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Summary:

As if we needed more evidence that brick and mortar stores are at a crossroads, a study out Tuesday from Paris-based consulting firm CapGemini found that more than half of shoppers globally said they think more physical stores will become merely showrooms by 2020.

512px-2009-02-24_Best_Buy_at_Renaissance_Center_in_Durham

Credit: Ildar Sagdejev

As if we needed more evidence that bricks-and-mortar stores are at a crossroads, a study out Tuesday from Paris-based consulting firm Capgemini found that more than half of shoppers globally think more physical stores will become merely showrooms by 2020.

According to the report, which was based on interviews with 16,000 consumers from 16 countries, 51 percent of respondents said that, in the next eight years, they expect retail locations to be showrooms for selecting and ordering products. In developing markets, the study said the percentages were higher but that at least one third of the respondents in more developed markets agreed with the assessment.

Capgemini’s “Digital Shopper Relevancy” study looked at several different trends (which I’ll return to below), but the piece about the changing role of the bricks-and-mortar store is particularly timely. Over the past few months, the trend of so-called “showrooming”  has received increased attention as it’s become progressively clear that growing numbers of bargain-hungry shoppers (or “smart buyers”, as my colleague Om likes to call them) are checking out products in a store but then purchasing them online.

Online shopping, mobile phones and apps are changing retail

The growing prominence of online shopping sites and the ubiquity of mobile phones and shopping apps have given shoppers new and easy ways to find the best bang for their buck. As more consumers reference their mobile phones in-store (52 percent according to a recent Pew study), many are realizing that they can find better prices or deals elsewhere, often online. A February 2012 survey from market research firm ClickIQ found that 45.9 percent of online shoppers in the U.S. were guilty of the practise. For Target, showrooming became such an issue that the company announced in May it would stop selling Amazon’s Kindle after the online giant encouraged consumers to scan items in-store for discounts on its site.

But the emerging trend doesn’t necessarily mean that offline retail locations are destined to become showrooms for the products consumers can buy online.

Over the past few months, big-box retailers have launched new initiatives to combat the practise. A recent New York Times story described how major retailers like Walmart, Macy’s, Sears, the Container Store and others are upping their customer support game – with pickup locations, payment booths, drive-through customer service centers and other premium services that blend online and offline — to keep customers happy.

Retailers fight back

In June, Best Buy’s interim CEO Mike Mikan told investors that the company’s “No. 1 priority” was beating the trend. Last week, the electronics retail giant said it’s refashioning its stores to be more Apple-like, with a product support center that resembles Apple’s Genius Bar and an option for consumers to pay on the floor instead of lining up at the cash register.

Of course, Apple itself is a great example of a company redefining the role of the retail store. Even though consumers can purchase Apple products online, the stores have been mostly a wild success because, for Apple, they’re not just about selling things – developing customer relationships and branding figure highly. The Genius bars, available computers and bend-over-backwards employees invite consumers to bask in the glow of the company and become even more loyal to the brand. They’re also places to inspire future purchases or accommodate last-minute, impulse buys.

Earlier this year, Om actually said he thinks that Amazon will open physical retail stores as a way to extend the Amazon experience. Despite the draw of its online site, he said, a physical space could serve as a local reminder of the brand and a place for consumers to further discover what Amazon has to offer.

As the Capgemini report found, the digital shopper isn’t just digital and she expects to be served seamlessly across all channels, physical and digital.  That goes for Amazon shoppers, too.

The report covered a lot of ground, but here are a few other interesting tidbits:

  • Almost 60 percent of shoppers interviewed said they expect the retail experience to extend across physical and digital channels by 2014, but more than half said most retailers currently lack cross-channel consistency
  • 56 percent of shoppers said they were likely to spend more money at a physical store if they had used digital channels to research ahead of the purchase
  • 44 percent of shoppers would like to use a mobile app to support in-store shopping
  • 61 percent of respondents want online stores to remember their personal information and payment credentials to speed up shopping in-store but only 41 percent want to be identified through their mobiles when they enter a physical store
  • 55 percent of women shoppers are more engaged when using digital channels compared with 44% of men; women indicate more interest in receiving personalized offers, recommendations and information about new products

(Image by Ildar Sagdejev via Wikimedia Commons)

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  1. Praveen Sripati Tuesday, July 10, 2012

    In India, where bargaining is a common practice, many and many are asking the retail stores to match the online price. Flipkart.com which is called the Amazon of India is really picking up. Online sales are increasing in the developing countries also. But, people want to hold the device before buying it, so they go to a store, feel it and they buy online.

  2. Manmohan Manu Tuesday, July 10, 2012

    Interesting article. I work for McGladrey and there’s a white paper on Retail on the website ( http://bit.ly/JDHmUU ) that describes current trends in US retail sector with insights from industry experts.

  3. see http://www.indoorLBS.com for a comparison of shopping apps that use indoor location and indoor maps 

  4. How long do you expect stores can resist until “customers” (customer who doesn’t buy is not a customer) uses physical stores to build an opinion and make the purchase online?

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