Consumer Study: 63% Of Online Shoppers Expect Three-Day Delivery As Standard

Shoppers are looking beyond cost when making e-Commerce purchasing decisions, according to the 2018 Consumer Trends Report from Kibo. While price is still the most important factor for 61% of shoppers, its share has fallen from 70% in 2017. At the same time, a small but growing portion of shoppers rate other factors as more important:

  • Speed of fulfillment (8%, up from 2%);
  • Online shopping experience: (8%, up from 4%); and
  • Variety of fulfillment options: (7%, up from 4%).

Flexibility and speed are particularly important purchase influencers: 40% of shoppers say taking more than two days for delivery would prevent them from making a purchase, while 63% expect delivery within three days as the standard. Making a variety of delivery options visible early in the shopper journey also is important: 76% of shoppers say having multiple fulfillment options influences their purchasing decision, up from 64% in 2017. The findings are similar to the results of the Retail TouchPoints 2018 Last Mile Survey, which reported that 65% of consumers want greater shipment flexibility and 61% want faster deliveries.

“What we’ve been seeing is a shift towards convenience and a shift towards the experience portion of the buying cycle,” said Tushar Patel, CMO at Kibo in an interview with Retail TouchPoints. “As a consumer, the importance of the experience with my retailer, the experience I have online and the experience of receiving my items have gone up compared to price being the major factor.”

Usage of buy online, pick up in-store (BOPIS) services remains strong, and more than 66% of shoppers have chosen this option in the past six months. Avoidance of shipping fees is the most common reason, cited by 86% of shoppers, up from 79% in 2017. Other top reasons include:

  • Flexible pick-up times (85%, up from 78%);
  • The ability to touch and try merchandise (77%, up from 68%); and
  • Saving time at the store (76%, up from 71%).

When Shoppers Have A Product In Mind, They Visit Retailer Sites First

The most popular first stops for customers still researching brands or products are either a search engine (69%) or Amazon (61%). However, when a shopper knows what product and brand they want, 65% prefer going directly to a retailer’s web site. Other common destinations include:

  • A major retail store (47%);
  • A branded manufacturer’s web site (31%); and
  • An online marketplace (27%).

 

In comparison, when a shopper has a product in mind, but not a brand, their preferred channels are:

 

  • A retailer’s web site (66%);
  • A major retail store (41%);
  • An online marketplace (26%); and
  • A branded manufacturer’s web site (25%).

 

Retailers can use search engine optimization (SEO) to attract consumers to their web sites, but more work is needed to turn those visits into purchases. Approximately 87% of shoppers are influenced by peer reviews, and 91% have relied on reviews to make a purchasing decision in the past six months.

 

While 74% of shoppers are still somewhat, very or extremely influenced by interactive content that informs them about a product, that total is down from 92% in 2017. However, this doesn’t mean interactive content is becoming less important; rather, it indicates that shoppers need information to be tailored to them to drive engagement.

 

“When you’re catering to an individual’s intent and behaviors and their preferences, that’s when you’re really going to get the engagement,” said Patel. “What we’ve seen for retailers, and manufacturers as well, is when they’re driving individualized interactive content, that’s when you can get the most bang for your buck.”

 

Home Page Personalization Influences 63% Of Shoppers

 

Personalization can have a significant impact on purchasing decisions, but the most effective methods are changing. Approximately 63% of shoppers have been influenced by personalized recommendations on a homepage, down from 88% in 2017, while 50% of shoppers have been influenced by shopping cart recommendations, down from 93%. The influence of personalization is rapidly growing on the product page itself: 64% of consumers are influenced by recommendations there, up from 19% in 2017.

 

These results imply that many shoppers already know what they want by the time they visit a retailer’s web site and are skipping directly to the purchase. Retailers must make sure the checkout process remains simple even as they add personalization at the tail end of the buying journey: 78% of consumers say a simple, streamlined shopping cart influences their completion of a purchase.

