Fact or Fiction: The Future of Retail in the Digital Age
It wasn’t long ago that every organization — regardless of industry — was working in earnest on an app. This new tool, they reasoned, would be an easy way to stay top-of-mind with consumers and an essential way to grow digital sales.
The promise of the app turned out to be something of a myth, however. Few consumers wanted to take up valuable mobile memory on apps that they didn't use daily. In fact, by 2016, more than half of smartphone users failed to download a single new app per month.
With the speed of the retail landscape changing more rapidly than ever before, many organizations can be equally unsure of whether today’s industry predictions will turn out to be more fact or fiction. Here we explore three popular retail myths against the backdrop of new research from SapientRazorfish and Salesforce. The report, "Shopper-First Retailing: What Consumers Are Telling Us About the Future of Shopping," reveals new patterns of shopping behavior and preferences.
Myth No. 1: The Store is Dead
Our research revealed quite the opposite. Even the youngest and most tech-savvy customer segment prefers shopping in physical stores by nearly 18 percentage points. At the same time, our survey showed that shoppers are more likely to start their hunt in digital channels by an almost two to one margin. In addition, at least for one retailer, half of digital sales involve the physical store, either for in-store pickup or in-store ordering.
And so we see, it’s not a matter of the store going extinct. Rather, its role must be reimagined. Integration between physical and digital channels remains of paramount importance and retailers must consider an extensive restructuring of their businesses — away from traditional, siloed roles and towards diverse, cross-functional teams built around customer journeys — in order to serve the modern customer.
Myth No. 2: Mobile is But a Research Tool
Many retailers may not be surprised to hear that more than half of all e-commerce traffic comes from phones. But consider this: nearly one-third of digital orders are placed through mobile devices — which is a remarkable surge from just a decade ago when smartphones and tablets were in their infancy. Even in-store, 59 percent of all shoppers use their phones. Taken together, we see that mobile is actually impacting not simply digital, but the physical store as well. The smartphone is clearly the new retail compass, providing direction for shoppers wherever they are.
At the same time, our research presents a significant shift in mobile visit dynamics. While mobile buyers are increasing their visit frequency on phones by 12 percent, those visits are more fleeting, as the duration per visit fell a corresponding 12 percent. Thus, while the fundamental behavior we're seeing is that customers are using their phones as an initial point of contact, a robust mobile experience is required to fully convert interest into sales. For mobile to become a true driver of sales, it must be designed to support every stage of the customer journey, including discovery, consideration, purchase and payment.
Myth No. 3: Social Media Has Little Impact on Revenue
Social remains an important part of the shopping journey. Consider that 47 percent of shoppers used social media to look for a product or service in the last 30 days. Furthermore, both the number of buyers and browsers via social channels has tripled over the past two years.
While social channels may be focused on awareness today, they certainly have the potential to drive sales in the future. As such, retailers must continue to expand their presence in order to keep pace with customer behaviors.
For CEOs, chief marketing officers and other retail executives, now is an important time to re-examine the business and reimagine the future of the industry. To compete against the next wave of digitally native competitors requires a deep understanding of customer behaviors, a new set of investments and a new mind-set.
And that’s a fact.
Matthew Eisnor and Armughan Javaid are vice presidents, east region retail vertical co-leads, SapientRazorfish, an agency designed to help companies reimagine their business through radical customer centricity.