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[16 comments]

Physical stores dominate path to purchase

July 28, 2014

A recent survey from A.T. Kearney found 55 percent of consumers prefer to use both stores and online throughout the stages of the entire shopping journey (discovery, trial, purchase, pickup and return). But discovery proved to be the only stage where shoppers prefer online for a select few categories.

And even around discovery, in-store was preferred for key retail categories such as apparel and accessories, health and beauty, and furniture.

In-store was largely preferred for all the other four phases of the transactional journey across most categories:

Trial: In-store was most essential for product trial and test. For high touch-and-feel categories including apparel and accessories, health and beauty, and furniture, the preference for in-store trial and testing was as high as 85 percent. For standardized categories such as consumer electronics, trial and test preferences were in the 76 percent range. Immediacy, ease, and accuracy of testing were all cited as reasons for preferring in-store trial.

Purchase: In-store was preferred in the majority of cases with stores benefiting from immediacy and accessibility. For categories such as fine jewelry, electronics, furniture, and sporting goods, better customer service in stores was also valued.

Pickup: Although home-delivery is preferred for categories such as furniture, in-store pickup is preferred for most categories. Health and beauty and fine jewelry products were particularly preferred for in-store pickup. In-store pickup offers a sense of reliability and trust not found online, as well as take-home immediately.

Returns: After trial and testing, returns is the stage in the shopping journey where consumers demonstrate the highest preference for physical stores over online shopping. Accessibility, immediacy, and time efficiency favor in-store returns.

Also encouraging for stores was the finding that two-thirds of customers purchasing online use a physical store before or after the transaction.

A.T. Kearney said the findings show that the store should be looked on as "the foundation" when building omni-channel strategies. It also implied that stores are an overlooked source of value creation (brand building, product awareness).

Mike Moriarty, a partner and co-author of the report, said in a statement, "The decoupling of value capture is important for retailers to understand as they consider resource allocation decisions across channels to ensure that the true value the physical store creates is accounted for properly."

Discussion Questions:

What lessons should be learned from the A.T. Kearney study about how online and offline complement each other in the "shopping journey" across purchases? What does it say about establishing omni-channel strategies?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

What phase of the shopping journey is the most important reason pure e-tailers may want to open their own physical stores?

Comments:

The study reinforces the notion of omni-channel and demonstrates the need for retailers to make the in-store and online shopping experience as seamless as possible. Consumers no longer consider online and offline to be separate. Retailers need to respond accordingly. Those who do will benefit from higher customer appreciation and sales.

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Max Goldberg, President, Max Goldberg & Associates

I think we all knew this in our gut; that the store remains the center of the shopping experience. But it seems that retailers have been thrown into a panic over the notion of "showrooming" and the potential of losing their business to Amazon.

I think I've mentioned this before. In a briefing, one tech vendor mentioned that in 1990, approximately 10 percent of all sales were conducted via catalog. That's about where we are with direct sales today (albeit through the web). He said, "Who says it's going to keep growing beyond this?"

In fact, I don't know the answer to that. I DO know that Amazon, the etailer retailers feared the most, is unable to make any kind of reasonable profit. I have my own theories around this; too long to get into here. And I also know that Walmart appears to have taken all the share it's going to take from retail.

The good news here is that smart retailers will find creative ways to both keep their customers and leverage the notion of inventory as a shared asset across channels, to reduce their total inventory levels while improving service levels in stores.

The ultimate lesson? Retail is a very emotional business. I'm actually starting the think the stock market is equally emotional. But if we become more data-driven, rather than emotional, I think we'll find the key to retailing success. Data plus art (the right product) plus a great customer experience lead to top and bottom line success.

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Paula Rosenblum, Managing Partner, RSR Research

Omni-channel refers to how the consumers shop, not how retailers are organized. Increasingly, consumers' shopping journey is anytime and everywhere. The A.T. Kearney survey reinforces how consumers increasingly prefer both online and stores. In the future, add mobility and apps to the equation.

Whether consumers "showroom" (shop in store and purchase online) or "webroom" (the reverse) is somewhat contextual and category-sensitive, as the A.T. Kearney study illustrates.

The study clearly does indicate the growing value and potential of stores. However, store based retailers can not take anything for granted! Today's consumers are looking for personalized services in-store. When online service and convenience trump in-store experience, the purchase pendulum can quickly tip the other way.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Yet another intuition-confirming retail research report.

I hadn't seen the "shopping journey" road map before. Admittedly I'm not a true "retail expert" like most of my BrainTrust colleagues, but I do understand the psychology and energy of the human experience. Something immediately leapt out at me.

The shopping journey apparently ends when the customer "returns" the goods. (Is this retail's business model?) I find this totally odd and totally from the retailer's perspective, not the customer's. So really it's the "retailer journey," since the goods begin and end with them. If this was focused on the customer experience, wouldn't we have a phase called "enjoy" or "satisfaction?" Here, we skip right from "picking-up" the item to "returning" it. While I'm at it, where's a phase called "repeat?" That would make it a circular journey, not a linear one.

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Ian Percy, President, The Ian Percy Corporation

There are several ingredients missing from this e-tail vs. retail stress test. Availability, shopping convenience, delivery options and pricing which just happen to be the largest attractions for e-commerce. I guess that it might not require much effort for a band of experts to make the list partial to a desired outcome, but in any test comparison the strengths of any and/or all objects tested should be put in the comparison mix.

