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Bricks and clicks – the rise of mixing physical and online shopping
People have taken to online shopping with force. In the first few months of this yeari, the number of online searches by shoppers grew 52% compared with just one year ago. Searches on mobile devices alone grew by 50%ii.
Given these figures, you’d think online shopping would be causing a big splash in the retail world. However, the reality is that online shopping only has a 14.2%iii share in the market currently (July 2016), up from 12.6% a year ago.
What is causing more of a splash is the change in shopping behaviour. According to research by Verdict and British Landv, close to 90% of all UK retail sales ‘‘touched’’ a physical sale store last year through “click and collect” services or online as a result of browsing in-store.
By offering these “multi-channel” retail services, stores are now learning to read the market and adapt to this new reality in retail behaviour. In fact, this type of multi-channel buying is actually boosting physical sales in UK stores by 5%vi. Smart retailers are recognising the power of online shopping, but rather than trying to compete with it, they’re using it as a source of inspiration to improve offerings to customers.
Here’s how bricks (physical stores) and clicks (online shopping) together are transforming shopping as we know it.
It’s about experiences over transactions
When you can purchase just about anything with a single click, shopping purely for the sake of shopping doesn’t cut it any more. Making where shoppers visit more enjoyable, convenient and memorablevii rather than just a place to buy something, is essential for retailers not wanting to be left behind – and they’re doing this with the help of digital.
There are many new ways the more sophisticated retailers are doing this, one of the most successful of which is through augmented reality mirror displays. These mirrors are activated through radio frequency identification (RFID) technology on product tags and can display product information in text, image or video form, provide encouragement to order, and even show changing room occupants what they would look like wearing particular garments.viii
Digital technology is being used by some stores to help with shoppers’ comfort levels by installing touchscreens to control what products should be brought to them by shop assistants and even the retail environment itself.ix
Showing not selling
One of the biggest bugbears among online shoppers is not being able to test the quality and actual appearance of products. According to TimeTrade’s State of Retail Report last year, 85%x of consumers prefer shopping in physical stores where they can see, touch and test products before they buy.
To combat this, some online retailers have opened up "virtual showrooms" where customers can sample products.
These showrooms – or “web rooms” or “guideshops”xi as they’re sometimes called – give shoppers a try-before-they-buy online experience. It also means physical stores can do what they do best: give customers a real-life feel for their products.
Although the majority of sales happen in-store, many customers discover their future purchases online first. In fact, according to a poll carried out by Kibo Commercexii, more than two thirds of UK respondents said they would research items online before purchasing them in physical stores.
To help physical customers browse, some stores have brought online directories into stores so shoppers have access to their entire range. Marks & Spencer has rolled out “browse and order” hubsxiii in its stores allowing customers to learn about and order items ready for collection or delivery.
Delivering the goods
And it’s not just physical retail that’s seeing the benefits of the digital revolution, as online retail sometimes leans on the traditional store to solve some of its own problems.
Convenient and quick delivery from online purchases is an ever-increasing demand among shoppers. Just last year Amazon began offering unlimited same-day delivery for its Prime service members in greater Londonxiv, and Argos also launched its UK-wide same-day delivery service.xv
But speedy delivery depends on where customers live and whether they’re available to pick up a package in person. Click and collect services reduce the distance travelled and speed up delivery times, sometimes making a product available in store within a few hoursxvi.
This has a good payback for retailers too, as - according to a Kantar Retail report last year - between 60-75% of shoppers who click and collect end up buying extra products while they’re in store collecting what they’ve ordered.xvii
Sharing the shopper
Rather than engaging in an endless tug of war for the shopper’s attention, physical and digital retailers have realised a little cooperation can go a long way. When it comes to securing a sale, both online and traditional stores can prompt customers to visit each other.
Online search advertising – those ads that show up at the top of results when someone types a word or phrase in search of something online – has shown to increase physical store sales by an average of 1.46%xviii. While that increase isn’t staggering, in monetary terms for overall sales for retail – both online and offline - the value is clear.
And the mutual back-scratching doesn’t stop there. While online retail marketing is driving up physical retail sales, traditional stores can also help online retailers get noticed. In the saturated online retail market, brands can find it difficult to establish themselves and attract customers amid all the clamouring for attention. Opening physical stores, like online retail giant Amazon did, can get a brand noticed much faster, and even drive up traffic to the website.xxi
Bricks and clicks: retailers must have a plan for both
As physical retailers need the convenience and reach being online can bring, and online retailers need a physical presence to boost their profile and sales, the days of wondering who’ll come out on top are gone.
Nowadays customers want a blend of physical and online shopping. They continue to want physical stores because they appeal to the senses and the emotions. But they also want all the advantages online shopping delivers.
In this way, physical and digital shopping complement each other, and both are now required if either is to stay relevant to today’s shopper.
‘’Retail is the lifeblood of the UK economy. In many ways, the UK is the largest and most vibrant retail market outside the USA. MBNA has a long tradition of delivering retail innovation for customers. We pioneered Contactless, Apple Pay and Android Pay – and we recently launched the ground-breaking intu Credit Card in partnership with the UK’s largest shopping centre operator.’’ Michael Donald, Chief Commercial Officer & Payments Executive.
With card use being driven up by online shoppingxxii, find out what will happen to cash in our article, What will the future of money look like? And read how wearable payments are slowly infiltrating the shopping experience too, in How should UK retailers prepare for a wearable payments future?
i Q1 of 2016
iii excluding automotive fuel
v from July last year