Elliott Poulter - 23/03/2021
With the rise of the eCommerce industry and the increasing popularity of eCommerce giants like Amazon, eBay, and Walmart, there has been much discussion about whether offline retail can continue to survive. With the arrival of the COVID-19 pandemic, which has forced many bricks and mortar stores to close – either temporarily or permanently – it has become clear that retailers need to adapt if they are to continue to be successful.
Although customers still need the items that they shopped for pre-pandemic, the ways that they shop has now evolved. Both pre-, and post-pandemic, there are many reasons that shoppers choose to shop both online and offline, but the future of retail has been permanently changed. Customers want more choice, convenience, and the way they make their purchases to fit their lives – whether through a website, an app, on their social media feeds, or in-store.
In this post, we’ll be taking a look at the reasons that customers choose to shop instore and why they choose to shop online before taking a closer look at the current state of the retail sector and how retail can and will continue to thrive despite the challenges, and competition that eCommerce presents.
Reasons That Shoppers Choose To Shop Instore
Shopping in-store has been the traditional way that customers have been able to purchase the goods that they need. Visiting the grocery store, shopping in department stores or boutiques for clothing, or going to a pet store for supplies has been part of our weekly and monthly routines for years. But even as eCommerce has presented another way to get hold of those supplies, customers still want to visit stores – and there are some excellent reasons why.
Personalized Shopping Experience
Many customers want a personalized shopping experience. There are thousands of statistics to support this statement, but here are just three that demonstrate our point:
- 71% of consumers feel frustrated when a shopping experience is impersonal
- 36% of consumers say retailers need to do more to offer personalized experiences
- 91% of consumers say they are more likely to shop with brands that provide offers and recommendations that are relevant to them
Personalization is being implemented by online businesses every day, but brick-and-mortar retailers have been personalizing the shopping experience for years. From holiday savings schemes to loyalty and reward schemes, in-store personalization has led to increased footfall and repeat custom. The feeling that the customer ‘belongs’ to the business and benefits from being a member of a club or loyalty scheme is a powerful tool that encourages customers to return regularly.
Today that experience is found with loyalty cards still. Still, more often, it is linked with an app that provides customers with special offers tailored to them, not only based on previous purchases but also on their location, the time of day, and so on. This not only means that they are happy with the deal they get, but they are much more likely to make purchases with the retailer – and not just of the items that are on special offer.
Seeing Products In Person Before Purchase
There are some items that customers are happy to click to order – often, they’re items that they regularly buy, that are inexpensive, or that have great reviews that they are willing to take a chance on. But for some products, customers don’t want to shop like that – whether it is because the items cost more or because they need to be experienced before a purchase decision is to be made. This may include clothing or shoes that the customer wants to try before they commit to spending their hard-earned cash on, or it could be that the item needs to be tested in person in some other way, such as perfume, make-up shades, or skincare.
For some products sold online, augmented reality might satisfy some customers and encourage them to make a purchase. With the right type of lighting and technology, it is possible to get a good idea of whether a product will work – whether a specific shade of lipstick might suit them, for example. But even when it is done exceptionally well, the technology isn’t foolproof since it can’t give the user the experience of the texture or the scent of the product. Experiencing these in-store helps to reassure customers that they are making the right decision for them.
Easy Returns And Exchanges
Although eCommerce businesses are making it easier to return orders that they don’t want to keep, in most cases, there is often a wait before the return has been processed by the retailer, which means a delay before receiving a refund. That means the customer’s cash might not be available in their account for several days – which could be a problem for customers with lower income or who need to purchase an alternative quickly.
The same thing applies where customers want to exchange their item – whether for a different product variation such as size or color or swap the item for a completely different product altogether. Rather than waiting for their article to be shipped back, processed, and reissued (which could take up to 7 days, depending on which day they ship the item back and if the retailer works over the weekend) by an eCommerce retailer, with a brick and mortar retailer, they can have the exchange dealt with instantly, and walk away with their replacement item there and then.
The ability to ask for help – whether it is finding the item they are looking for, seeking advice, or reassurance about the store’s returns policy – is a major contributing factor to customers shopping in-store rather than online. There are other reasons that customer service is essential:
- Support with purchase decisions – such as when they are buying a gift, or they are unsure whether the fashion items they are considering are right for them
- Being able to ask questions about products, such as suitable alternatives to the product they are considering and which items complement the one that they are buying
- Physical support with making their purchase – carrying the item to their vehicle or having it delivered
- Being able to purchase several items with a personal shopper, such as in the case of making luxury purchases or high fashion
- Making returns in person
- The ability to speak to someone in person about a complaint they want to make
Accessing support from a sales advisor in-store means that customers are more likely to leave the store feeling happier about their purchase and supported by the company. In turn, this means they are more likely to become repeat customers and share their experiences with their family and friends. Good word of mouth is incredibly powerful, and businesses know this – which is why there are so many great sales assistants in department stores.
