Why physical stores will power online shopping this holiday season

Most retailers are more likely to engage in e-commerce if they can return the item to a local store

A pressing question during the holidays is whether people will return to the brick store or buy almost everything online. Mary Meeker’s quote is: What percentage of retail spending goes online? But this “physical vs. e-commerce” binary story is wild and does not include the role that stores play in promoting online sales.

In fact, a more interesting question is to what extent can traditional retailers use physical stores to gain a competitive advantage in their battle against Amazon and other purely virtual retailers? In the past, retailers with stores and e-commerce saw it as different channels, with different P&L and different operational teams. Major retailers have recently recognized how stores and e-commerce support each other and are starting to integrate these efforts (for example, meeting along the way and seeing brick stores as important distribution centers.

The common working assumption is that almost all Christmas shopping will be online and stores will have a limited or limited function. This changes the roadmap in terms of dollar volume compared to previous years. Although most purchases are made online, the presence of local stores will play an important role in the decision-making process of consumers.

Will Prime Day End Cyber   Week?

Shoppers are generally more interested in price during the holiday season, which is more selective and less impulsive than last year, especially when most purchases are made online, where demand and spontaneous purchases are less likely.

A cross-poll of 2,000 adults asking about Labor Day intentions can predict future shopping behavior during the holiday season. The survey found that 49% of consumers said they would spend less than last year; only 6% will spend more.

Unless the economy improves dramatically, we can extrapolate what customers find on this vacation more selective and interesting than last year. This means a ubiquitous discount with free delivery for customers to buy. Retailers still offer discounts for months to promote online sales, so consumers may need additional incentives.

When it comes to online advertising, we are likely to see aggressive competition between retailers for top and bottom visibility. A lot will happen earlier this year, as retailers are looking for all the benefits to overcome their competitive advantage. As suggested by this week’s IAB data, Google and Facebook are likely to be the direct beneficiaries of this increase in digital advertising spending.

Black Friday, Cyber   Monday, and related shopping holidays may be less concentrated this year. Amazon Prime Day will arrive in October, which means that competitors will also offer an early promotion at the same time. This event can kick off the traditional Cyber   Week sale if people spend their money in advance.

Hungry for normal shopping, but also scared

If that were to happen, the Black Friday shopping experience would be very fluid compared to previous years. About half of consumers say they are afraid of buying COVID in a store, according to a new survey of Mood Media’s marketing solutions in several countries.

In the United States, there is a suppression of consumer demand for normality and anxiety in the retail sector. In countries where the pandemic has subsided, consumers are returning to stores. According to the Mood Media survey, 71% of respondents worldwide said they feel comfortable going back to stores. It depends to some extent on the retailer’s safety precautions.

The survey also found that 67% of global shoppers had already returned to non-essential stores; the value in the United States was 60%. This does not appear to be consistent with other research data and is a widespread concern. Only 10% said that after the end of the pandemic they would “never go back” to old habits (presumably traditional shopping).

As noted, a large percentage of American consumers still express concern about stores. A survey conducted by Morning Consult in late August found that only 36% of consumers are willing to visit a mall in the next 2-3 months. And if the consumer does, the stores will receive far fewer visitors than last year.

Pedestrian traffic, ‘touch and feel’

However, traffic data from Gravy Analytics shows that discounts and shopping have recovered better than traditional malls, as consumers have more value for stores in greater numbers. As the graph above shows, foot traffic for these two categories is equal to or higher in early February before roadblocks. However, traffic in department stores decreased by 15% and in conventional shopping malls by 12%.

Previous research has shown why many consumers prefer to shop in physical stores (including Generation Z). 

According to the Mood Media survey, consumers rate:

• Ability to touch, feel and experience the product – 47%

• The convenience of taking your purchase directly home – 47%

• The ability to navigate and discover new things – 36%

According to another study, 62% of shoppers are more likely to buy e-commerce if they can take the item to a local store. (And when they get there, they tend to shop extra.)

This is the most important point and a source of advantage for traditional retailers who sell online. Target and BestBuy, for example, experienced triple growth in digital e-commerce in the second quarter. But it was largely fueled by the presence of shops.

The agnostic buyer “ROBO-BOPIS”

In addition to direct e-commerce, many shoppers also use the Internet as a tool to find products locally and reduce time spent in stores. BOPIS and Sidewalk Collection work to provide instant (or near-instantaneous) satisfaction with in-store purchases, with the convenience and efficiency of online shopping. The buyer can get the product on-site today (and possibly return it tomorrow) without having to navigate the aisles and locate the product in person.

Bazaarvoice released a report showing that consumers are now more focused on shopping in local stores (read: SMB), both online and offline. It also indicates that the internet is playing a much bigger role in offline shopping than ever. Although people have searched online since the advent of the internet before buying locally, the vast majority do: Search online, buy offline (ROBO).

In addition to directions, opening hours, or product and service reviews, this online to offline activity is also reflected in inventory checks. In 2019, 46% of shoppers confirmed their inventory online before entering a store, according to a Google-sponsored survey. Among the blocks, Google reported that searches with the phrase “available” increased by more than 70% in April. And while it includes online retailers, it mostly serves local stores.

In this limited environment, consumers don’t want to waste time or visit stores with a chance to find what they’re looking for. Therefore, inventory data can make a difference in the form of local ads (LIAs) or specific landing pages.

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