In-store analytics and digital disruptors

This month PwC’s annual retail report came out, titled: ‘the age of disruption’. The number one disruptor? The changing role of the store. Even though, the physical store will continue to serve a function retailers need to innovate and offer ‘unique, brand-defining experiences.’ Other disrupters include the rise of mobile and increased use of social media. What do these disrupters mean for physical stores and how can in-store analytics and retail analytics help retailers cope with and even gain from these disruptions?

The increase of smartphone usage means customers have the power to instantly compare the products they see in store with online offers and they have sometimes conducted research before coming into the store. ‘One major challenge of the physical store is that technologically enabled and empowered consumers simply don’t need to browse as much at the store. That loss of foot traffic means fewer opportunities for impulse buys’ (PwC).

 “Digital has really disrupted this business tremendously as shoppers are more purposeful than ever with less impulsive purchasing. They do not go out to just window shop because smart phones have enabled them to find exactly what they are looking to purchase. Gone are the days of window shopping discovery that resulted in impulse buys.” John Kalinich, SVP of omnichannel at Deckers

To tackle the issue of customers that go straight to their destination, it’s essential to understand how shoppers use your space.  Two key things to understand are coverage and the customer journey. To what extent do shoppers use the full space of your store? And do they walk the way your store was designed to? (see our previous post). Through experimentation retailers will be able to increase coverage, optimize the customer flow and find the perfect spot for placing impulse buys. Because even if a shopper knows what she wants, she’ll always have to cross certain paths. And don’t forget that the ability of customers to be able to browse online is very powerful; the PwC study found that 70% of respondents has done ‘reverse window shopping’, meaning they browsed online and then went to the store. So, even though these customers know what they want and might immediately go to that item, they possibly would have never visited the store in the first place if they hadn’t seen it on the web.

Another way in which the physical store can complement the online store is by offering options such as click-and-collect or returns in the store, the latter is considered one of the most important return options by customers. In these cases, however, the shopper is even more goal-oriented and conversion rate amongst these shoppers might be low. There’s no (public) research available to see whether it’s in fact the case, so it’d be interesting to use retail analytics to see if it is actually true that shoppers who come to the store to pick up or return their online purchases buy less.  Even if it turns out that these shoppers buy less, going into the store will likely make consumers buy more, be it online. Given that the retailer understands that today’s stores revolve around offering shoppers an experience. The positive experience and association the shopper gains with the brand through the store are valuable and difficult to replicate online.

It’s crucial that retailers adapt and innovate, but is there any reason for immediate panic? The top 3 reasons why customers prefer to shop in physical stores cannot be replicated online (in the foreseeable future). They include the ability to touch and see the product and the ability to get the product immediately. Thus, the physical store will certainly not become completely obsolete, but brands that fail to innovate might be forced to close down some of their locations or reduce the space of their stores. Offering great experiences and making smart use of data and new technologies will help prevent this and make you thrive, instead of survive.