Technology and the retail store: The shoppers’ perspective
By Dr Alan Treadgold, [email protected]
There can surely be no question that the two defining themes re-shaping the U.S. retail landscape are the combined impacts of recession and technology. But whereas the impact of recession is, we hope, cyclical; the impact of technology on shoppers’ lives and on retailers’ businesses is profound and structural.
Much of the discussion about the impact of technology on the retail industry has focused on how far the Internet will replace the physical store as a sales channel. Indeed, as each successive quarter shows Internet sales growing much more strongly than store-based sales, the debate has largely polarized on when the Internet will make the retail store redundant.
At Leo Burnett, we are far more interested in understanding the drivers of shoppers’ behaviors than we are in forecasting the pre-eminence of one channel over another. So when we explored how shoppers are behaving in a technology-enabled retail landscape, the insights we uncovered were variously interesting, provocative, nuanced and complex.
The first thing to say is that we do not believe that the death of the physical retail store is either imminent or inevitable. It is clear from asking shoppers that many of them still look to the retail store as their final preferred purchase point in the total (and often very long and complex) ‘path to purchase’ journey. So it is not a case of either shopping online or in-store. For most shoppers in many product categories, the Internet plays one role and the physical store plays another, complimentary role.
But this does not mean either that the future of the retail store is assured. Shoppers are often very clear and very vocal about the shortcomings of the physical store experience. For many shoppers, stores continue to under-deliver on the absolute retail basics of having the right product at the right price and in the right place. Indeed, the size of the deliver gaps between what shoppers want and what they feel they get is often notably wide and notably worrying.
But even if retailers are able to deliver better on the ‘retail fundamentals,’ this will not be enough to assure the future of the retail store. The nightmare scenario for retailers with heavy investments in physical ‘brick-and-mortar’ real estate is that their stores default to simply being collection points for merchandise purchased online. In other words, hugely expensive and inefficient mini-warehouses.
To avoid this doom scenario, retailers with heavy investments in physical store networks need to deliver in their stores experiences that dial-up and emphasize those attributes where stores can win out over the Internet and other remote channels. Many retailers have looked to in-store technologies to deliver enhanced shopper experiences in store.
Unfortunately, when we ask shoppers how much technology does in face enhance their in-store experiences, it has to be said that the results often appear disappointing for retailers who have spent a great deal of investment in recent years on customer-facing technologies. Many retailers have looked to in-store technology to deliver on the holy grail of both taking cost out of their businesses and simultaneously improving the customer experience. The disappointing news is that customers are often largely unimpressed. From the shoppers perspective, the usefulness of in-store technology is seen as being largely about functionally improving the shopping process in self-directed environments (such as grocery stores), rather than enhancing the shopping experience in more browsing, experiential environments (such as department stores). Right now, in many store types shoppers see technology as putting up something of a barrier between them and the store experience. In other words, it is undermining the experience rather more than it is enhancing it. Furthermore, for most of the 2200 shoppers that we surveyed, in-store technologies are very low order priorities in their ‘wishlists’ of what will create more appealing shopping experiences.
What, then are the learnings for retailers? The good news is that most shoppers for many of their shopping needs still value the physical retail store. But in those stores, the promise of technology to deliver an enhanced experienced for the shopper, as opposed to a lower cost model for the retailer, has been largely unfulfilled. More work required.
Dr. Alan Treadgold is Global Head of Retail Strategy for Leo Burnett. He is based in London and Chicago and leads the agency’s strategy work and research program for the retail sector. He can be reached at [email protected].
‘Re-imaging the retail store: the shoppers’ perspective’ is the latest piece of shopper research in the retail sector conducted by Leo Burnett. A full presentation of the report is available on request.
NRF survey: Holiday bargains entice, but much more shopping to be done
Washington, D.C. — A survey released Wednesday by the National Retail Federation found that aggressive holiday sales drew shoppers a little earlier this year, but many shoppers still have half their purchasing yet to do.
According to NRF’s 2010 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, the average person had completed 49.5% of their holiday shopping by the second week of December, up from 46.7% at same time last holiday season.
“It’s well-known that at least half of the shopping that occurs during the holiday season happens during the last few weeks, making the final stretch of utmost importance to retailers,” said NRF President and CEO Matthew Shay. “With the big day falling on a Saturday this year and a lot of shopping left to be done, retailers will continue to push aggressive promotions in the weekdays leading up to it, hoping to remind shoppers they only have one more weekend to shop.”
According to the survey, 37 million people (16.9%) had not even started their shopping as of late last week, lower than the estimated 42 million people who said so during same point last year.
Additionally, 22 million (10.1%) say they have already finished, up from 8.6% who had finished by this time last year. Men admit to having completed slightly less than women at this point (48.5% vs. 50.4% respectively).
Most holiday shoppers (32.4%) plan to complete their list prior to Saturday, Dec. 18, yet Friday, December 24 (11.9%) is expected to be the second busiest day between the 18th and Christmas Day.
Of the people who say they have used their smartphone to shop this holiday season, 26.0% have used the phone to make an actual purchase. Nearly one-third (32.5%) are specifically using their phone to receive text messages with special offers and 34.6% are reading customer reviews. Locating store hours or locations (50.7%) and browsing for gifts (60.2%) are the most popular ways shoppers have used their phones thus far.
Department stores can expect the larger share of traffic over the next few weeks (38.4%), though online retailers (37.6%) and discount stores (36.5%) will also be popular shopping destinations for last-minute shoppers. Electronics stores (19.4%), clothing or accessories stores (18.8%) and outlet stores (10.8%) will also see their share of procrastinators in the coming days.
When it comes to gifts that have been bought so far, most say they have purchased clothes or clothing accessories (43.9%). Though books, CDs, DVDs, videos or video games (38.1%) have also been popular purchases. Consumers also bought toys (35.3%), gift cards (29.9%), consumer electronics (21.3%), food or candy (20.0%), and home décor (15.2%).
When asked which payment method they have used the most, 40.9% have used their debit or check cards most often. Nearly one-third (31.1%) have used their credit cards and 24.4% have used cash. Just 3.6% have relied on checks.
Kohl’s expands Elle-branded line
MENOMONEE FALLS, Wis. – Kohl’s and Lagardère Active have announced plans to expand the Elle-branded contemporary lifestyle collection into fashion jewelry and beauty. The Elle Bijoux jewelry collection and Elle-branded line of cosmetics will be available exclusively in Kohl’s stores nationwide and Kohls.com beginning spring 2012.
“Elle has consistently exceeded our expectations in the contemporary category and with its demonstrated success, we are confident the brand will continue to be instrumental in driving our exclusive brand strategy,” said Don Brennan, Kohl’s chief merchandising officer. “Expanding Elle into additional categories allows us to increase the value proposition to our customer and delivers on our commitment to offer world-class brands in each category.”
Elle Bijoux will include runway-inspired fashion jewelry, including necklaces, earrings, bracelets and rings, according to the companies. The Elle-branded line of cosmetics will ultimately include on-trend make-up and color, skin care, bath and beauty and nail products.