The 8 ways online has changed the way we shop and what traditional retails should do about it.

online retail

Intel’s global head of retail Jon Stine recently spoke with a group of Australian retail managers ahead of the National Retailers Federation’s annual expo in in NYC.

Given Stine works with Intel, he has a pretty strong view on the future of online retail, but regardless, had some interesting things to say about how online is changing the way we shop and what traditional bricks and mortar retailers can learn from it. As a marketer, brand manager or brand owner, you’d be forgiven for thinking the majority of consumer purchases were made online, and if they weren’t already, it would soon be the case. For all the talk of online retail being the future, I think perspective is important. A look at the latest retail figures in Australia from November 2017 show that 5.5% of all retail was online. These figures still sit below the US – 10% for the same period, and the UK – 19%. There is no doubt the number as a percentage of sales in Australia continues to grow, and that at 19% of sales being online in the UK, retail in that market has changed significantly, but to an extent, with only 5.5% of retail sales in Australia being online, we have yet to see the ‘brave new world’ that has been long predicted.

Let’s compare for a second the impact of home delivery on the fast casual and restaurant category in Australia. In less than two years, the introduction of delivery has seen a significant change in the way Australian’s are ‘eating-out’. Delivery has grown the total category spend by as much as 30%, with around 1/3 of those sales cannibalized from the restaurants existing customers. That by comparison is a seismic shift in consumer behavior with a significant impact to businesses in that part of the hospitality category.

The more significant number in terms of online retail is the metric of how many customers started their buying journeys with a digital search. In the UK research has shown this to be as high as 80% of consumers. Regardless of the exact numbers, where you are located and what you are selling – indisputably, digital is shifting the way consumers prefer to buy, and all retailers need to grasp this change and develop strategies for their brands to respond accordingly.

“The younger and the more digital the shopper, the greater the expectation that the world will be like the internet, as opposed to the internet being like the world,” Mr Stine said. “With more and more products being commoditised, merchandise was becoming less important and service was becoming more so and the ability to gain customer loyalty was becoming the most crucial element to a retailers success”, he said. “Amazon Prime is the killer app – it allows easy shopping, friction free payment, payment in a click”.

The 8 ways online has changed the way we shop:

01. Choice – Consumers today expect to choose from the widest possible range of products. Retailers who carry a narrow product range without a strong rationale will find they frustrate more and more of their customers.
02. Product Information – Consumers expect to be able to find out every detail relating tho the products they are considering purchasing. Retailers need to have this depth of information at their finger tips, or even better; available for customers to access if and when they wish.
03. Product Comparison – Consumers are used to being able to compare apples with apples when it comes to the products they are after. regardless of what their preference is based-on.
04. Personal Recommendations – With more eCommerce sites providing recommendations based on your previous purchases and profile data, retailers need to be able to do the same.
05. Reviews – Along with product comparisons, consumers value objective product reviews as a valued part of the decision making process. Retailers unable to provide reviews as part of the shopping experience are inadvertently providing a roadblock to purchase.
06. In My Own Time, In My Own Way, Without Being Hassled or Sold to – Online retail provides a zero pressure sales environment. Consumers are becoming used to this way of shopping when they want, even spreading the decision making process over days or weeks, with all the assistance they require and without any sense of sales pressure. The challenge for traditional retailers is to provide attentive service to assist with closing a sale, without any sense of sales pressure.
07. Immediacy, the ability to buy when and where I want. Retailers with restrictive opening hours and only one retail outlet will find it increasingly difficult to meet the shopping habits of consumers. Longer opening hours and wide availability of product through more stores or retail partnerships are becoming table stakes.
08. Simple One Click Sale (incl. remembered payment details) – This final step may not sound like much, but anyone who’s spent much time in retail understands how important the last five feet are in the purchasing process. Get the last step right and you go a long way to having a happy customer. Get it wrong and you likely lose the sale and a customer for life. Online retail offers an immediate, pressure free payment process with more retailers offering one click purchasing with credit card and delivery details saves to their customers’ profile.

But it’s not a completely biased playing field. The traditional bricks and mortar retail experience still provides some natural advantages to meeting the desires of consumers. The opportunity here is for retail brands to understand their natural advantages, and overlay those with shifting consumer shopping habits, to develop a strategy to build consumer loyalty into the future.

The 5 big advantages bricks and mortar retailers still have:

01. Trial & Sizing – Reducing the Chance of Dissatisfaction/Returns – Still a bug-bear for online retail is the hassle for consumers when their purchase arrives and it isn’t the right size or what they ordered. This is an opportunity for traditional retailers to exploit their natural advantage.
02. Visual Merchandising – Displaying, demonstrating and trialing product is still the best way to attract and close a sale. Traditional retail is all about the experience, and retailers need to focus on creating ways to display and demonstrate product to leverage this advantage.
03. Informative and Expert Assistance – What could be better than all the info available on the web? An expert on hand who can answer a consumer’s specific questions, make suggestions, offer advice and recommendations. Many consumers remain resistant to asking for help, and online shopping is only reinforcing this habit. Retails need to develop bot expertise, and a way for their customers to access it when and how they wish.
04. Personal Touch – For many consumers, having a human involved in the buying process is still a positive part of the experience. The difference here is well trained staff providing a high level of service Vs a poor customer service experience. Over the last decade, the gap between the best trained retail staff and the rest of the pack has continued to widen (think Apple, Lulu Lemon and Mecca) as leading retail brands identify and leverage this advantage.
05. Immediate Fulfillment – Perhaps the greatest advantage of traditional bricks and mortar retail for consumers is the ability for them to walk out of the shop with their purchase, with little chance of product dissatisfaction relative to online retail.

Dave Ansett
David is the founder of Truly Deeply, a brand agency with 25 years experience working with brands to position them for growth. His deep expertise is in the creation of high engagement brands that attract the attention of their audience and stand out from their competitors. David has extensive experience working with corporate, retail, food & beverage and entrepreneurial clients. Find out more here
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Photo Credit: Kevork Djansezian, jsmith

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