In contrast, online purchases tend to be more isolated, and if there are issues with the purchase, customers don’t expect the same level of service – which may be enough to encourage them to shop in-store instead.
Having The Purchase Immediately
There are almost always moments where an item is needed there and then. A wardrobe mishap during a day may mean a new item of clothing is required in a hurry, something has been lost and needs replacing, or that a gift is required for an event that has been forgotten about. Whatever the reason, we can’t see a time when customers will shop solely online – there will always be moments when shopping in-store is essential.
Although COVID-19 has meant more customers are choosing to be cashless and making the majority of their purchases with their credit or debit cards, several customers still use cash regularly. Whether the customer is spending money that has been gifted, or they are using cash because they don’t have a bank account, being able to use cash is essential.
While many customers choose to shop online because they don’t want to have to deal with other members of the public (especially since the COVID-19 pandemic), there are still large numbers of people who enjoy the social interaction that going into a brick and mortar store offers. People who are isolated because they live alone or far from family may look forward to going shopping as an opportunity for social interaction – and without this interaction, they may find themselves even more isolated.
Supporting Local Businesses
In smaller communities where customers know the owners of the businesses around them, customers may choose to shop with those businesses rather than shopping online, even when they know they might get a better deal with a big-name retailer or from an eCommerce business. Making purchases from business owners that are in their local community helps to support the local economy and contributes to a more robust local network.
Why Customers Choose To Shop Online
As we’ve seen, it is clear that customers still enjoy shopping in-store – but there are enough customers that shop online that the whole retail industry is shifting to compete with online sales. The unstoppable growth of online retailers such as Amazon means that they must be fulfilling the demands of consumers – we wouldn’t be discussing this topic if this wasn’t the case. Let’s take a look at some of the reasons that customers choose to shop online.
Not everyone has personal circumstances that allow them to visit stores for their shopping. Family commitments and caring responsibilities, and working schedules are just two reasons customers prefer to shop online. While brick-and-mortar locations may have extended hours, eCommerce allows customers to shop exactly when they want, around the clock, wherever they are – as long as they have a mobile device that has a connection to a data network, of course.
Having items delivered directly to their homes is a significant factor that customers cite for shopping online – whether that is for groceries or other items. Where goods are heavy, bulky, or the customer doesn’t have access to a vehicle to bring their items home, retailers that can deliver are essential. Having the ability to have the items delivered without needing to leave home and place the order offers even more convenience – as well as being able to place the order at any time of the day or night.
Ease Of Finding Products
When customers are looking for something specific, it is often easier for them to track it down online. This is particularly the case where customers are searching for items that are out of season. Fashion retailers tend to change their offering dependent on the season – which makes sense since customers will demand items that suit the weather and holidays of that season.
Let’s use the example of swimwear – the demand for leisure swimwear and bikinis drops significantly throughout the winter months in many states, particularly in the north. Customers shopping in smaller towns that are taking a winter sun vacation may find it difficult, or even near impossible, to find swimwear in December – or they might find themselves restricted to retailers that carry sportswear.
Finding seasonal products – especially ones that customers want to be certain will fit, like bikinis – is much simpler online. A wider range of retailers will continue to stock items like swimsuits year-round, and the availability of inventory is clear. With extensive information about sizing, material, and so on, as well as customer reviews, it is often simpler to find items such as swimwear from an online retailer when the items are out of season.
Shopping for a particular item online makes it easy to check the price against competitors before placing an order. Everybody wats to feel that they are getting good value for money, and the rise of eCommerce has made it simpler than ever to check the price of products and to buy from whichever retailer is offering the best deal. Customers searching for products that they want to buy can use dedicated price comparison tools that can help guarantee that they haven’t missed a better deal and can use discount codes on their purchase that they might not have had access to when shopping in-store.
When shopping online, there is an increasing number of ways that customers can check whether the business they are considering buying from is likely to fulfill their needs or not. Although many customers stick to household-name retailers or marketplaces that they know they can get support from if something goes wrong, some will take a chance on retailers that they have never heard of – if they can find social proof about the company.
Social proof is where customers can find evidence that the company is a good one to do business with. Customers may look at reviews on the retailer’s website before checking their social media channels and seeing how the company interacts with their followers there. Facebook pages, Instagram, and Twitter feeds are prime locations for customers looking to air grievances if they have encountered sub-par service – and how a brand responds to complaints on these channels may impact whether they choose to order from the business or not.
In addition to reviews on the website and the business’s social media, customers may search on review platforms such as Trustpilot and Yelp. On these independent review platforms, businesses are unlikely to remove the reviews unless they are libelous – although they may be able to respond to negative reviews, and customers are likely to take those responses into account. Like with social media replies, these responses may help customers understand whether the business can provide the type of service they want.
