As specialists in digital commerce, helping retailers and brands understand and plan for future trends in retail is one of the key roles we play here at Wunderman Thompson Commerce. And while our expertise in ecommerce and digital technology is an integral part of the services we offer, sometimes we have to remind ourselves (and our clients) of an important fact: The future of retail is certainly not purely digital.
Despite the volume of discussion about the demise of bricks-and-mortar retail, the facts suggest that physical stores — and consumers’ inclination for using them — are not going to disappear any time soon. For example, current estimates put the global ecommerce share of total retail sales at just under 14%. In a country such as the UK, which has a well-developed ecommerce market, that figure only rises to 18%, which means that the overwhelming majority of retail sales still come through non-digital channels.
What is more, although it is known that the ecommerce share of the market has been steadily growing more or less since the concept first emerged, the rate of growth is slowing down. If that trend continues, ecommerce will not devour traditional retail. Instead, the two will intertwine, enabling a seamless experience.
Our recently published report, The Hybrid Future of Retail, outlines our vision that, in the near future, we won’t be talking about physical and digital retail as if they are two separate entities — we will just talk about retail again, as a concept that embraces both physical and digital technologies and channels.
But what about the people who matter most in all of this, the shoppers themselves? In our experience, when the industry talks about trends in retail and commerce, it often forgets that the people who really make the decisions are the consumers who are reachinging into their own pockets when making a purchasing decision. If we want to analyze the comparative futures of physical and digital commerce, we can only gain a complete picture once we understand how customers see it. We must determine what drives their decisions to choose digital over physical, or vice versa, and whether they even want a future where digital is the only option in town.
With that in mind, we quizzed more than 15,000 consumers on their online and offline shopping habits as part of our latest Future Shopper market survey. Here’s an insight into what we found.
Best of both experiences
First of all, we asked survey respondents about their attitudes toward retail brands that offer both online and offline shopping. Just under half (48%) said they would prefer to shop with brands that provide both options. Slightly surprising is the fact that younger shoppers seem to be more interested than older shoppers in having both digital and physical options. Fifty-three percent of 16 to 24 year olds said they’d rather have both, compared to 45% of 45 to 54 year olds and 44% of those over 55. With this in mind, the idea that younger shoppers are abandoning stores in favor of online channels needs rethinking.
In further support of the idea that bricks-and-mortar retail still plays a key role in how consumers view shopping, we found that more than a quarter of shoppers (27%) still prefer to browse in stores to find inspiration for new purchases (27%). This isn’t far behind the number that use social media (32%) or browse brand websites (33%) for inspiration.
Further evidence that consumers prefer to shop in stores came when we asked survey participants about their shopping habits in certain categories. Here, we found that physical retail remained the most popular channel in three retail segments — groceries, vehicles and luxury goods.
In grocery, the big supermarkets in particular have invested heavily in ecommerce platforms over the past decade or so, with online shopping supported by home delivery and, more recently, click-and-collect fulfilment options. But while a healthy 27% of consumers said they bought groceries from these online retailers, that remains a notable distance behind the 40% who say they still never buy online.
It would be no surprise, however, if this gap narrows in the future. We found older shoppers are considerably less likely to buy groceries online than their younger counterparts. Fifty-six percent of those over 55 said they never shopped in this category online, as did 43% of 45 to 54 year olds, but the numbers dropped sharply for those under 45. By contrast, 29% of 25 to 34 year olds and 30% of 34 to 45 years olds said they bought groceries from retailer ecommerce stores, compared to 21% of those over 55. Over time, this is likely to lead to a rise in the overall proportion of consumers using grocery retailer sites, although physical stores will still play a key role.
In-store purchases still dominate in grocery due to issues around product selection and delivery of fresh produce. When it comes to vehicles, the size and value of the product factor into why 40% of consumers told us they never buy cars (or accessories) online. There is still a strong preference for seeing and test driving a vehicle before committing to such a high-value purchase, although the likes of Audi are redefining the online vehicle experience.
Our report does show that digital channels are gaining ground in terms of vehicle accessories, however. Nineteen percent of consumers said they use Amazon to buy these products, while 12% said they used other marketplaces, and 11% said they went straight to retailer websites. Vehicle retail is also primed for a hybrid fusion of physical and digital channels — dealers can use websites, social channels, and marketplaces to promote sales and engage customers while still offering consumers an in-person look and test drive at a physical location.
As for shopping luxury goods, 30% of our survey respondents told us that they never buy them online, be it high-end jewelry, designer clothes, footwear, or similar items. The fact that a brand’s own website was the second-most-popular channel — getting 21% of the vote — provides a clue as to why in-store retail still prevails in this category. When buying luxury goods, customers want to know they are getting the genuine article from the original, trusted source. They also want the premium experience that goes hand in hand with a luxury buy, and they value the custom, personalized services that brands and their retail partners are so well-positioned to deliver.
To get the full up-to-date picture on consumer attitudes regarding retail and digital commerce, download our Future Shopper 2019 report.