Online Failings Could Impact In-Store Holiday Sales

Traditionally, retailers have considered consumers’ online experiences completely separate from in-store sales. However, new research indicates that customer service mistakes with online shoppers on Cyber Monday could lead to significant in-store sales losses during the 2015 holiday gift-buying season.

In October, LoyaltyOne conducted a nationwide survey of more than 1,000 U.S. consumers. Nearly half (47 percent) of Cyber Monday shoppers indicated they would be reluctant to make an in-store holiday season purchase from a retailer with whom they have an unhappy or difficult online experience on the Monday after Thanksgiving.

And those Cyber Monday shoppers constitute a significant percentage of overall holiday season shoppers. Nearly eight out of 10 survey respondents said they plan to make Cyber Monday purchases; that number climbs to 93 percent in the tech-savvy millennial demographic (18-24 year olds).

Conversely, consumers indicated that a negative in-store experience would have a somewhat less deterrent effect on their online shopping behavior. In responding to the statement, “If I have a poor experience at a retailer’s store location, I would still do my holiday shopping at that retailer’s online store,” 22 percent were neutral, 11 percent said they would be unlikely to shop online with the retailer and 3 percent said they would be very unlikely to shop with the retailer online.

Research released in June of this year by LoyaltyOne, Verde Group and the Wharton School recommended that retailers take care to identify specific online and in-store shopping experiences most damaging to customer loyalty, as billions of dollars are at risk. The research showed that across five formats that include grocery, mass merchandise, pharmacy, department store and specialty apparel, retailers are at risk of losing 16 percent of their business due to poor customer experiences that are unresolved. At 25 percent, mass merchandisers have the most business at risk.

Another key finding from LoyaltyOne’s October research puts an outdated retail assumption to rest. Instead of making the trip to a brick-and-mortar store to touch and hold “just the right thing,” 83 percent of consumers said they disagree or strongly disagree with the statement, “I’d be reluctant to tell friends and family that I purchased a gift online or through a mobile device.” Furthermore, 88 percent of survey takers said they disagree or strongly disagree with the sentiment that gifts bought online are not as heartfelt and sincere as gifts bought in a physical store.

Retailers can take several lessons from the survey results:

• The online purchase is a high-risk touchpoint: A poor experience can have a negative impact on shopper spend. For example, an unsatisfactory Cyber Monday experience could pay a crossover price in the form of lower in-store sales during the holidays. Make the online experience a priority.
• The purchase experience must meet the expectations of online shoppers: Transactions can get derailed by problems associated with the lack of free shipping or issues with returns. Online shopper value also is damaged when rewards cards or coupons cannot be used, when sales or specials are only available in-store, and when shoppers cannot use their preferred credit card or payment type.
• In addition to convenience, consumers have accepted that a gift purchased online holds equal emotional weight with an in-store purchase: Either way, consumers now truly believe, “It’s the thought that counts,” which helps further alleviate reservations about online gift shopping.
• Ensure alignment of brand values between online and in-store experiences: Consumer needs may change, but appreciation for values like customer service, product selection and convenience remain. Retailers should compare online and in-store experiences to ensure consistency, which validates customers’ choices and brings them back time and again.
• Millennials — the original digital natives — continue to march to the beat of their “own drummer”: In addition to being strong Cyber Monday participants, this large and influential consumer group demonstrates significantly more enthusiasm for developments such as smartphone shopping and drone delivery services.

Now more than ever, a retailer’s presence online and on-site are inextricably linked. As this new research shows, the impact of an online "fail" echoes even more strongly with in-store results, meaning retailers need to make sure their efforts are strategic and aligned. With Cyber Monday looming, it’s the perfect time for retailers to make sure they’re covered.

Dennis Armbruster is vice president and managing partner, LoyaltyOne Consulting, a leader in the design and implementation of coalition loyalty programs, customer analytics, and loyalty services.