 

“If you see what’s happening with mobile, see what’s happening with voice-enabled devices, experience is key,” said Patel. “No one buys on Alexa because it’s necessarily a cheaper way of doing it, but because the experience of buying is frictionless. Consumers are going to go towards the most friction-free way to shop whenever they’re given the option.”

 

Gen X Leads In Grocery Spending, But Millennial Families Are Catching Up

Although Millennials are making the shift into marriage and child-bearing later in life than the generations that preceded them, they are increasing their grocery spending significantly as they form families. Millennial parents report spending an average of $360 per month on groceries, 47% more than Millennials without children, who spend an average of $245 monthly.

These are some of the findings from the 14th Edition of The Why? Behind The Buy, an annual report on the buying patterns and behaviors of grocery shoppers from CPG-focused sales and marketing firm Acosta.

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The Missing Link In Personalization: Only 13% Of Retailers Identify Most Profitable Shoppers

While as many as 77% of retailers say they have an established process to identify their most loyal customers, only 13% say they can accurately identify those that are most profitable, according to the BRP 2018 Customer Loyalty Special Report. Up to 39% of retailersdo have processes in place to identify profitable customers, but admit that their efforts still need improvement. Another 27% project that they will be able to identify these shoppers within three years.

Retailers that want to maximize customer profitability as well as loyalty are leveraging personalization efforts across a number of different areas:

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Want To Reach Gen Z? Learn To Speak ‘Phygital’

Q&A with Ken Hughes, Shopper Behaviouralist and Keynote Speaker

In this Q&A, Shopper Behaviouralist Ken Hughes shares his unique insights on the future of retail and the importance of embracing the next generation of shoppers and members of the workforce. Hughes will be delivering Keynote and Creativity sessions during the Retail Innovation Conference, April 30-May 2 in New York City.

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CCSeries Webinars: Perfecting Every Point Of Contact

Even as points of customer contact multiply, retailers are tasked with making the most of every interaction along the shopper journey. The 2018 Connected Consumer webinar series from Retail TouchPoints highlighted innovative solutions and strategies for maximizing each contact point with a retailers’ customer target groups. Following are brief recaps of the seven webinars in the #CCSeries, which are now available on-demand.

4 Email Marketing Strategies That Create Relevant Experiences

Greg Zakowicz, Senior Commerce Marketing Analyst at Oracle + Bronto, kicked off the Connected Consumer series with the webinar, titled: Increased Expectations Means Better Email Marketing: Are You Prepared?

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The Real Retail Shakeup: A Split Between Value And Experience

The media may be quick to proclaim retail doom, but the industry’s upheaval is more of a renaissance than an apocalypse, according to The Great Retail Bifurcation report from Deloitte. Weakness in some areas is being offset by strength in others, and in-store sales grew $30 billion annually between 2012 and 2016, while e-Commerce sales grew $40 billion annually.

The industry’s real split isn’t between physical and digital channels but between value– and experience-focused retailers. Macroeconomic factors are playing a significant role in creating this divide. While average household income has returned to pre-recession levels, the bottom 80% of households have only received 7% of capital gains since 2007, and their shopping habits have changed to reflect their reduced spending power.

“What we’ve identified are pretty significant changes that are driven by the economic situation of the consumer,” said Kasey Lobaugh, Chief Innovation Officer, Retail & Distribution at Deloitte in an interview with Retail TouchPoints. “The best retailers are those retailers that identify how consumers are changing, and best modify their value propositions to deliver upon those needs.”

Balanced retailers, which offer value through sales and deals, have been squeezed on one side by price-based retailers that focus on selling at the lowest possible prices, and on the other side by premier retailers offering highly differentiated products or experiences. Revenue increased 81% at premier and 37% at price-based retailers over the past five years, while balanced retailers only saw a 1% increase.

Store Openings Greatly Outpace Closures

Store closings among balanced retailers are driving the apocalyptic narrative, but they fail to tell the whole story. A representative sample studied by Deloitte found balanced retailers shuttered a net 108 stores between 2015 and 2017, but price-based retailers opened a net 264 locations during the same period and premier retailers added 109 net openings to the total.