Besides knowing whether the business is one they want to buy from or not, customers may be looking for social proof for the product they want to buy. For this, they may also refer to websites from other retailers that sell the item, and marketplaces such as Amazon or eBay, where customers can leave reviews. Most customers are aware that there will always be complaints – not everyone will be happy with every single item, after all – but they can gauge whether any complaints are likely to be of concern for them.
Being Able To Avoid Going To The Shops
Sometimes going to the shops isn’t feasible. During times of illness, when a baby has been born, when there is a family crisis, or when it is peak time in their jobs – there are so many reasons that people don’t want to go to the shops. And of course, the reason might be as simple as that they don’t like going! eCommerce allows people to get what they need, when they need it, without needing to visit the store.
Since COVID-19 arrived, the population has become more alert to the dangers that germs present. Because customers are likely to touch multiple items in stores, the chances of being exposed to the COVID-19 virus (in addition to many other illnesses) has been highlighted, and customers will likely continue to be cautious. For customers concerned about exposure to such germs, having an alternative means they don’t have to go to the shops and risk their health or that of their family members.
Is The US Retail Industry Dying?
The National Retail Federation states that the failure of the retail industry in the US is a falsehood. While the retail industry is indeed changing – the story that keeps being reported by the media about the industry dying is not entirely true.
- Across the United States, there are more than 1 million retail establishments.
- US retail sales have grown by almost 4% year on year since 2010
- The ‘battle’ between online and in-store isn’t real – of the top 50 online retailers, almost all operate brick-and-mortar stores.
- Online sales account for 10% of all retail sales.
- There are more businesses opening stores than are closing them – 5.2 to 1
- New stores being opened locally increases traffic to the retailer’s website by 37% on average.
How is the industry-changing then? Well, we’ve mentioned the COVID-19 pandemic enough times already, so let’s take a quick look at that before we dive into how retail is evolving.
The Impact Of COVID-19
COVID-19 has changed the lives of almost everyone on the planet and has impacted the retail sector worldwide dramatically. National lockdowns in many countries have forced shoppers to make their purchases online, and retailers in the US have been affected similarly. The exception with the US is that rulings about which retail units are allowed to remain open have been made by individual state governments in response to local cases rather than by the national government.
It has been reported that large numbers of retail businesses are closing their doors permanently, and even where mandatory closures and stay-at-home orders are not in place, footfall has dropped to record lows.
Because of the temporary closures of their local stores, customers have been forced to adopt short-term behaviors that, for many, are likely to become permanent. In 2019, it was estimated that just 4% of grocery sales in the US were made online. With the increase in delivery services required by customers, it is now expected that online grocery sales will climb dramatically – from $35 billion to more than $250 billion by 2025.
Grocery isn’t the only industry sector that is expected to change. Almost all retail businesses that have seen their doors closed and footfall and profits drop will need to adapt and change if they continue to grow.
The Future Of Retail
The global pandemic has changed the world as we have known it. We have all had to adapt our habits, and there have been some significant shifts as a result that are unlikely to change even when vaccines have been widely adopted, and herd immunity has been achieved. Changes include cooking at home more often, brewing coffee at home rather than going out, doing home workouts, and working from home. These changes all have knock-on effects for retailers. Since customers are likely to be seeing the benefit of these changes, retailers must assume they are likely to be permanent changes and adapt to these demands accordingly.
Brand Preferences Have Changed
Before the widely reported panic-buying began at the start of the pandemic, people had brand preferences for many items. Whether it was a specific brand of toilet paper or pasta, customers would gravitate towards certain brands over others. When hoarding started, and people realized that they might not be able to get any at all (and this was particularly pertinent for toilet paper!), their priorities changed – having some, of any brand, was preferable to none.
Now the panic has worn off and customers have been reassured that the retail supply chain isn’t going to fail, customers are still likely to consider making changes to their buying behavior. If their favorite brand of toilet paper is important to them, they may become more likely to buy it in bulk or have a delivery from an online retailer in advance. If they have become ambivalent about whether the brand is really important, they may choose items based on cost or availability.
The panic buying will have caused a shorter-term change in behavior too, since long-lasting products – dried and canned foods, toilet paper, and detergents – are slow to be used, and so customers that have bought in bulk are unlikely to shop for them again quite as soon as they would have. This is likely to be a temporary dip but still needs to be taken into consideration by retailers.
Will Physical Retail Really Survive?
There has been much debate about if there will ever come a time where bricks and mortar stores don’t exist. With the advantages that traditional retail stores offer for customers, we think it is unlikely. Still, we do believe that offline retail needs to change significantly to serve the customer in a way that offers them a better all-round experience.
