Study: Retailers should incentivize use of BOPIS drive store traffic
Shoppers are buying more goods than ever online, but they also are increasingly picking the items up at — and returning them to — brick-and-mortar store.
That's according to JDA Software's third annual “JDA Consumer Survey,” in which 50% of respondents used BOPIS services in the last 12 months, up 44% from JDA's 2015 consumer survey. In-store returns of goods purchased online is also way up: Nearly one in three shoppers took advantage of buy online return in store (BORIS) services this year, up from only 20% in 2016.
“While there has been speculation of a ‘retail apocalypse,’ that doesn’t seem to hold true for consumers," said Jim Prewitt, VP of retail industry strategy at JDA. "No longer the only channel for shopping, brick-and-mortar stores are still a key cornerstone for a quick and easy shopping experience and the facilitator for popular fulfillment options, like BOPIS and buy online return in store (BORIS).”
The JDA survey revealed that by offering incentives, retailers could significantly increase the number of shoppers who take advantage of BOPIS. Eighty percent of shoppers said they would consider using BOPIS if retailers offered price discounts or incentives. (In April, Walmart announced it would start offering a discount on select BOPIS items.)
"While some retailers are already testing out ways to incentivize consumers to choose BOPIS services over home delivery, our research found that this could be a successful way to capture shopper attention in today’s competitive marketplace and further validate the role that BOPIS will play in the success of retail stores,” said Prewitt. “By offering incentives to shoppers to use BOPIS, like discounting, retailers are driving more foot traffic into stores, and potentially, buying more than they intended to, once they arrive at the store, boosting store sales.”
In addition to leveraging existing store inventory and streamlining shipping logistics, BOPIS provides a sales opportunity for retailers. Of the respondents that use buy online pickup in store services, 40% “sometimes” made additional purchases in-store.
BOPIS adoption remains tied to consumers’ desire for convenience. Avoiding home delivery (40%) and wanting the product sooner (33%) remain the top reasons for selecting the fulfillment option, similar to findings in 2016 and 2015. And with more retailers successfully implementing the service, 58% respondents did not experience a problem with the service during the last year.
But problems still exist, and they continue to be associated with mismanaged staffing. Twenty-three percent of respondents found that store staff took a long time or were unable to find the shopper’s order in their store system, and 16% found that there were no dedicated in-store staff for BOPIS purchases. This is consistent with 2016 results, and showcases the need to refine workforce management for new fulfillment channels, according to JDA.
In other findings from the report:
• Forty-four percent of respondents who returned goods purchased online in stores did so because the item was not what they expected it to be. Over 30% used BOPIS because they did not want to deal with the hassle of return deliveries, and 17% did so because they believed they would receive their refund/exchange faster.
• Twenty-six percent of respondents have leveraged social media to purchase an item online, with those ages 18-29 years old more likely to do so (35%) than other age groups. Facebook (81%) and Instagram (26%) were the most widely used social media channels for online purchases.
“Social media continues to be a channel for consumers to browse, but is still emerging as a path-to-purchase,” Prewitt said. “That means retailers need to continue refining these channels as shoppers begin to embrace them, particularly as the Gen Z generation of shoppers increases.”
Accessories retailer readies for international expansion
With plans to triple its store portfolio in six years, Parfois needs to expertly anticipate demand and gain global visibility into its inventory.
By partnering with Oracle, the accessories retailer is one step closer to scaling its operations. Parfois added the Oracle Retail Merchandise Operations Suite and the Oracle Retail Warehouse Management System — two solutions that will support the company’s high growth and international expansion plans.
Parfois designs and develops 3,500 SKUs each season, and adds new items and merchandising in every store, each week. However, the company’s previous merchandising processes couldn’t scale to support these introductions or new business models. In fact, several core processes were supported by Excel-based tools that were often prone to human error and a lack of consistency, according to the retailer.
By using the new platforms, the retailer now has a modern interface and persona driven dashboards that deliver a holistic vision of demand, and inventory status. The solutions also provide a consistent and reliable core operations engine.
"Our transformational initiative allowed us to evolve and efficiently prepare for growth opportunities today and tomorrow,” said Frederico Santos, CIO and CFO, Parfois. “By gaining visibility into inventory and adopting industry best practices, we can better anticipate demand and plan inventory placement.”
BDO: The top risk factors for retailers are….
Consumer confidence remains strong, but that's not stopping retailers from worrying about the economy.
General economic conditions ranked as a top risk factor for the 9th consecutive year in an annual ranking of the top 25 risk factors by retailers, cited by 100% of respondents. Cybersecurity and regulatory concerns shared the top spot with the economy.
That’s according to BDO USA’s 11th annual “Retail RiskFactor Report,” which examines the risk factors listed in the most recent SEC 10-K filings of the largest 100 public U.S. retailers. Other top risk factors include: industry competition and consolidation; natural disasters/terrorism/geo-political events; labor, litigation; implementation/maintenance of IT systems; and credit markets/availability of financing.
Retail space overcapacity is another pressing issue. As e-commerce continues to accelerate, retailers continue to reassess and optimize their real estate portfolios. Eighty-four percent of retailers cite impediments to U.S. expansion as a risk, and 69% reference risks associated with owning and leasing real estate, up from 54% last year.
In addition, failure to invest new capital in new stores or projects was cited by 63% this year. And 44% are concerned with risks associated with mall traffic and competition for prime real estate
“Retailers’ top risks show their eyes are wide open to the new wave of emerging and evolving risks, from widespread store closures and bankruptcies, to uncertain regulatory changes and mass digital disruption and its associated security threats,” said Jennifer Valdivia, partner in BDO’s Consumer Business practice. “While awareness is a key first step, retailers’ proactive responses to these vulnerabilities will ultimately determine their fate.”
In other key findings:
• Regulatory: Forty-four percent of retailers cite concerns around potential border tax, and 76% reference U.S. accounting rule changes, internal controls and financial reporting risks. Thirty-six percent list FCPA as a risk factor.
• Geopolitical: Whether by virtue of their physical store locations, supply chains or e-commerce sales, nearly all retail players are exposed to some degree of international risk. Eighty-nine percent cite international operations as a risk, up from 73% in 2016, and 41% reference impediments to international expansion, up from 30%. Twenty-two percent of retailers mention Brexit in their 10-Ks, 95% of which have U.K. operations
• Labor: Among the 98% of retailers who cite labor concerns as potential risks, 49% point to minimum wage increases, and 26% list pension costs. Eighty-five percent are concerned about the loss of key management or new leadership, up from 73% last year, and 58% cite healthcare reform and benefits risks.
• Cybersecurity: As companies grow more knowledgeable about their unique vulnerabilities and are increasingly held accountable for safeguarding sensitive data, they anticipate more cybersecurity guidance from regulators. Seventy-eight percent point to risks associated with data privacy and security regulations, and 30% name Payment Card Industry standards and EMV compliance as a concern.
To see a chart listing the top 20 risk factors in the report, click here.