Research review: How our shopping habits are changing the retail landscape

Adams cake shop, Brisbane arcadeNo one would argue that the retail landscape is not changing. Retailing is now ‘well-and-truly’ a multi channel business. It’s no longer simply about the local store or the broad catalogue.  Retailing is a changing industry where the dominant agent of change is not the retailer but us – the customer.

In “Customers take control” published by PwC in December 2011, survey data and rich insights are presented which make the irrefutable case that it is the consumer that is leading and shaping the global retail industry. Specifically it is our online consumer behaviour. The report, authored by Mark Hudson and John Maxwell, respectively UK and Global Retail and Consumer Leaders for PwC, presents the findings from over 7,000 online surveys (where the survey respondents’ profile reflected the age, gender, employment status and regional profile of 8 selected national markets across 3 continents). The results from this survey point to several implications for retailers both at a national level and a global one.

Our ten-point summary of the report:

  1. Multi-channel shopping is here to stay and it includes 1) spreading shopping across a number of different channels and choosing the one that works best for a particular occasion or type of purchase, 2) buying goods from the same retailer but doing it across more than one channel and 3) using a range of different channels to make a single purchase.
  2. Most of us view ourselves as accomplished online shoppers, highly capable of researching and buying online.  This is important to retailers as being ‘online savvy’ means we have higher expectations for product selection, customer service, information and delivery. In addition, 48% of us shop across all 11 retail categories (grocery, DIY, jewellery, furniture/homeware, sports/outdoor, toys, health and beauty, clothing and footwear, computer, electricals/electronics, books/music/movies).
  3. Convenience is the most important reason for online shopping (28% citing this), just topping price/offer (25%). We clearly want to shop where and when we want as a further 29% of us also either said online shopping was quicker or easier than visiting shops!
  4. Online shopping has also opened up choices for us not just in terms of what we buy but how we buy it. We can go online to research and compare, make the purchase, track delivery and access after-sales support. In addition, at each step in this purchase ‘journey’ we can choose from a range of channels including store, catalogue, mobile and website.  If retailers do not create efficient multi-channel models, consumers work it out for themselves – for example – visiting a store to research and compare and then buying online with an alternative retailer or vice-versa.
  5. Keeping up with multi-channel shoppers is getting more complex for retailers. For example, clothing retailing needs an efficient and fast process for returns – something that needs to be simple for the consumer but can prove challenging for the retailer to implement as the process needs to be adapted from in store to online purchases.
  6. There is no magic formula for a successful multi-channel operation but there is one factor that prevails across multiple formats; a deep understanding of those customers. If a retailer understands its consumer appeal then the key is replicating this across all relevant channels and supporting it with seamless execution behind-the-scenes. This is perhaps even more important when consumers are forming personal portfolios of favourite stores which then attract a higher proportion of that consumer’s spend. Note: the survey reveals that over half of global consumers shop across multiple channels with 5 or fewer retailers.
  7. Whilst 3 of the top 5 factors for success in multi-channel retailing are traditional retail factors – namely product, trust and reasonable price, the remaining 2 are an easy-to-use website and fast/reliable delivery. However, while the purchase journey and the use of multiple channels is similar across different countries, the reasons for using the channels do differ clearly indicating that retailers looking to expand internationally will need a value proposition that is broad and deep enough to meet consumer needs in those different markets.
  8. Successful retailers are those who can ‘inspire’ existing customers to spend more with them and know how to use multiple channels together, for example using their website or app not just to sell but to drive traffic to the physical stores. Online retail requires an integrated strategy that links brand advertising, search engine optimisation, pay-per-click promotions and old-fashioned word-of-mouth. It requires digital marketing skills that may not exist in the traditional store-focused marketing teams.
  9. A focus on the customer begins with defining the customer as not just the individual who visits the store. Knowing the customer, wherever they are, requires a central database to manage all customer information so the retailer can ensure consistent product ranges and prices. Websites need to encourage quick and efficient online research and make it easy to translate that research into an online or local store purchase. Website features such as wish-lists, booking an appointment to view an item in-store, personalised recommendations, product reviews and rapid checkout represent online shopping best practices. Physical stores need to have clear purpose too; are they flagships for the brand or showrooms for the product range as well as being convenient transaction and collection points?
  10. The strategy for multi-channel retailing, combining online and physical stores, has multiple ramifications for retail businesses including systems warehousing and distribution, product and price transparency and the need for accurate real-time customer data – all of which have IT implications.

Finally, the PwC report presents a vision for global retail in 2020 which makes customisation, innovation and efficiency the watch words for success in multi-channel retailing. A full copy of the report can be downloaded here.

Image credit: State Library of Queensland, Australia

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