customers are least influenced by digital overall, and they also tend to do less pre-shopping before arriving in stores than shoppers in other categories. In general, higher-frequency shoppers tend to use digital more often; however, grocery shoppers demonstrate the opposite behavior. Interestingly, low frequency grocery shoppers’ purchases are more influenced by digital. This begs the question: is digital usage in the grocery category low because the consumer does not want to use it, or because digital shopping features are relatively less available.
Deloitte’s research indicates the next categories likely to be disrupted due to digital. Note that this does not imply that these categories will fail or shrink, simply that digital is having a profound impact today. Across the board, consumers shopping in these categories are highly influenced by digital, with digital influence factors greater than 50 percent of sales impacted
In the Baby/Toddler category:
- Consumers are most likely to spend more due to digital, at 46 percent.
- Shoppers are most likely to read product reviews via digital, at 81 percent.
- Consumers are most likely to use social media during their shopping journey, at 56 percent.
- Over 15 percent of shoppers made their last purchase through ‘buy online, pick up in store.’
In the Furniture, Home Furnishings, and Home Improvement category:
- Consumers are next most likely to spend more due to digital (after baby/toddler shoppers), at 38 percent.
- High frequency shoppers use digital 50 percent more than low frequency consumers.
- Consumers are 37 percent more likely to make a purchase if they use social media along the journey.
Retailers operating in these categories should reassess and revise their value proposition to speak to the way their customers are shopping. They need to add value at every step that is important to customers and they need to understand deeply what keeps them coming into their stores. The most effective retailers in these and other categories will plan and execute their digital, merchandising, and offer strategies at the category level. Insights By Deloitte
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