Contrary to popular belief that online shopping is overtaking brick and mortar, e-commerce retail encompasses less than 10% of all retail sales in the U.S. In reality, the modern consumer has become an omnichannel shopper who buys across both digital and physical channels, often within a single transaction. These new shopping habits are challenging traditional retail models. And while brick and mortar is a key player in omnichannel retail consumption, traditional retailers must catch up to satisfy demand for this modern, multi-channel approach—or risk missing out on opportunities for growth. 

Too often, retailers place their focus exclusively on the point of sale to measure success. But zeroing in on that transaction takes vital attention away from other key stages of the purchasing process, known as the shopping journey.  

Each stage of the shopping journey can take place either offline (in store), online (phone, tablet, computer), or by a combination of the two. Today’s consumers are increasingly choosing to mix different channels to complete a single purchase. For example, a shopper may choose to research a product on her phone, test the product in store, decide to purchase it, but make the actual purchase online at home. This is a phenomenon often referred to as “channel surfing.”  

According to a study by Forrester Research, 38.5 percent of in-store purchases were digitally influenced in 2017. In other words, customers may have researched, browsed or price-compared online before making an in-store purchase. It’s a trend that’s been on the rise since 2014, and is forecasted to surpass 41 percent by 2022, indicating continued growth in consumers’ omnichannel shopping habits. But how and why are customers shopping across channels—and what are they looking for?  

EASE AND SPEED

Because of the speed and convenience of the Internet, modern consumers have high expectations when it comes to customer service, pricing and product options—even more so when it comes to shipping and delivery. According to a 2017 UPS study, 64 percent of online shoppers expect orders placed by 5 p.m. to qualify for next-day shipping or delivery. Sixty-one percent expect orders placed by noon to qualify for same-day shipping or delivery.  


PURCHASING POWER

Satisfaction equals increased spending. For example, 75 percent of shoppers in the UPS survey said they are willing to pay a premium for expedited shipping, and a study by the Harvard Business Review found that when compared to their single-channel counterparts, omnichannel shoppers spend four percent more on in-store purchases and 10 percent more online. When customers used four or more channels, they spent nine percent more in stores than consumers whose shopping experiences began and ended with brick and mortar. The Harvard study also found that a consumer conducting research online tends to spend 13 percent more in store. Translation: increased ease of access to product research and information can help drive sales. 

BRAND LOYALTY

In conjunction with higher spending, omnichannel consumers show more loyalty to their preferred brands and retailers than single-channel consumers. Within six months of an omnichannel experience, the modern consumer reportedly makes 23 percent more repeat shopping trips to the same store. They are also more likely than single-channel shoppers to recommend a brand to friends and family. 

The most important benefit of brand loyalty is the well-known adage that acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one, according to Bain & Company. While engaging with customers across multiple platforms helps to generate new customers, the long-term benefit to business owners is much higher if they come back.  

THE STORE STILL STANDS

While omnichannel focuses largely on digital channels, more than 90 percent of total retail sales still occur in brick and mortar. Consumers use the store for research, like determining a product’s quality or trying on apparel for size, even if they make the final purchase online.  

When online-only retailers open physical stores, we see the most compelling evidence that brick-and-mortar locations help drive online sales. For many pure-play e-tailers, offering a physical location allows their customers to test products and decide on a purchase.  

On the other end of the shopping journey, most consumers—58 percent—prefer to return items to the physical store rather than ship them back. Even more important, 66 percent of consumers will make a new purchase while returning a previously bought item.  

WHAT'S NEXT?

The relationship between e-commerce and brick and mortar has never been more interconnected, as retailers are finding unique offline channels help drive online sales. In recent years, several major retailers have reported that when a brick-and-mortar location closes, their online sales decline in those markets. Conversely, they report that online sales increase noticeably in markets where a new store opens.  

Today’s channel-surfing consumer wants a seamless digital-to-physical transition throughout the shopping journey with multiple, well-integrated channel options. Retailers that can recognize the importance and cater to demand are best positioned for growth in an omnichannel world.

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