'gjarnoldjr'

Honestly, did a study have to be conducted to arrive at these conclusions? People shop online when price and selection is a problem. Few would purchase online unless they weren't presented with a satisfactory selection or a satisfactory price at a reasonably "local" store. Now we all know this doesn't cover every situation, but would apply to more than 90 percent of situations. I would strongly suggest that retailers focus on satisfying their customers and quit wasting time on e-commerce solutions. E-commerce exists because retail ignored consumers. Retail prefers to rely on up-and-down sale pricing rather than giving the consumer every day low pricing (which is what they want, and what e-commerce provides). If you continue to do what you have been doing and expect different results you won't survive. Do any kind of study you want to, it won't solve a retailer's problems. Focus on having the right products at the right prices and you solve retail problems. You don't need a study to know that.

Ed Dennis, Sales, Dennis Enterprises

The findings of this survey are probably not all that surprising. However, it is comforting to get confirmation on the value of physical stores. I believe the better a merchant can execute seamless operations between online and offline stores, the better and more attractive the shopping experience will be. Too often, though, a merchant will have silos for online and offline stores where communication and strategies don't always connect. That is the challenge to overcome.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Ninety percent of purchases are still made in stores, and you needed a study to figure out that they should be looked upon as "the foundation" when building omni-channel strategies? Really?

'RetailRetell'

Quite frankly there is nothing in this survey that is radically new. It is common sense. 90% of all retail sales continue to be made in the store. The shopping journey for a majority of shoppers will continue to leverage the store in one way or another.

Paula pointed out the one essential characteristic of retail, it is an emotional business. As long as a shopper is human, then predicting behavior will be difficult as it should be! Leveraging the online experience to the in-store experience is vital and will continue to be, but how this is done depends on the segment and the creativity of the retailers!

David Lubert, Industry Principal, Bridge-x Technologies

This is good news for traditional retailers. Many brick and mortar retailers have been concerned that online retailers will take over. Online will continue to grow. More retailers will make their products available via online channels. Some retailers will recognize their customers still have a need for brick and mortar locations. No doubt that online has hurt some traditional retailers, but it looks like the bleeding is beginning to subside. The balance between online and on-site is starting to form. The best retailers will be able to take advantage of both.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

I think we can excuse the "On Solid Ground" study for confirming some things that seem obvious to many of us. Of course shoppers view each retailer as a unified entity regardless of the channel of contact. Of course they formulate their own shopping solutions based on the options available online and in-store. Of course they behave differently depending upon the type of purchase decision, occasion, or product category.

Stores continue to dominate, even if their role and execution are modified or displaced by online tools for shopping, research, and promotion. Retailers cannot ignore the digital mode of interaction with shoppers, which has become as expected as a point of sale system, a customer service phone number and electric lighting.

This study reminds me that there is no "omni-channel" strategy, just good retail tactics that match the points of interaction with shopper needs and expectations. Do it well and earn a larger share of their wallets.

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James Tenser, Principal, VSN Strategies

The term "consumers" in this case is misleading. In all the studies we've done, the appeal rate of in-store trial and discovery literally falls in half when you ask younger people, i.e., the younger you are, the less you care about stores.

Which makes sense. Boomers have a visceral attachment to stores. We can remember when there was ONLY stores. Most of us trust stores more than the online process...some of us to a fault. But anyone younger than 25 (maybe even 30) does not have the same affinity for bricks. As a matter of fact, "peer reviews" ranked higher than "touch and feel of product" to younger people in the surveys we've done. Wow. Of course, it doesn't help that since our young people have been around, we opened countless stores that were/are nothing more than warehouses. So, what's to like?

What does all this mean? It means that if retailers are only looking at the aggregate of studies like the ATK report, they're about to get blindsided by new customers that couldn't care less about in-store trial, discovery and purchase. Time to help our stores compete with their online relatives before you lost a couple of generations worth of "consumers."

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Lee Peterson, EVP Creative Services, WD Partners

The results of this study have potential to lead retailers to focus less on online channels and more on their in-store environment. Now, focusing on improving customer experience in store is something that has been sorely lacking in this country and would be very much appreciated.

At the same time, this study does not differentiate between high-value and loan-to-value products and between impulse and considered purchases. In addition, it does not trend the findings based on consumer age and generation.

When the analysis is looked at in those lights, I would not be surprised to find clear indications that the higher the risk of the purchase and the younger the age of the purchaser, the greater the role of online, and particularly mobile research gets.

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Mark Price, Managing Partner, LiftPoint Consulting, Inc.

While not earth-shattering news, I hope this quiets the hype that the end of stores is near. Pragmatic retailers have grasped the importance of creating an experience as seamless as possible to facilitate a pleasant path-to-purchase for the consumer. Omni-channel and a consistent brand story and experience are essential to pleasing the shopper.

I think this means that retailers need to keep looking for ways to improve the in-store shopping experience while continuing to look for ways to exploit the advantages of each channel in ways that deliver a unified customer experience that is consistent with their brand. There are lots of opportunities to utilize mobile/online to compliment stores and many in-store ways to help consumers continue the shopping experience after leaving the store. Many of these programs don't require big capital or process change, but they all require experimentation and creativity.

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Larry Negrich, Vice President, Marketing, nGage Labs

Not surprising. E-commerce and mobile certainly have taken chunks out of the store in terms of consideration journey, but the bulk of transactions are store based in the broader demographic sense. In certain demographics and categories like books and music, I can see stores being eclipsed by e-stores, but in terms of share of wallet store spend is staying put.

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Kenneth Leung, Director of Enterprise Industry Marketing, Avaya

I believe the shopping journey is logical and organic to the category. I'm glad to see the research by Kearney proves it.

What works for books doesn't work for mattresses, yet I frequently hear "experts" trying to fit a square peg into a round hole.

The best way to approach onmi-channel strategies is, in my opinion, as a component of the overall marketing strategy. The consumer is using online tools, the challenge is finding the proper application for each category.

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Carlos Arámbula, Managing Partner, MarcasUSA LLC

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