Some interesting data from Gartner surfaced on my desk the other day. As I read through it, I felt that it was important to continue the discussion on some of the key things retailers should be aware of as we quickly approach the beginning of Q4.
I’ll probably sound like a broken record in saying that consumers are shopping in ways they never have before and across multiple channels. The proliferation of mobile devices and the availability of product and price information make it increasingly challenging for retailers to compete. “You are only as good as today”, as harsh of a statement as that is, it definitely resounded with me when I was a buyer. It’s definitely not as harsh as it sounds, but it explains that retailing is dynamic and one can confidently argue that choices in where and when to buy, make it harder and harder for retailers to retain loyal consumers.
Figure 1 below paints a picture of the percentage of consumers who shop in both a bricks and mortar type environment and in an online environment. Note that about three quarters of all respondents aged 18-54, say they shop across the various channels. Table 1 emphasizes the factors that persuade consumers to make a purchase in one outlet versus another. Price and availability are the decisive factors by a clear margin. This is not incredibly shocking, but what does this actually mean for retailers? In my opinion, it boils down to three key considerations.
1. Recognize and act on in-store and online pricing discrepancies. Often there are major discrepancies between inline and online pricing for the same item that discourage consumers and ultimately discredit an organization. There is a convenience to shopping online and there are freight and vendor-related costs that often make it fair to have a discrepancy. However, it’s extremely important for organizations to develop an internal strategy to combat massive discrepancies. This is especially important for large organizations where the online and in-store teams have their own distinct buying groups. Often suppliers neglect the online buying teams due to the smaller quantities they purchase. Ensure suppliers are treating both teams as one company and that the cost given to your online groups make sense. If it becomes cost prohibitive to carry a product online (or in-store for that matter), it’s often best to cut ties and not carry it.
2. Leverage the strengths of each shopping channel. As a consumer electronics buyer for the bricks and mortar side of the business, I saw firsthand how difficult it could be to ensure inventory levels were kept in check, especially during the hectic holiday seasons. This was especially hard due to the floor space limitation at the store level, often limiting how much product that could come in at any one time. Store management and buying can work cohesively to keep the consumer from going elsewhere to pick up available product. If the product is out of stock in-store but there is ample inventory online, it can be advantageous to communicate this to in-store personnel and encourage consumers to go online. Programs can also be put in place to incent customers in situations like this (i.e. free shipping or free pickup in store). Conversely, the online environment can be used to drive traffic in store for key products and services carried in-store and not online. It is equally as important to provide consumers with an appropriate after-sale environment. This is another side of the business that should not be ignored (i.e. purchase a product online and return it with no hassle to your local store).
Consumers are browsing multiple channels more than ever, so the short of it is that retailers must be increasingly creative in order to convert the customer. The last thing you want is consumers going to your store and online and not converting at all! Don’t let one channel in your organization be a showroom for the other and fail to convert on the sale. Leverage each channel effectively.
3. Promote the use of a price intelligence solution. Reliable and accurate price intelligence data provides merchandisers and pricing teams with the tools to plan and react to competitive trends and pick up business from their competition. Look for a price intelligence solution provider (like 360pi) that offers near real-time price, as well as availability and shipping price information. This will not only help execute the considerations discussed in points 2 and 3, but will allow your organization to be extremely nimble when it comes to trying to convert consumers. Afterall, with Black Friday approaching, strategies may need to be revised daily due to the ever-changing landscape and competitive offerings. Be ready!
It is my firm belief that merchandising teams must work with various groups in the organization to create a plan that maximizes conversion and sales. With Q4 on our doorsteps, price-sensitive industries such as consumer electronics and hardware may heat up more than others, but Gartner’s research reminds us that shopping habits are changing and retailers need to constantly be aware of how they are going to address this. Choice can be good for those who are taking action to address the landscape. Those who take action will thrive.