As specialists in digital commerce, one of the roles we see ourselves playing at Wunderman Thompson Commerce is helping retailers and brands understand and plan for future trends in retail. And while our expertise in ecommerce and digital technology plays a key role in the services we offer, sometimes we have to remind ourselves (and our clients) of an important fact - the future of retail is certainly not purely digital.
Despite the volume of discussion about the demise of bricks-and-mortar retail, the facts suggest that physical stores - and the taste consumers have for using them - are not going to disappear any time soon. For example, current estimates put the global ecommerce share of total retail sales at just under 14%. In a country such as the UK, which has a well-developed ecommerce market, that figure only rises to 18%, which means that the overwhelming majority of retail sales still come through non-digital channels.
What is more, although it is known that the ecommerce share of market has been steadily growing more or less since the concept first emerged, the rate of growth is slowing down. If that trend continues, ecommerce will not devour traditional retail. The two will intertwine, enabling a seamless experience.
That is why we recently published a report titled The Hybrid Future of Retail, to outline our near future vision of how we won’t be talking about physical and digital retail as if they are two separate entities - we will just talk about retail again, as a concept that embraces both physical and digital technologies and channels.
But what about the people who matter most in all of this, shoppers themselves? In our experience, when the industry talks about trends in retail and commerce, it often forgets that the people who really make the decisions are the consumers who put their hands in their pockets. If we want to analyse the comparative futures of physical and digital commerce, surely we can only gain a complete picture once we understand how customers see it - what drives their decisions to choose digital over physical or vice versa, whether they even want a future where digital is the only option in town.
With that in mind, we quizzed more than 15,000 consumers on their online and offline shopping habits as part of our latest Future Shopper market survey. Here’s an insight into what we found.
BEST OF BOTH
First of all, we asked survey respondents about their attitudes to retail brands which offer both online and offline shopping. Just under half (48%) said they would prefer to shop with brands that provide both. A slightly surprising aspect of this is the fact that younger shoppers seem to be more interested in having both digital and physical options than older - 53% of 16 to 24 year olds we quizzed said they’d rather have both, compared to 45% of 45 to 54 year olds and 44% of over 55s. This suggests that any idea that younger shoppers are abandoning stores in favour of online channels needs rethinking.
In further support of the idea that bricks and mortar still has a key role to play in how consumers view shopping, we found that more than a quarter (27%) still prefer to browse in stores to find inspiration for new purchases (27%) - not too far behind the number that use social media (32%) or browse brand websites (33%).
The strongest evidence we found for consumer preference for going into stores to shop came when we asked our survey participants about their shopping habits in certain categories. Here, we found that physical retail remained the most popular channel in three retail sub-sectors - grocery, motors and luxury goods.
In grocery, the big supermarkets in particular have invested heavily in ecommerce platforms over the past decade or so, with online shopping supported by home delivery and, more recently, click-and-collect fulfilment options. But while a healthy 27% of consumers in our survey said they bought groceries from these online retailer sites, that remains a distance behind the 40% who say they still never buy online.
It would be no surprise, however, if this gap narrows in future years. We found older shoppers are considerably less likely to buy groceries online than younger. 56% of over 55s said they never shopped in this category online, and 43% of 45 to 54 years olds, dropping sharply for under 45s. By contrast, 29% of 25 to 34 year olds and 30% of 34 to 45 years olds said they bought groceries from retailer ecommerce stores, compared to 21% of over-55s. Over time, this is likely to lead to the overall proportion of consumers using grocery retailer sites to rise, although physical stores will still play a key role.
In grocery, the main reasons why in-store still dominates are issues around delivery of fresh produce and product selection - people still like to make impulse purchases for their food and drink from what is on offer on the shelves before them – not so, our Head of Innovation, as his recent experience of Amazon Fresh reveals.
In automotive retail, the size and value of the product is a factor in why 40% of consumers told us they never buy cars (or accessories) online. There is still a strong interest in going to view and test drive a vehicle before committing to such a high-value purchase, even though the likes of Audi are redefining the online experience for motors.
Two things to say about this are that, in terms of motor accessories, digital channels are making gains. 19% of consumers said they use Amazon to buy these products, while 12% said they used other marketplaces and 11% said they went straight to retailer websites. Automotive retail is also a category primed for a hybrid fusion of physical and digital channels - dealers can use websites, social and marketplaces to promote ranges and engage customers, and then have the showroom to allow first-hand inspection and test drives.
As for shopping luxury goods, 30% of our survey respondents told us that they never buy them online, be it high-end jewellery, designer clothes, footwear, watches or similar. The fact that the second most popular channel with 21% of the vote was brands’ own websites provides a clue as to why in-store still prevails in this category. When buying luxury goods, provenance is a big factor, customers want to know they are getting the genuine article from a trusted source. Plus, they want a premium experience to go with the luxury buy, expecting the kind of bespoke, personalised services which brands and their stores in particular are well placed to deliver.
Our research indicates the importance of understanding the shopper, their needs, motivations and desires at a category level. We recommend that brands develop indepth insight into their shopper segments and their journeys, to identify the key touchpoints through which to deliver on shopper expectations. We can help through our Customer Experience Mapping service which has been adopted by a variety of well-known brands.
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Written by Shalina Ganatra
Senior Multichannel Consultant
Shalina works closely with brand manufacturers to develop their eCommerce strategy and organisation structures, fostering key initiatives such as eCommerce optimisation, digital enablement and business readiness.
A note about the Future Shopper 2019 survey
Research for this Future Shopper 2019 report was conducted by independent research consultancy Censuswide. A total of 15,188 consumers, who shop online at least once a month were surveyed, across 8 international markets, led by UK and US.