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Digital Channels Will Influence $2.2 Trillion In Brick-And-Mortar Sales By End Of 2015 Featured

  • Written by  Glenn Taylor
Digital Channels Will Influence $2.2 Trillion In Brick-And-Mortar Sales By End Of 2015

Although brick-and-mortar stores continue to acquire the largest share of store sales, consumers are starting to demand more connected, digitally driven shopping experiences.

Because retailers are unable to address consumer demands, there is a gap growing between consumers’ expectations and retailers’ strategies. This gap is referred to as the “New Digital Divide,” and is spurred on by the increasing usage of digital and mobile devices throughout the buying journey, according to research from Deloitte Digital.

As an example of the widespread effect digital technologies have on the retail industry, digital interactions are expected to influence 64 cents of every dollar spent in retail stores, or $2.2 trillion, by the end of 2015. This total has grown substantially from 2012, where digital channels only influenced 14 cents of each dollar spent in stores.

“Most big retailers stock approximately 20% in-store of what they show online,” said Jeff Simpson, Director at Deloitte Consulting. “If you marry that data to the fact that 64% of all in-store purchases by the end of the year will have been influenced by an online experience, almost two thirds of those consumers are looking at an assortment online that doesn’t really exist in the store. Think about what a huge disconnect that is for the customer.”

Deloitte commissioned the report, titled: Navigating The New Digital Divide, which polled a random sample of more than 3,000 U.S. consumers. An independent research agency conducted the online survey between Nov. 21, 2014 and Jan. 20, 2015.

Digital Influence Varies Across Retail Categories

The impact of digital fluctuates across retail categories, with 62% of consumers citing that digital influences their buying decisions for electronics, 52% citing an effect on baby and toddler purchases and only 39% citing the same for health and wellness products. While retailers continue to develop digital strategies for their brands, most haven’t implemented a strategy at a category level, according to Simpson, an author of the report.

“The feature functions consumers want for apparel are very different than the feature functions they are interested in for electronics,” Simpson said in an interview with Retail TouchPoints. “You see the pure e-Commerce players building different experiences for those two different categories, but the legacy brick-and-mortar retailers aren’t doing that. When you look at the online experiences being built at the category level, they are not honoring what you asked them to do, and they are not taking you where you asked them to take you.”

Retailers that aren’t succeeding in differentiating their category levels tend to miss out on sales opportunities, Simpson noted. For example, a digital user searching a specific product such as “women’s jeans” may be directed to the retailer’s home page or a generic women’s page, instead of pages strictly featuring women’s jeans.

“The customer experience is dictated by the retailer’s merchandise hierarchy or their assortment, and that’s fine, but it’s not what at all the customer now expects,” Simpson explained. “Their expectations have been built around the experiences they have had on Google and Amazon, which makes search intuitive and allows you to search in your own natural language.”

Understanding The Consumer To Improve Strategies

As consumers continue to leverage digital channels before and during their shopping journeys, retailers have a great opportunity to create great experiences for these consumers and, in turn, boost conversion rates.

In fact, consumers who use a digital platform while they shop in stores convert at a 20% higher rate compared to those who do not use such devices. Consumers that access social media during the shopping process are four times more likely to spend more, and 29% are more likely to make a purchase on the same day they turn to social media before or during their shopping trip.

Additionally, 76% of respondents said they interact with brands or products before arriving at the store. Shoppers now make buying decisions at other points in the shopping journey, where they find ideas and inspiration, research product information, access reviews and make purchases online to pick up in store. For example, while the influence of mobile on in-store sales has increased from 19% to 28% year-over-year, consumers are now 30% less likely to use mobile devices to perform in-store price comparisons.

“Consumer behaviors and their use of these digital channels is having a meaningful impact on their in-store behavior,” Simpson stated. “Should retailers choose to ignore that, they are effectively ignoring their customers. They will feel that through decreased share — in terms of learning about products, searching for products and ultimately, buying products. That’s the end game we want these legacy brick-and-mortar retailers to avoid.”

Click here to access the report.

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