Online, Offline or Both, Shoppers Call the Shots 24/7

Unified Retail

No matter what you call the new kind of shopping—e-tailing, omnichannel, unified retail, O2O—consumers hold the power and are bending retail to their will. Adapting to that new reality is key to surviving and thriving. Here’s what to know.

Within the retail industry, we’re all focused on how to talk about the evolving nature of our business. You could boil it down to terminology: There’s brick-and-mortar which begat websites and e-commerce. Multi-channel followed and then omnichannel. Total retail, also known as unified retail, is the latest buzzword. The list goes on.

To consumers however, it’s all just plain “shopping.”

We retailers should keep that in mind.

Until recently, shopping was primarily a planned-out, “active” endeavor. The consumer went to a store, picked up the items he or she wanted, paid up front and took the goods home. As the e-commerce era dawned, the consumer sat down at a PC to shop a store’s website.

Today, active shopping still goes on, but it’s something we can squeeze into our lives almost any time we want. Waiting in the express line at the supermarket? You can buy that Lego set for your son’s birthday on your smartphone before the cashier starts ringing you up. Stuck in a long, boring meeting? Check out a new pair of boots on your laptop out of sight of the boss. Running low on laundry detergent? Just hit the Amazon Dash Button and more will arrive tomorrow.

Clearly, shopping has evolved for everyone. But there are differences—some small, some big—in how, where, and why we shop that cut across age, income, and lifestyle. Other differences have to do with product categories.

In our 2016 FTI Retail Outlook Report, we surveyed a sample of 1,500 U.S. adults in key demographic and income ranges to find out more about their shopping habits and preferences. The results read like an instruction manual into the 21st century consumer.

The Reality Gap

First, it should come as no surprise that everyone shops online. Our survey showed that 90% of respondents had logged on and made a purchase in the past three months. Of those, 54% bought using a mobile device.

But what may be surprising is the fact that in-store purchasing still predominates and is the preferred channel in most product categories—with a few exceptions. In apparel, footwear and accessories, for instance, 75-90% of consumers made a brick-and-mortar purchase during the last holiday season, with over 50% expressing a preference for in-store. A whopping 80-90% of consumers bought in-store in the appliance and furniture category, with 60-80% saying they prefer to make purchases that way.

Food and groceries hit the high mark with 100% of consumers making an in-store purchase during the holidays; over 85% prefer it that way. Only electronics, where 75% bought in-store, showed online preference (18%) that approached in-store (35%).

Channel Preference

Source: 2016 FTI Consulting survey of 1,500 consumers

The Generation Gap

Changes in consumer behavior follow generational patterns, with younger groups typically blazing new trails. So it is with millennials and shopping habits. This group, born between 1980 and the mid-1990s, lead the way in online purchasing across every category of goods. And they top all others in mobile buying, as well. They make a purchase three times more often by smartphone than Baby Boomers, for example—76% versus 24%, respectfully.

Nevertheless, you can still find millennials in brick-and-mortars. In fact, they prefer in-store buying across every product category—even more so than Baby Boomers.

But it’s important to note that millennials’ in-store shopping habits have changed compared with the young generations who blazed trails before. In the past, these shoppers would stroll the mall in groups and go from store to store—where they would try new retailers, brands, and products. This in turn led to impulse buying along with preplanned purchasing.

Today, shopping is still a social activity for millennials, but it’s often more of an offline-to-online experience. Friends text photos and opinions of the products they see or try on to each other before deciding whether to purchase—either on-the-spot or later online.

Millennials also seek a variety of viewpoints about their retail desires. For instance, 26% follow fashion bloggers online compared to a mere 3% of Boomers. They value online reviews (68% rate reviews as extremely/very important versus 55% among Boomers.) And, they access more sources for reviews—especially via social media such as Twitter and Instagram.

Buy In-Store

Source: 2016 FTI Consulting survey of 1,500 consumers

The Income Gap

With fatter wallets, we can expect affluent households ($100,000 plus yearly income) to exhibit some unique behaviors and attitudes about shopping. And they do. For one thing, they are more active online purchasers than less-affluent households—66% buy online at least once a month as compared to 58% of non-affluent households. Affluent households are also much more likely to go online to purchase apparel, footwear, and cosmetics and somewhat more likely to purchase electronics, furniture, foods, and groceries online.

But when it comes to household appliances, higher-earners do not buy online as frequently as less affluent. Why? It may be because of issues related to installation and servicing. They also buy jewelry less frequently online—most likely because they are willing to pay the higher price points of in-store or concerns about receiving authentic goods.

Interestingly, the affinity for online purchasing does not extend into mobile for affluent households. As it turns out, non-affluents are slightly more active smartphone buyers. But, the wealthier are more frequent cross-channel shoppers, that is, buying both in-store and online at higher rates.

Buy In-Store Online

Source: 2016 FTI Consulting survey of 1,500 consumers

Ready for the Future

Once, retailers set the pace on change within the industry and the consumer followed along. Those days are over. Now, consumers, largely empowered through digital tools, dictate change. But consumers are not all created equal in their habits, and, the product categories themselves are migrating from offline to online popularity at different rates.

Electronics, for example, as well as apparel and accessories, have become big online sellers and will likely remain so. Furniture and home appliances are still making the move. Food and groceries are largely unchanged.

Yet even within demographic and category trends, certain individual products just seem to lend themselves better to attracting online shoppers. These tend to be items that are easy to describe and are brand-familiar to consumers. Think of an UGG classic boot, a Sony 32” LED HDTV, a Gone With the Wind novel. Items that defy easy definition using brand names or otherwise, or require delivery, lag behind.

As the evolution continues to unfold, we retailers must focus our efforts on knowing our customers inside and out and give them every opportunity to get what they want when they want however they

want. With mall traffic down for the third year in a row and conversion of online flat to declining, it’s a must.

After all, consumers just want to shop.

© Copyright 2016. The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.
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