At a dinner event a couple of days go, I got into a major discussion with a few folks. It was all about how in the next few years we will be living the ultimate digital reality… everything we do will be virtual!
As a “digital native” (I have been in this space since 1995), it is very easy and seductive to fall for the same rhetoric. However, the reality is quite different.
According to a new report by Forrester Research Inc. entitled “U.S. Cross-Channel Retail Forecast, 2012 To 2017” approximately 10.3% of total retail sales in the U.S. in five years will be online purchases. Let’s repeat that – only a little over 10% of total retail sales will be online purchases in the U.S. 5 years from now. The figure today is closer to 5%. Is this surprising?
I was a bit surprised at this number. Most of my purchases are done on my iPad. I like the convenience and simplicity it provides (except the returns process). I am living the digital lifestyle. However, on reflection, this low number makes sense to me. Most people like to go shopping in real stores where they can see and try real merchandise. My wife and I spent three hours yesterday shopping for clothes (hers). She tried on a bunch of outfits and then bought a few. She can’t do this off her tablet. She wants live customer service. And, she wants it in a friendly environment with clean fitting rooms.
This doesn’t mean she doesn’t shop and buy digitally. She does. She now uses the digital ecosystem to make her smarter and more focused in her buying behavior. The digital environment makes us smarter and better informed consumers. Influenced by visiting retailer’s web sites, researching products through search, subscribing to promotional emails and ingesting promoted social media content. According to the same Forrester study, 40% of purchases are influenced by Internet research on PCs, smartphones and tablets and that number will increase to 60% by 2017, but the actual online purchases will not be a significant percentage of total retail sales.
Retail marketers who want to win in the future need to keep this construct in mind. Don’t get carried away by the digital-alone rhetoric. That would be a mistake. Instead, focus on delivering an integrated, omni-channel experience that allows your brand to feel authentic and credible across all touchpoints.
This can only work if you have a very clear understanding of your core customers. Almost 90% of companies we’ve surveyed, don’t have a clear idea of their most valuable customers (MVC). They think they do, but once we dig into their assumptions and data, we find that there is huge opportunity to develop a much clearer picture. Once we know who these MVC’s are, we can then understand the dissonance between what they say and what they actually do. By aligning the business value proposition with their needs and behaviors, decathlete retailers are able to create distinct and differentiating experiences where and when they want. This is what delivers profitable transactions while enhancing value in brands.
In my mind, the two keys to success in this new economy.