Today’s world is more connected than ever and no industry has felt the implications of this more than the retail sector. Retailers face the challenge of delivering a consistent high-level shopping experience across a range of channels, including online, mobile, social and in-store. E-commerce gets a lot of attention, but the reality is that online sales still account for a small fraction of total U.S. sales.
According to eMarketer, global e-commerce sales make up well under 10 percent of total purchases. It’s clear— despite all the hype around online and social buying — brick-and-mortar still rules when it comes to driving revenue.
So why, exactly, in today’s digital age, is brick-and-mortar still dominating the retail scene? It’s because the Web model doesn’t work as advertised. Online shopping can leave buyers unsatisfied for several reasons. Physical interaction with products is impossible, pages can be difficult to navigate, there is no instant gratification, and there is a distinct lack of knowledgeable assistance available. In the coming years, we will start to see e-commerce providers succumb to these hurdles and brands will de-emphasize their Web presence and put more of a focus on brick-and-mortar locations. The retail space will begin to feel a “Web-lash,” or a backlash on online shopping and an increased focus on the store.
According to Time Trade’s recent State of Retail report, consumers do the bulk of their research online, but they still visit stores to buy. In fact, 65 percent of survey respondents prefer to shop in-store. This is because, when done right, in-store interactions deliver a deeper, more personalized shopping experience than a Web site. Intelligent, well-trained staff is key, as 90 percent of survey respondents report that they are more likely to buy when helped by a knowledgeable associate. Shoppers want someone who can interact with them, answer questions, provide insight and make recommendations – the types of interactions that are not achievable online in any kind of personalized way.
In fact, one of the most recent moves we’ve seen in support of this idea is the opening of Amazon’s first brick-and-mortar bookstore in Seattle in late 2015. According to The Seattle Times, the brick-and-mortar store offers something that its online counterpart couldn’t: “the instant gratification of owning an item the second it was purchased, as well as the personal touch of a knowledgeable sales clerk.” For a brand like Amazon, which rose to fame on an online model focused on inventory volume and speedy delivery, this shift speaks volumes. And it is reflective of the mindset of the average American consumer: According to the State of Retail, 71 percent of respondents said they’d prefer to shop in a physical Amazon store than at Amazon.com.
Other examples of retailers making an increased investment in their brick-and-mortar presence include Kohl’s Corp., which recently tested in-store cafés, and Macy’s Inc., which is experimenting with dressing room technology. Both retailers are making a statement by increasing investments in the in-store experience.
Demographic breakdowns offer up interesting insights into shopping habits and reasons for Web-lash. The U.S. Census reports that Baby Boomers account for 75.4 million American citizens, and according to the State of Retail, 67 percent of respondents in this group said in-store was their preferred purchasing channel, pointing to a distrust or poor experience with online shopping.
As we know, Millennials are also a critical demographic to consider — they have now surpassed Baby Boomers in numbers and represent 25 percent of the country’s population. As the group matures, their wallet share increases, giving them more buying power and making them an increasingly important group to cater to.
The State of Retail found that Millennials are forcing brands to engage with them differently — over social and digital channels versus in more traditional ways — but they are still making their way into stores. In fact, more than 92 percent of Millennials expected to shop in stores at least as often in 2015 as they did in 2014. Additionally, it should come as no surprise that Millennials crave personalized attention and instant gratification. They have bought in heavily to the concierge economy — the idea that services and goods are available and brought to you almost instantly, at the click of a button. When asked if they would make online appointments with retailers, 59 percent of Millennials said “yes” — the highest of the demographics surveyed. With Baby Boomers favoring in-store shopping and Millennials demanding increasingly customized assistance, the shift from online buying to in-store service can only be expected.
The Response to Web-lash
So what are the next steps for brick-and mortar retailers? Step one is to ensure that associates are well-trained and prepared to offer personalized service and counsel to shoppers. Informed and engaged employees are far better equipped to deliver the customized “VIP” level service that shoppers — especially those of the Millennial generation — crave. The next step for retailers is working to cut down on wait time and ensure that customers are greeted and helped upon arrival. By giving consumers the option to arrange shopping appointments ahead of time, retailers can ensure that shoppers are greeted the minute they set foot in the store and that employees are ready to address their specific question or issue. This approach enables retailers to deliver elite, in-store service that is the cure for today’s lacking online shopping experience.
In a world where digital often dominates the conversation, the retail sector will soon see a change. Online shopping, despite the hype, has failed to deliver in one critical area: experience. The bottom line is that no matter the “cool factor” of the online technology, consumers say that there is no substitute for knowledgeable assistance and a positive shopping experience.
The shortcomings of the online model are clear, and in the coming years they will result in retailers reducing focus on their e-commerce presence and refocusing attention on the brick-and-mortar shopping experience.
Gary Ambrosino is president and chief executive officer of Time Trade. For 25 years, Ambrosino has been involved in creating and leading early-stage companies. Before Time Trade, Ambrosino headed Cognio (acquired by Cisco), where he pioneered the field of intelligent spectrum management for WiFi systems. Earlier, Ambrosino was cofounder of SecureMedia (acquired by Google), one of the first DRM encryption systems for online content and spent seven years with Hewlett-Packard in Silicon Valley.