Study: In-store, Online Coordination Seen Lacking

A.T. Kearney survey concludes that new approach to store portfolios is needed.

A laserlike focus on e-commerce might be blinding some retailers to opportunities in their brick-and-mortar stores, including some created by the Internet.

A study by A.T. Kearney, titled “Recasting the Retail Store in Today’s Omnichannel World,” included results from interviews with 3,200 consumers in the U.S. and the U.K. and both reinforced some of the historical strengths of traditional stores and pointed to ways in which they could be a more dynamic part of the evolving omnichannel landscape.

The study found that, regardless of age or income, consumers spend the majority of their time shopping in stores — 61 percent in stores versus 31 percent online and 4 percent each for catalogues and mobile.
Shoppers are considerably more likely to spend more than planned when in a store. Forty percent said they spend more than originally intended when shopping in stores versus 25 percent when looking for merchandise online.


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“Online shopping tends to be very mission-focused, with consumers more inclined to get in, buy what they want and get out,” said Michael Brown, coauthor of the study and partner in A.T. Kearney’s New York office. “When you get a consumer inside your store, there’s a far greater ability for the store and the staff to engage the customer in the store experience, up-sell him or her and generate multiple sales.”

Citing data from the U.S. Census Bureau, the study points out that online sales have enjoyed a 17 percent compound annual growth rate since 2000 versus just 4 percent for in-store sales. Yet 92 percent of consumer spending continues to take place in stores.

Brown acknowledged that, in apparel, consumers have become more comfortable making purchases online, just as they did with catalogues in an earlier era. “But with the exception of a few retailers who are very consistent in their sizing and fit, there’s always a degree of doubt,” he said. “When you’re trying to understand a brand and how, for instance, your figure works with a particular fit, you need to have those store experiences to support your future purchasing.”

The study probed five elements of purchasing behavior — discovery, fulfillment, entertainment, relationship and transaction — and found that, in apparel, accessories and footwear, stores played a greater than average role in all of them. With the exception of discovery, the same was true for beauty and personal care products.

Asked to quantify the percentage of their time spent on various elements of their shopping, stores ranked highest in after-sales experience (83 percent in stores versus 17 percent online), followed by testing and trying on merchandise (81 percent). Stores garnered 76 percent of the time spent on both purchasing and pickup or delivery, while research ranked lowest for the stores at 55 percent.

The study concludes that retailers need to fully integrate their omnichannel offerings, and not simply by investing in their digital efforts. It points out that the U.K.’s House of Fraser has opened several “click and collect” stores, averaging 1,500 square feet as compared with the 100,000 square foot average for a department store, that facilitate next-day delivery to one’s home or the place of purchase. Macy’s Inc. has also begun using its stores as fulfillment centers and, on a more modest scale, providing for in-store pickup.

“Retailers have spent a lot of time and money building up their digital capabilities,” Brown said, “but we’re at an inflection point now where they have to go back and look into their physical stores and see how they can effectively use one to support the other.”

This, he noted, will require a different mind-set than the one that ushered in the opening of large branch stores as a means of capturing sales and market share in previous decades.

“Smaller [store] formats closer to target segments’ areas of residence can attractive convenience shoppers and provide for efficient fulfillment of online purchases,” the study suggests. “This portfolio-based approach can address consumers’ wide array of needs, boosting spend and building brand loyalty” while improving operational efficiency.