Consumers Embrace Digital Experiences In-Store: What You Need to Know
The pandemic accelerated e-commerce by 10 years in a matter of months and ushered in new consumer behaviors, not the least of which was the trend of switching brands because of availability (in-store and online), convenience and value. These three factors will play outsized roles far past today’s supply chain disruptions and economic uncertainty.
Consumers prefer apps as they save them time, enable faster transactions, and offer streamlined conveniences and individualized experiences. This explains why time spent in retail apps skyrocketed 45 percent year-over-year (YoY). Just think about how central apps have become to streamline curbside pickup, navigate behemoth stores, receive personalized and customized loyalty rewards, and use augmented reality to select the perfect furniture for your room. All these benefits are critical to the customer experience, which is increasingly how consumers develop their preference for one brand over another.
For retailers, mobile apps offer better opportunities to truly understand their customers and form stronger direct relationships, as it’s much easier to tie together their digital and physical activities, collect first- and zero-party data, and engage them more immediately and personally throughout their journey with the brand.
Mobile Apps Have Become Consumers' Preferred Destination
As people started returning to stores, Airship wanted to see how pandemic-shaped behaviors would change, and what retailers should focus on to increase footfall and sales. We surveyed 9,000 consumers across the U.S., U.K., France, Germany, Australia, Singapore, and India.
Globally, we found that 48 percent of respondents would complete 75 percent or more of their holiday shopping online, and that the vast majority of that would be done using smartphones rather than desktop computers. We also found that the preference for using retail apps extends across all age groups: 81 percent of millennials have used retail apps more or about the same since the pandemic began, followed by 77 percent of Gen X, 74 percent of Gen Z, and 66 percent of baby boomers.
Companies like Chipotle and Ace Hardware are treating their apps as preferred destinations for customers, and their results show. Chipotle’s highest margin transaction, digital pickup orders, represented slightly more than half of its digital sales in Q3 2021. It also grew its Chipotle Rewards loyalty program by 40 percent YoY with new enhancements that offer customers more choice in how they want to be engaged and rewarded. Ace Hardware saw digital revenues increase 272 percent during the pandemic, with its Ace app and e-commerce site bringing unique offers and useful how-to content to new customers, including more women, younger consumers and recent home buyers.
Consumers Now Expect to Meld Digital and Physical Shopping Experiences
For most countries and generations, the likelihood of using a retailer’s app while shopping in-store is only a few percentage points behind visiting the retailer’s website, despite people having to first download it from the App Store or Google Play. That’s great news for retailers as app users produce 3.5x more revenue than other shoppers and are three times more likely to make a repeat purchase.
Apps streamline in-store experiences that benefit customers and store associates alike. For instance, the app from The Home Depot has an in-store mode that specifies the bay number and stock status of items in a shopping list or search result. American Eagle Outfitters offers unique trip-tracking functionality in its app to remove friction for curbside pickup and order-ahead, as many of its stores are located inside malls.
In every country we surveyed, the majority of consumers said they would be likely to use their smartphone to accomplish eight different activities while shopping in-store. Digitally enabled shopping experiences are especially pervasive among millennials.
eMarketer projects double-digit growth in annual e-commerce sales, which will mean more competition to make the sale, yet it will still only account for 23.6 percent of total U.S. retail sales by 2025. That’s why melding digital with physical experiences to bring customers greater value and convenience is a much larger opportunity. It’s also why many top direct-to-consumers brands such as Allbirds, Bonobos, Glossier, and Warby Parker are opening physical retail locations in key markets as they innovate even more immersive in-store digital experiences.
Our new research into consumers’ preferences and behaviors mirrors what we’ve seen working with thousands of brands — mobile apps aren't simply another promotional engagement channel, but rather a high-value destination where the consumer and brand have an open and reciprocal value exchange that’s critical for mutually beneficial, sustained relationships.
Thomas Butta is chief strategy and marketing officer at Airship, an app experience platform.
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Butta brings over two decades of marketing leadership and brand positioning expertise, resulting in billions of dollars of enterprise value created through market leadership, strategic acquisitions and record-breaking IPOs. Prior to joining Airship, Butta was CMO at SignalFx, and before that Sprinklr, where he redefined brand value around software observability and customer experience management respectively, resulting in SignalFx’s acquisition by Splunk and Sprinklr’s subsequent public offering under the ticker symbol, CXM (NASDAQ). Before that, Butta was a consultant in residence for Andreessen Horowitz, where he developed the firm’s points-of-view on market-changing technologies that supported its industry-leading executive briefing program on innovation. His career spans CMO leadership roles at AppNexus, NICE Systems, Parametric Technology Corporation and Red Hat, among others.