Retailers: the four waves of disruption
The retail environment has never been more complex.
That’s the word from Greg Doone, a director and digital strategy and data specialist at PwC.
Retailers are facing four waves of disruption according to findings from a recent PwC study, Total Retail 2015: Retailers and the Age of Disruption.
Four waves of disruption
“While e-commerce sales are growing every year, the store isn't dead yet,” Doone says.
According to the study, while 68% of the global sample say they have browsed products at a store but decided to purchase them online, 70% said that they have done just the opposite; that is, browsed products online but decided to purchase them in-store.
“Shopkeepers and shops have been around for centuries, so it's a pretty safe bet, mobile apps or not, that stores will still be around in very familiar forms for at least the next few decades,” Doone states.
The PwC survey data strongly backs that claim up; PwC says in some areas it has found a strong bounce-back for the store from previous surveys.
Doone says mobile is still a very small piece of the pie in terms of overall retail sales, but mobile phones are a increasingly critical factor in setting the stage for a purchase.
“Thirty percent of our global respondents have located stores, and a quarter have used coupons they received by mobile phone,” Doone says.
Companies and governments analysing trends with 'big data' has produced exceptionally valuable insights. Today's consumers can access their own versions of big data on their smartphones, and Doone says this capability has only scratched the surface.
“Improvements in data storage, near-field and GPS technologies and retailers' abilities to recognise shoppers' preferences are game-changers,” he says.
“The smartphone won't be just something consumers can call or search with - it will be constantly searching on their behalf for the cheapest, greatest value, and most unique product.”
When asked if their interactions on social media had led them to buy more, a total of 62% of survey respondents answered either "Yes in most cases" (19%), or "Yes in some cases" (43%).
“Optimising or integrating social with your site, particularly in its mobile web presence, investing to improve search engine rankings, and creating a focused social strategy may be the best approach for retailers who are innovating their social networks,” says Doone.
“Social media platforms are ideally suited for creating or supporting a brand, distributing great content, and providing the space to generate genuine word-of-mouth and viral buzz.”
Digital and display ads, on the other hand, reinforce consumer interest, Doone says. Search platforms point to a strong desire to complete an actual transaction. To improve viability as a purchase destination, Doone says search engine optimisation should be invested in.
Global ageing patterns show retailers can count on a large segment of global consumers who have a long track record of spending, and are intending to spend into the foreseeable future. The survey illustrates how 'digital natives' - those aged 18-24 - include mobile and social media as part of their shopping experience at a much higher rate than the rest of survey respondents.
“Interactions with favourite brands tend to make digital natives spend more on products and engage in mobile purchasing behaviours more often,” Doone explains. “The question remains whether they, together with the next wave of young, digitally-sawy shoppers, have the economic clout in the next few years to force retailers' hands in how they view their business models.
However, Doone says it's worth noting, these younger demographic behaviours have a track record of 'infecting' the more mature generations. “The significant growth of 'parental' and 'grandparental' migration to Facebook over the last four years is a good indicator of this,” he says.
“Any store manager will tell you 'showrooming' in store is not just restricted to under 24 year olds.
“As online shopping continues to grow at the expense of store visits, the premium in the future will be on creating unique, brand-defining experiences that keep customers coming back- whatever the channel,” Doone says.
With the very real prospect of increasing tax on the 42% split of e-commerce purchases New Zealand consumers make on overseas sites, Doone says there is a real domestic imperative to focus energies on the digital.