Digitally influenced retail sales to reach $2.2 trillion by 2015
FYI, this story is more than a year old
Digitally-influenced sales are becoming more and more significant for retail brick-and-mortar stores, according to Deloitte Digital.
The company’s latest study, Navigating the New Digital Divide, finds digital interactions are expected to influence 64 cents of every dollar spent in retail stores by the end of 2015, or $2.2 trillion.
This figure has grown considerably from 14 cents of each dollar spent in brick-and-mortar stores in 2012, the first year Deloitte Digital conducted the annual study.
Deloitte Digital defines ‘digital influence’ as the percentage of traditional brick-and-mortar retail sales impacted by shoppers' use of digital devices.
The company has also identified a growing digital divide between consumers' digital behaviours and retailers' ability to deliver on those expectations.
"Retailers often use the wrong metric - e-commerce sales - to indicate whether their digital strategy is working," says Kasey Lobaugh, Deloitte Consulting LLP principal and Deloitte Digital's chief retail innovation officer.
"Last year, e-commerce sales represented $300 billion, or just 7%, of total retail sales, while digitally-influenced store sales were over five times higher, topping $1.7 trillion.
“Retailers that prioritise and design digital functionality with the sole purpose of driving sales in the e-commerce channel marginalise the consumer experience and risk ceding authority to competitors," says Lobaugh.
Marketplace volatility in the retail sector increases the need of capturing and accurately measuring digitally-influenced sales, according to Deloitte Digital.
The research indicates that in the last five years the top 25 established retailers have lost 2% of their combined market share, which equates to $64 billion, while smaller players that have entered the market with digital at their core have multiplied.
On this Lobaugh says, "We are seeing a real change in the competitive dynamics, with digital as the great equaliser.
“The findings indicate that the large retailers are collectively losing ground to the much smaller competitors."
While the upward trend in overall digital usage has accelerated, this year's study uncovered a range of new consumer behaviours.
Mobile influence is up, but price checking is down
Consumers surveyed indicated they are 30% less likely to use smartphones to perform price comparisons in-store than they were a year ago.
This decline occurred while the influence of smartphones alone on in-store sales rose to 28% in 2014, up from 19% the prior year.
Consumers are advancing in their sophistication - using mobile more often for inspiration and idea generation earlier in their shopping process, and not simply as a price comparison vehicle.
Digitally-influenced consumers buy more and spend more
Consumers who use digital while they shop convert at a 20% higher rate compared to those who do not use such devices, according to Deloitte Digital.
Furthermore, consumers who access social media during the shopping process are four times more likely to spend more, and almost one-third (29%) of those surveyed are more likely to make a purchase the same day they turn to social media before or during their shopping trip.
Consumers are hunters, not gatherers, once they arrive at the store
Nearly 8 in 10 consumers (76%) surveyed interact with brands or products before arriving at the store.
Shoppers now make buying decisions at other points in the shopping journey, where they find ideas and inspiration, research product information, validate performance through reviews, and even make purchases online to pick up in store.
"Instead of measuring moments that matter during the shopping journey, retailers continue to focus on measuring the buy button - the point at which they actually have the least influence," says Jeff Simpson, Deloitte Consulting LLP director and co-author of the study.
"Retailers that simply track channel sales and fail to measure the influence of digital along the entire path to purchase can miss key indicators of performance and customer behaviour.
“Retailers should focus on designing and building customer experiences that play to how their customers are shopping for their products - rather than direct consumers to the point of purchase if what they really seek is inspiration or information,” he says.