Several approaches are becoming popular with retailers that can increase customer satisfaction and ensure their business’s longevity. Omnichannel and omnichannel approaches have become popular with retailers over recent years, and the role of social media will continue to grow for many retailers.
How Can Omnichannel Strategy Help?
If brick and mortar retail thrives alongside eCommerce sales, it must provide increased convenience for customers. Putting customers at the center of the business, providing the type of service they want, wherever and however they want to interact with the business, can help retailers increase their offline success.
Omnichannel retailing has been discussed extensively over the past few years, and for good reason. The omnichannel approach to retail first appeared as a strategy in 2003, when Best Buy adopted a customer-centric approach to compete with Walmart’s electronics department. Best Buy consciously formed customer support for both in-store and online sales and included post-sales support as part of their strategy. This was initially regarded as ‘assembled commerce’ and eventually became omnichannel. The healthcare and financial service industries began to adopt the approach, and smaller retailers that were operating both online and offline saw the benefits and began to implement the approach too.
Omnichannel is where retailers take a multi-channel approach to their marketing and selling and creating an experience for customers that is integrated and cohesive, no matter how, when, or where the customer engages with the business.
By making the same high level of service available to customers wherever they want to interact with the business, customers are likely to feel more positive about their interactions. This positivity means they are more likely to make recommendations about the business to their friends and family.
A customer interacting with a retailer and buying a sweater could look as complicated as this:
- The customer searches for a specific type of product on Google Shopping, which leads them to the retailer’s website.
- They visit the store when they are in their local town – perhaps they try the sweater for size.
- The customer decides which color they are going to choose, and then (because of an email that a friend has forwarded with 10% off when they order through the app) they install and order the sweater via the retailer’s mobile app.
- They collect the item from a click and collect point that is local to them.
- When they get the sweater home, they change their mind about the color and so contact the retailer via social media for guidance about returning the item.
- They request a refund via their web browser on their PC, then drop it off at a third-party collection point.
- They call into another store location to buy the alternative color. That store doesn’t have the correct size, so a staff member calls another local store, who reserve the sweater for the customer to collect later that day – where they pay cash.
Most customers aren’t likely to have this many interactions with a retailer for merely buying a sweater – and of course, there are many different customer journeys. In this example, the customer has ten interactions with the business but eventually has the outcome that they want – and they experience the same level of convenience and customer service that they expect from the brand.
While the customer needs to be at the heart of an omnichannel approach, retailers benefit from it. The increase in customer satisfaction and trust that the customer has means they are more likely to advocate for the business and become more likely to become loyal to the brand. This means more conversions, an increase in profits, and due to the nature of the omnichannel approach, a more cohesive workforce that works collaboratively to meet the demands of customers.
Retailers that don’t see the value in operating on every single channel may choose an omnichannel strategy. This involves mapping out the customer journey to purchase and understand the data clearly to provide and establish the best channels for their customers. This allows them to enhance and deliver the best possible customer service on each of the channels they operate, rather than attempting to provide service everywhere as in the omnichannel approach.
Where Does Social Commerce Fit?
Social commerce or social selling is exactly what it sounds like – retailers selling their inventory to their followers via their social media feeds. Almost all social media channels are building eCommerce functionality into business accounts, and in many cases, this means that followers can buy directly within their social media feed.
Almost as soon as retailers started using social media to connect with their customers, the social media giants saw the opportunity for making money from eCommerce on their platforms. It makes sense since Facebook research alone showed that people use social media to find new products and services, for product research, and to help with purchase decisions – and that’s before we look at research from any of the other companies.
The race is now on to add eCommerce functionality to social media – and more functionality is being added all the time. Currently, we see that Facebook is leading social commerce developments:
- Around a quarter of retailers are now selling via their Facebook posts.
- Facebook Pay was made available in 2019 and can be used across all Facebook-owned services – Facebook, Messenger, Instagram, and WhatsApp.
- Instagram made posts shoppable for business users from as early as 2018
Other social media companies are developing functionality too. Pinterest has Product Pins that allow users to buy directly from a pin. Snapchat has dynamic ads, and TikTok is currently testing eCommerce functionality and has partnered with eCommerce giant Shopify to help make that happen.
The future of brick and mortar retail might feel uncertain, particularly with much of the media’s reporting suggesting that eCommerce is the future and that offline retail is unsustainable, but we disagree. It is far more likely that the lines between offline retail, eCommerce, and social selling will blur substantially due to the demands and needs of customers.
The majority of retailers are unlikely to sustain their business as purely offline – although there will continue to be businesses that do buck this trend. Rather than choosing one, retailers can operate across multiple channels, with high-quality service to customers in-store, through their website, and on their social media. The flexibility that this allows retailers to offer means that customers are much more likely to return and make further purchases – both online and offline.
Elliott is the Marketing Executive at Olvin.
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