In the span of two months, retailers raked in over $83 billion from shoppers who never even left the house. Where retail sales fell 0.1 percent in December, online shopping was the silver lining (growing 12.7 percent from the year before).
This last holiday season’s showing puts into serious question the viability of a store with a strong presence in your neighborhood, but a weak one on your phone. However, the same digital shift that is threatening physical retail could also be what ultimately saves it.
Physical retail death knell?
It might be.
This holiday season confirmed what we all knew, but were too afraid to be fully invested in: Consumers have become digital ninjas, and the smartphone is their weapon of choice. According to the National Retail Federation, more shoppers polled went online (103 million) than to stores (102 million) over the Thanksgiving/Black Friday weekend.
Consider also that on Christmas day, a record 49 percent of traffic was driven by smartphones alone, nearly exceeding desktop (38 percent) and tablets (13 percent) combined. The smartphone has become the consumers’ remote to experience the world around them, including buying things.
What we know for sure is that a retail strategy involving only a physical presence -- or one that does not prioritize digital channels (mobile, in particular) -- is almost certainly doomed.
There’s a major threat here to physical retail, but only if retailers choose to see it that way. The brands that will win are going to embrace the changing dynamics of their audience, re-orienting the shopping experience by blending the physical and the digital.
Shoppers are leaving brands behind.
In mobile retail, consumers are ahead of brands. Survey data has shown that 92 percent of millennials consider the smartphone their primary device (as high as 67 percent for those 70 and over). Getting a ride home or even finding a date have become commonplace activities on a phone. These services have set a high standard for consumer expectation, and retailers aren’t always meeting it.
Case in point: the same survey showed that over 50 percent of respondents were not satisfied with their mobile retail experience.
Many retail apps and mobile sites have not pinpointed the use cases that will resonate most with their shoppers. If the mobile feature set is all that's available on the retailers’ desktop site, it’s too much for the user to navigate for.
Simplicity is important, as well as catering to consumer desire for technology. When asked, 67 percent of shoppers were open to using their phones to complement physical shopping.
Take advantage of the shift.
Retailers have already begun dipping their toes in what it means to blend physical and digital. Last year, we saw brands creating custom mobile maps to get shoppers quickly in and out of stores. If you went to a home improvement store for a bathroom renovation project, this could save you a lot of time.
You can also imagine a retail store with large screen displays installed. When shoppers walk by, the image changes based on historical info about the individual. A shopper may not be in the market for a flannel shirt, but if shown the latest style as they walk by, it might spark something. Demos such as these have been prominent at recent retail shows.
The work here is around defining the use case, and it will be different for each individual retailer. Leveraging location information to send promotions in real-time for instance is popular and can also be very effective. Forrester has said that 100 percent of the consumer brands they work with saw clear incremental revenues through leveraging coupons and loyalty programs via mobile wallets. But if used improperly, consumers will consider it spam.
Brands will have to figure out what adds value for their shoppers, and the level of personalization that’s helpful without being intrusive. The starting point of any data-fueled strategy will be to earn the trust of your audience and entice them to opt into your service. Without trust, even the best use case will fall on deaf ears.
If all these pieces come together, the in-store shopping experience is transformed in a way where competing channels become complementary. Retailers have the opportunity to upend themselves for the better, before another company does it for the worse.
Consumer habits move quickly.
Retail brands have time to leverage the digital shift, but not much. We saw with ride-sharing apps how quickly consumers were able to change their transportation behaviors.
If last year was about laying groundwork and experimenting with digital retail, this year will require brands to think execution.
When the 2016 holiday season comes around, we can expect that consumers will continue turning towards their phones in between the celebrations. Hopefully, we’ll begin seeing them do that inside of a store.