Retailers Need to Adapt to the Smart Customer
Digital advances combined with changes in consumer preferences have helped to transform retail operations more in the past 10 years than in the previous 20. Since the beginnings of online commerce, its share of overall retail sales has steadily grown; it’s gone from 3.5 percent in 2008 to 8.9 percent today, according to U.S. Census estimates. Deloitte’s recent 2017 retail holiday forecast anticipates that e-commerce sales will reach $111 billion to $114 billion—about 11 percent of total holiday retail sales.
So should traditional brick-and-mortar retailers be worried?
What makes many retailers anxious is not the market share of online channels but the influence digital channels wield over consumer shopping decisions. Digital influenced 56 cents of every dollar spent by U.S. shoppers in stores in 2016. The influence of digital media and devices is expected to remain strong during the upcoming holiday season, as more than 90 percent of shoppers are planning to use at least one digital device, whether a desktop, laptop, smartphone, or tablet.
Decoding the nature of digital influence on consumers requires retailers to understand an extended digital ecosystem consisting of digital content (e.g., reviews, news articles, pictures), digital media (e.g., retailer websites, social media, blogs), and devices (especially smartphones). Many retailers are investing in online channels and putting out rich digital content on social media to woo customers. Understanding how consumers use their smartphones and the potential these devices offer to enrich customer experiences, whether in stores or online, may be the next logical step in securing additional wallet share.
SMARTPHONES ARE MAKING YOUR CUSTOMERS SMARTER
Smartphones have become an integral part of the customer journey, as they cater to an innate need to access information and make better purchasing decisions with minimal effort. Our primary research found that 40 percent of holiday shoppers plan to use smartphones during their shopping journeys.
Moreover, Deloitte’s 2017 Holiday Survey: Retail in Transition revealed that retailers stand a 75 percent chance of converting a desktop or laptop shopper into a purchaser this holiday season—and a 59 percent probability of converting a smartphone shopper into a customer.
Effortless access to information is often critical for shoppers when it comes to finalizing their decision to purchase. In the past, shoppers were largely influenced by an inner circle of family and friends; retailer-sponsored content, such as advertising, store promotions/coupons, and catalogs; and store associates’ guidance.
In providing digital access to shopper reviews across numerous sites, whether on blogs, third-party distributor sites, or retailer websites, smartphones can make these resources accessible and available on-demand, 24/7. More than 50 percent of smartphone users rely on their devices for shopping decisions such as what to shop for and where to shop.
Many consumers want to make their shopping decisions based on carefully researched information—without investing a lot of additional time and effort and without sacrificing convenience. Additionally, scores of consumers demand effortless shopping experiences across channels and have become increasingly intolerant of perceived inefficiencies. Our research found that more than 40 percent of customers are discouraged from shopping at physical stores due to crowds and long lines, especially during busy seasons.
Many consumers are using smartphones to reduce their effort while making purchases in stores or online. During the upcoming holiday season, more than 40 percent of savvy shoppers will likely cut through busy checkout lines while in stores by choosing the buy-online-and-pick-up-in-store option and using payment apps—essentially taking advantage of the best of both worlds. Bottom line: Three in five smartphone users will order products using their mobile devices, and seven in 10 users will make payments using their mobile devices.
Fueled by the widespread consumer adoption of smartphones, the use of digital content is on the rise. Retailers may well wish to evaluate their digital strategies in light of their potential to attract shoppers. Smartphone-centric strategies could conceivably benefit retailers with the foresight to expand their digital presence across channels and platforms. Actions to ponder include these:
• Think beyond a basic digital presence such as setting up a mobile app and operating a retailer website.
• Weigh the potential benefits of new device interfaces for digital content (e.g. augmented and virtual reality platforms and/or voice assistant apps).
• Examine the value of engaging digital partners for content curation and ecosystem security.
The resulting new normal for digital retail may possibly rest on a smartphone-based ecosystem encompassing retailers’ in-house and third-party mobile apps, along with curated digital content.
The picture that appears to be emerging is one of rising consumer expectations for a seamless, effortless customer experience. And once again, this expectation is anticipated to affect both online and in-store channel preferences for where consumers do their research, browse for ideas, and ultimately make their purchases. Retailers that understand what makes for a satisfying shopping experience—and that can provide that experience across channels to an increasingly fragmented consumer base—may be best poised to set themselves apart from the competition.
Arun Tom and Ram Sangadi are retail, wholesale, and distribution researchers, and Leslie Ament is retail, wholesale, and distribution research leader, for the Deloitte Center for Industry Insights.
Copyright © 2017 Deloitte Development LLC
10 CRM Trends to Watch in 2017
All eyes will be on automation as the lines between humans and machines (and sales, service, and marketing) continue to blur. What else lies ahead?
Omnichannel Journey Design—Is Your Business Ready?
Your customers want to interact with you when, and how, they choose. Your journey design processes should support them.
Gilbane Conference 2017: Marketers Must Compete on Customer Experience
Speakers discussed the importance of using data and artificial intelligence to create exceptional customer experiences.