Time and again there has been a debate on online stores taking precedence over physical stores, with many retailers going from brick to click. Refuting this market trend is the latest PwC survey titled ‘Total Retail: Retailers and the Age of Disruption’, which highlights that physical stores remain the primary destination for shoppers in the US despite the recent influx of digital retailers. Though the digital age has encouraged more consumers to shop and browse products on the web, but a physical store is where they want to purchase these products.
Based on a survey of more than 19,000 respondents globally, the report reveals that physical retail stores still hold the fort, recording higher footfall and encouraging retailers to innovate with differentiated storefronts and through updated technology. According to the survey, only 27 per cent of the US consumers shop online weekly, while 68 per cent intentionally browse products online before they purchase them in-store. This allows them to buy an item immediately as well as gives them the advantage of trying, seeing and feeling the product. “For the past several years, the story around retail stores was ‘showrooming’, in which stores were places to display items for online purchase. However, this year’s survey results reveal that the online shop has also become a showroom where shoppers’ research and compare prices for later in-store purchases,” reveals Steven Barr, PwC US Retail and Consumer Practice Leader.
Presently, the web has made it easier than ever for consumers to make price comparisons and to access product reviews. Before finally making a purchase, today’s shoppers are loaded with research, and no longer do impulse shopping like they used to before recession. This changing dynamic is creating a major challenge for retailers, who need to come up with new strategies to entice consumers who are ultra-knowledgeable and in many cases, more knowledgeable than the store’s own sales staff. “They (consumers) want their shopping needs met in a way that minimizes uncertainty and inflexibility and maximizes efficiency, convenience, and pleasure,” informs John G Maxwell, Global Retail and Consumer Leader, PwC. Adds Steven, “In future, we expect the premium may be on creating unique brand-defining store and online experiences that keep consumers coming back.”
This new shopping consumer behaviour is creating a challenge for retailers, for which they need to focus on ways and continuously re-strategize according to the changing consumer behaviour. The ‘showrooming’ panic had become a fixation for brick-and-mortar retailers several years ago as they were worried that shoppers were visiting stores to try and test merchandise only to go home and purchase them on an online platform. But this data provides a silver lining for many traditional retailers making it clear that stores have hardly become obsolete in the shopping process and more than half of the consumers want to visit a store to make the final purchase. “Retail stores will likely become an experiential venue for both online and non-online purchases. From in-store design studios and personal shopping assistants to coffee and tea ateliers, retailers are offering a comprehensive experience, evolving into something sleeker, more customized, and increasingly attuned to shoppers’ expectations of what the in-store experience should be,” states Steven.
-
Plastic still leads amongst US customers as 40 per cent cite credit and debit cards as their preferred payment mode.
-
Security still remains an issue for 33 per cent of US consumers who do not use their smartphones or tablets for shopping due to security concerns.
-
Also, 77 per cent of consumers are wary of having their credit card information hacked using a mobile phone.
-
Only 1 per cent of consumers have used mobiles as preferred mode of payment, underlining the technology’s infancy in the American market.
-
Around 36 per cent say ‘yes’ to the influence of social media to buy more.
As per the study, there are four major disruptors to retail: evolution of the store; mobile technology; social networks; and demographic shifts. For the evolution of the store, brands and retailers must offer a unique shopping experience or something exciting that engages customers and brings them back to the store. Also, mobile and related technologies are rapidly becoming a part of life. Today, people use phones not only to shop but also to check prices and seek advice from friends. About 46 per cent of US survey respondents have researched products on their mobile phones, while nearly the same percentage has used them for price comparisons. Mobile payments are still at the infancy stage, with only one per cent of consumers using them as their preferred method of payment. Further evident is the US retailers’ and brands’ bend towards social media, which is driving consumer engagement. “Integrating technology, along with the power to engage on social media, has enhanced the consumer experience while requiring companies to transform their legacy system,” continues Steven. Lastly, the survey found that the shopping pattern of ‘digital natives’, i.e. 18-24 year olds who have grown up with the internet, was different from the rest of the sample.
The ongoing debate on online versus physical store will not fade away soon. Only those retailers who change with the consumer behaviour and follow growing trends will be able to wade through and stand strong amidst competition. As consumers become more fickle-minded, it is becoming even more important to provide them with a unique experience in-store so that they become customers for life. But the battle still doesn’t end here, as brands have to continuously update and imbibe technologies in order to make stores an exclusive destination to satisfy the complex customers. “Consumers are seeking retail ‘experiences’ over simple purchase transactions, which is inspiring landlords and retailers to collaborate on making the destination more enjoyable, convenient and memorable. For the physical stores to remain relevant today, retailers should adapt to consumer preferences,” concludes Byron Carlock, US Real Estate Practice Leader, PwC.