The rapid expansion of price-based retailers comes despite relatively little investment in technology on their part, according to Lobaugh. They find success in their ability to adapt to customer trends by delivering on value, often at the expense of providing a significant digital presence, particularly in mobile.

“At the end of the day, what matters is the consumer’s desires, demands, wants and needs,” said Lobaugh. “If you can understand and respond to those, that’s the secret sauce, and it may or may not involve technology.”

Millennials Aren’t As E-Commerce Obsessed As Believed

It’s true that there is a divide between shoppers who prefer e-Commerce or brick-and-mortar, but the preferences fall along economic rather than generational lines. Approximately three out of five low-income shoppers (58%) prefer browsing in-store, while a slight majority of high-income shoppers (52%) skew towards buying online.

The trend holds across generations, including Millennials. While 79% of low-income and 81% of middle-income Millennials are likely to shop in stores — similar to other generations — high-income Millennials are 24% less likely than all non-Millennial shoppers to shop in a store. High-income Millennials account for just 19% of the generation, but their exaggerated behavior skews the perception of the entire cohort.

“When you begin to tease it apart and look at it in a more granular way you discover some really interesting behaviors, demands and needs,” Lobaugh said. “For us this is a big ‘a-ha’ moment, because what we’re seeing is retailers have to be more and more granular about truly understanding the consumer, what they need and how they need to deliver it. The more we average things together and talk about the consumer or the Millennial consumer, the more we miss out on these unique insights.”

Lobaugh will speak at the Retail TouchPoints Retail Innovation Conference, expanding on his findings in a keynote entitled The Factors Fueling The Great Retail Bifurcation. The event will be take place April 30 to May 2 at Convene in New York City.

Shoptalk 2018 Secures Its Spot As A Must-Attend Retail Event

The impressive marketing and branding efforts have catapulted Shoptalk to the top of the events-on-your-radar list for retailers and brands, but the 2018 speaker lineup and massive 1:1 meeting setup has cemented the conference as one of the top “big” retail events-to-attend.

As press attendees, it honestly was difficult to decide which sessions to cover and which meetings to schedule. Here’s a wrap-up of our key takeaways, in addition to the Quick Quotes article we shared last week:

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Can The Toys ‘R’ Us Troubles Teach Valuable Lessons To Other Retailers?

Toys ‘R’ Us appears to be headed for chainwide store closures and liquidation in both the U.S. and the UK, where the retailer operates approximately 100 stores, according to a BBC News report. However, CNBC reports that the retailer is exploring a plan that would keep approximately 200 of its 800 U.S. stores open, in part by combining the stores with stronger Canadian operations.

The demise (or the drastic slimming down) of this once-iconic chain raises urgent questions for other retailers seeking to avoid its fate:

How ‘special’ does a specialty retailer have to be? The merchandise at Toys ‘R’ Us is highly brand-driven, but consumers have numerous other places to buy these items — from Amazon to big box stores like Target and Walmart. Toys ‘R’ Us lacked the hands-on experience of Build-A-Bear or the private label brand power of Lego, creating a differentiation problem in a highly competitive field.

Does the store experience match today’s taste for experiential retail? Just days after filing for bankruptcy in September 2017, Toys ‘R’ Us announced plans to launch “Play Labs” at 42 stores, providing spaces for kids to test out the season’s hottest toys. Such investments can keep customers in stores longer and add value to purchases, but the move was arguably too little, too late.

Is the company carrying too much debt for a slow-growth economy? Some analysts believe Toys ‘R’ Us would have had a fighting chance to emerge from bankruptcy but the significant debt it carried was too heavy a weight to overcome. “Toys ‘R’ Us is going under for one reason only: KKR leveraged them with over $7B in debt for expansion even in spite of increased competition from Walmart, Amazon, Target and others,” wrote Greg Buzek, Principal Analyst, IHL Group in a March 13 blog post. “It was not the market dynamics that took these companies over, it was the fact that their owners took on so much debt that it positioned them to only be successful if all the market dynamics went their way.”

Is Private Equity To Blame?

