The meteoric rise of digital combined with economic uncertainty has changed the path to purchase forever, creating a whole new raft of challenges for anyone selling through retail channels. We will address these challenges in a series of four blogs, entitled “The future of retail”. As customers change their priorities and the way that they shop, new retail models are emerging at overwhelming speeds. We therefore start our journey by examining where retailers will find tomorrow’s shoppers.
In today’s retail landscape there are more channels, shoppers visit more retailers in their search for products and there is less loyalty to brands. Markets are ultra-competitive, which means anticipating and activating shopper demand is essential. Research and analysis of shopper behavior must be ongoing, so that retailers and manufacturers can adapt to meet needs as they evolve. However, solutions must be implemented as part of a considered business strategy to ensure that they satisfy shoppers, but are also profitable.
Making a multi-channel strategy work for the customer and the retailer
US department store Macy’s is creating a shopper-centric experience with a seamless experience across store, online and mobile in order to reach and attract shoppers. Activity across all of these channels is interchangeable and linked with their loyalty account. Another retailer, Best Buy has linked their mobile app with their rewards program, incentivizing shoppers for checking in to store locations, and giving the option to purchase through the app for home delivery or order for store collection.
In the UK, grocery retailer Tesco has been at the forefront of digital innovation over the last decade or so with its omnichannel approach, adding first e-commerce and then m-commerce to its retail channels. However, the success of that strategy has recently been shown to have come at the expense of profitability. Tesco has borne the cost of subsidizing grocery delivery to millions of British homes.
If we look across to France, we see that the approach has been to manage delivery costs while at the same time focusing on increasing customer satisfaction. Click & Collect has been employed to keep fulfillment costs to retailers in check, and shoppers perceive the service as a benefit. Many state that they find Click & Collect a more flexible choice, as staying in to wait for a home delivery can be inconvenient.
Shoppers’ channel preference and use differs by country
Our research from FutureBuy explores why shoppers use different channels, and the country of residence seems to have a significant influence on their preferences. For instance, when buying mobile phones, German shoppers buy online primarily to save money (62%) and for a better selection (50%). Japanese consumers buy in store to get products sooner (62%), and to see and feel them before they purchase (54%). The Japanese market is very technologically advanced, but here consumers are far less likely to shop purely online (20%) compared to those in Germany where four in ten (39%) have a preference for online-only buying. So it’s important for international retailers to adapt their strategy to the local market.
Insights into shoppers’ needs and behavior are already informing how stores and online commerce platforms are designed. For example, Apple has recently concentrated on getting buyers to purchase online rather than in their stores and is placing its physical stores at the center of the brand experience – where people come to try out new products, to discuss items with sales assistants, and for customer service. Conversely, Pets at Home has used its e-commerce site to attract customers to its stores in order to establish a consultative relationship with them, as a platform for selling premium products and services. The key here is to understand how and where consumers want to buy different products, and to ensure the channel strategy meets those needs.
In today’s challenging, competitive retail environment, with digital and physical co-existing and numerous ways to buy, it’s all about making sure that the right products are offered in the right way to the right people at the right time. To win, businesses need to invest in making shopping a seamless and convenient part of people’s lives.