It’s beginning to look a lot like the holiday season. Everywhere we go, stores are aglow with displays that tempt the inner child in us all. The lights are up, and the sales are on. So why aren’t there more people in brick-and-mortar stores buying gifts for everyone on their list?
The National Retail Federation’s Holiday Consumer Spending Survey conducted by Prosper Insights and Analytics revealed that consumers celebrating Christmas, Hanukkah, and/or Kwanzaa plan to spend $805.65 on average in food items, decorations, gifts, and more in 2015. Although this figure is the highest ever in the survey’s 14-year history, in-store foot traffic and sales are steadily declining as indicated by the 8% decrease experienced during the 2014 retail holiday season.
So what happened? Why are the lines waiting to visit Santa shorter? More important, why is it easier to find a parking spot at the local mall? The answer is closer than you think – just look at the device you are using to read this blog.
Digital retail and the redefined holiday shopping experience
Although sales in physical stores have been lackluster, online sales appear to be picking up the slack. Adobe recently predicted that e-commerce purchases will increase by 18% on Thanksgiving and by 15% on Black Friday this year over 2014. Meanwhile, Cyber Monday still shows promise for still being the biggest day of the year, despite a modest growth of 12%.
However, this is only the beginning of the digital transformation of the industry. In fact, recent Economist Intelligence Unit (EIU) research reminded retailers of all sizes that going digital is much more than creating a new sales channel and generating sales around the clock. It is a platform for a more harmonized shopping experience for the shopper.
Yes, consumers are making more purchases online. Yet nothing beats personally seeing the product before buying it. “It’s important for retailers to recognize that consumers still go to stores to take possession of goods,” Brian Kilcourse, managing partner at US-based Retail Systems Research (RSR) says. For that reason, omnichannel consumers continue to be more profitable than those who only visit the physical store.
In addition to the duality of the evolving consumer behavior, executives are concerned about greater competition from existing brands. In the EIU study The Hyperconnected Economy: Phase 2, approximately 57% have faced significant pressure from established companies that have launched digital offerings, compared with less than half who feel disrupted by digital start-ups. And over the next three years, competition is expected on both fronts to grow in future.
How retailers can provide hyperconnected value – and give Santa some company
While online-only retailers like Amazon and Alibaba are highly visible, retailers that have adopted and integrated digital practices into their business model are surely winning over consumers’ hearts and wallets.
“We know that customer journeys vary – some begin their journey in-store and finish it online and vice versa,” says John Lewis’s online director Mark Lewis. “Whether they are using their phones or tablets in-store, on the sofa, or on the train on the way to work, their experience needs to be seamless and the content and information easy to access. The key is recognizing what each device is best for and then tailoring the customer experience to that device.”
This realization prompted John Lewis to unify its various retail channels into a single omnichannel strategy in 2009. In addition, the retailer added services such as the use of beacon technology to alert click-and-collect customers when their purchases are ready to be picked up when they are close to the store. For this retailer, its success relies on its ability to tailor the buying experience around its customers’ lifestyle and shopping needs.
As John Lewis realized, the unprecedented rise in interconnectedness is not just a technological fad. Rather, it is a defining characteristic of this era as well as a new generation of consumers that knows life only in a hyperconnected world. It’s up to you to decide whether your retail business adapts to it.
Open your retail business to the opportunities of the digital economy. Check out the EIU study “The Hyperconnected Economy: Phase 2.”