It’s undeniable that Toys ‘R’ Us has been under a heavy debt burden since its $6.6. billion joint acquisition in 2005 by private equity firms KKR and Bain Capital and Vornado Realty Trust. Ignoring the impact of this debt plays into a false “Retail Apocalypse” narrative, according to Buzek: “Here is the reality. Retail sales in the U.S. were up over $232B in 2017. To put that in perspective, we added the equivalent of the annual retail sales of South Korea, the fourth largest retail economy in Asia! Or the entire GDP of Finland. But when you are positioned to only succeed in conditions better than this, it’s not the market that is the issue.”

Did Toys ‘R’ Us Miss The Experience Opportunity? 

Some industry experts point to a store experience at Toys ‘R’ Us that wasn’t keeping up with the trend toward experiential retail. “As a shopper and the mother of a 10-year-old, I can say that visiting a Toys ‘R’ Us wasn’t fun,” said Laura Davis-Taylor, Co-Founder, HighStreet Collective in an interview with Retail TouchPoints. “The toys are sealed up in plastic and there are no real play areas.”

Toys ‘R’ Us was caught in the middle between the low price/low experience and high price/high experience ends of the spectrum, Davis-Taylor said. That made them susceptible to competition from Amazon. “People can buy something off of Amazon without a thought, so there’s no reason to come into the store and pay $5 more for it,” she said. “There’s not even the need to try on a pair of jeans, as there is at an apparel retailer. People know they’re going to get a Furby when they order it online, they don’t need to see the box.”

The retailer’s moves to invest in its stores represent too little, too late, said Davis-Taylor. “Target is investing in the billions to upgrade their store experience, and they understand the unique points of differentiation they have,” she said. “People like to go to a store where everyone who is on the trip can get something for them. It’s what I call the ‘pester’ effect when you’re shopping with kids.”

Wider Business Effects Of The Toys ‘R’ Us Downfall

Retailers will not be the only business segment affected by the shrinking or disappearance of the chain. Shares of toy manufacturers Hasbro and Mattel have fallen following reports about the retailer’s liquidation plans. Toys ‘R’ Us accounted for 15% to 20% of U.S. toy sales last year, according to Jefferies analyst Stephanie Wissink, reported CNBC.

High levels of debt are troubling a number of retailers, according to Moody’s Investor Service. The firm is calling for retail defaults to reach a rate of 12.4% by the end of March, which would represent a new high, according to CNBC. In comparison, the rate of defaults for the previous 12 months is approximately 6.3%.

Moody’s expects maturities to spike next year, with many significant debts coming due. In 2019, $5.9 billion in retail debut will mature, with the majority coming from five companies: Sears Holdings, Neiman Marcus, Claire’s Stores, Bi-Lo Holding Finance and Guitar Center.

The Death Of Boring Retail: Exclusive Q&A With Steve Dennis

SteveDennis SageberryConsultingIn this exclusive Q&A, industry expert Steve Dennis shares his predictions and recommendations for retailers struggling to find the best ways to survive and thrive in the age of Amazon. Dennis is the President of SageBerry Consulting, a strategic advisory firm focused on innovation and growth strategy for retail, luxury and social impact brands.

Dennis will be speaking at the Retail Innovation Conference, April 30-May 2 in New York City. His session is titled: A Really Bad Time To Be Boring: Reinventing Retail In The Age Of Amazon.

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How Will Gen Z Reshape Retail?

Given that the oldest members of Gen Z are just now reaching college graduation age (and the youngest are still finger-painting in kindergarten), it’s difficult to draw accurate conclusions about what this group’s ultimate impact on retail will be. Still, researchers and industry analysts have made predictions about Gen Z that have many retailers concerned about the fallout when these consumers start spending their own money, rather than their parents’:

• Will anything draw these digital natives into brick-and-mortar stores, or will they rely almost exclusively on mobile and voice shopping?

• Will Gen Z consumers follow in Millennials’ footsteps, spending their disposable income on experiences rather than possessions?

• How will retailers meet the needs of this informed and savvy group of shoppers?

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