How a Smart Digital Strategy Can Make the Physical Retail Store a Prime Asset
By Dave Richards, Accenture
In the early days of e-commerce, internet shopping was supposed to spell the demise of the physical store. Pure play online retailers would sweep all before them, rendering the retail store a historical curiosity. In fact, it hasn’t quite worked out like that. Recent Accenture research confirms that more shoppers are planning to increase their purchases from physical stores this year than last. However, the positive news for brick–and-mortar needs to be tempered with the realization that what shoppers want from the in-store experience is changing fast, shaped by their digital experiences. Retailers who fail to understand those new needs and adapt accordingly will struggle.
Two worlds collide
Rather than thinking about the store and online as discrete entities, retailers need to bring the two worlds much closer together. Consumers are looking for experiences that bring the best from digital and physical. For example, more consumers today are ‘webrooming’ (browsing online before making an in-store purchase) than ‘showrooming’ (going to a store to make their selection and then searching online for the best price) across a variety of retail categories. They also increasingly expect their purchases to be delivered for free, with more than half (57%) saying that waiting for free delivery was the most important option. In addition, a higher proportion of shoppers year on year are using click and collect services, whereby they purchase an item online and then pick it up from the store.
The findings of Accenture’s survey point to a new stage in the development of the interplay between the online and physical retail worlds. What consumers increasingly expect is a seamless experience across all channels. That means, for example, consistent product ranges across all channels, with the same promotions and prices available regardless of how a consumer chooses to shop.
The struggle for seamlessness
In terms of delivering a seamless experience, most retailers are still finding it hard to forge deep connections between virtual and physical. Less than one-third of consumers surveyed said that their accounts were connected across in-store and online channels. Yet moving closer to a singular experience, regardless of which channel the consumer uses, will pay clear dividends. For example, simply being able to find out in real time about product availability would persuade the majority of customers (89%) to make a purchase.
Of course, bringing the two worlds together is a challenge. But it’s also a huge opportunity. Harnessing detailed customer information across all – digital and physical – channels and touchpoints, and by deploying analytics, can create the basis for new models of customer engagement and personalized service.
Reinventing the store
So what does that mean for the future of the store itself? One thing’s for sure; more of the same is not an option. As retailers rethink their physical space they need to understand it alongside their virtual presence to create a new and differentiated customer journey. In this new world, not all physical locations need to be destination stores. But those that do need to offer something exceptional in order to stand out from the both the online and the physical crowd.
One key element will be retail staff that have deep product knowledge and can offer customers advice and support unavailable elsewhere. As consumers now routinely do their own product research online, staff who are one step ahead of them can really help differentiate the in-store experience and help close a sale. Achieving that level of service will require retailers to invest in and commit to in-depth training.
Of course, some stores will need to be primarily about convenience. Understanding different customer needs and behaviour through analytics will help to determine the best use of physical locations.
Too much choice?
But it’s not simply the in-store environment that retailers need to consider. Product assortments also need careful consideration. While choice is a consistently important factor in making a retailer attractive, the question of just how much choice must be offered requires close attention. Simply having an extensive assortment is often seen as a positive end in itself. But closer analysis questions the profitability of pursuing a policy of ‘assortment for assortment’s sake’. Instead, successful retailing comes from acting as a curator and editing the choices available in order to provide customers with an evolving assortment, both online and in-store, that reflects their preferences and ‘derisks’ the choices they make. The aim is to meet a wide variety of needs but without the requirement to continuously extend the number of items offered.
Bringing it all together
Bringing together deep insights into changing customer needs and behaviour alongside understanding how they will impact the development of online and physical retail channels will become increasingly critical for success. As Accenture’s research shows, today’s shopper does not favour one channel over another. Rather they’re seeking the optimal combination that will offer the right experience at the right time. Winning retailers will respond by delivering the best of both worlds, seamlessly.
Lumber Liquidators has challenging second quarter
After a delay of several days, Lumber Liquidators has reported second-quarter results, nearly three weeks after the company revised its full-year guidance, which caused its stock to plummet in recent days.
Net sales for the quarter increased by 2.3%, totaling $263.1 million, compared with $257.1 million in the same quarter last year. But comparable-store sales decreased by 7.1%, with the average sale declining 1.8%. Net income was $16.6 million for the three months ended June 30, down 18.7% from last year’s $20.4 million.
The company points to several factors, including reduced customer traffic, which coincided with certain weak macroeconomic trends and has remained particularly low in geographic areas most severely impacted by the unusually harsh winter weather. Additionally, constrained inventory levels in certain key merchandise categories reduced the conversion of customer interest into invoiced sales.
"Our second-quarter net sales and earnings per diluted share were in line with our revised expectations communicated earlier this month," said president and CEO Robert Lynch. "Despite the challenges we faced in the second quarter and results that were not at the level we would have hoped, our value proposition is as strong and relevant as ever to our customers. We remain focused on continuous improvement across our operations and implementing our multi-year strategic initiatives to position the company for long-term growth."
Its full-year 2014 outlook now stands at net sales in the range of $1.05 billion to $1.10 billion, and earnings per diluted share in the range of $2.65 to $3. The company also plans to open a total of 33 to 37 new locations in its expanded showroom format. It also plans to remodel a total of 15 to 20 existing stores in the expanded showroom format, down from a previous range of 25 to 30 existing stores.
Deloitte: Back-to-school spending down
New York — Parents and their children in grades K-12 will spend a combined $543 on back-to-school items, and double that, at $1,223, on college spending. According to new survey data from Deloitte, parents alone expect to spend 13% less than in 2013.
More than two-thirds of respondents (68%) shopping for children in grades K-12 indicate their back-to-school purchases will be driven by the school’s recommended product list, rather than their child’s requests. More than one-quarter (26%) of parents expect to complete their shopping after the start of the school year.
In terms of where consumers plan to shop, "online sites" moved up to the number two shopping destination, tied with "office supply/technology stores" and behind "discount/value department stores" for the first time in the survey’s history. The number of shoppers who prefer to purchase from retailers offering the option to buy online and pick up in the store increased to 40% from 33% last year. Nearly six-in-10 (57%) say they plan to conduct research online before buying in the physical store.
Nearly six-in-10 (55%) of respondents in the Back-to-School survey say they are more concerned about the protection of their personal data when shopping online than one year ago. Those worries extend to the physical store, where more than half (51%) of respondents said they are concerned about the protection of their personal data. However, 44% acknowledged that they are more likely to shop at a retailer who provides education surrounding the security of their personal data.
While nearly one-in-five (18%) parents of children in grades K-12 plan to visit social media sites, on par with last year, the percentage more than doubles in college households. Two-in-five, or 44%, of respondents said they or their children plan to use social media sites to assist in their back-to-college shopping.
However, this year reveals a shift in the value that households with college-bound students place on social sources, with declining emphasis on simply looking for deals. While the number of shoppers checking social media channels for promotions dipped 12 percentage points to 55% compared with 2013, the number who plan to visit retailers’ pages (46%) jumped 12 percentage points, and those posting comments and reviews (37%) climbed 13 percentage points from 2013.
Among the electronics that college students own, the survey revealed that smartphone ownership overtook personal computer (desktop and laptop) ownership in 2014. Nine-in-10 (89%) college students own smart phones, compared with 84% who own a desktop or laptop. Additionally, the percentage of college students who own tablets has grown to 32% from 18% last year.