New physical locations are important because 42 percent of retailers surveyed say that faster delivery of online orders is their top customer-facing priority, according to a joint NRF/Forrester survey.
While this month’s closing of Toys R Us seems to offer more evidence of the “Retail Apocalypse,” the broader state of retail appears to be more complex, at least according to a survey by Forrester for the National Retail Federation.
The survey suggests some degree of optimism amid this period of upheaval for brick-and-mortar.
For one thing, while Bloomberg News’ story notes that 3,000 new retail locations were opened during the first three quarters of 2017, while 6,800 shops shuttered during that same time frame.
Perhaps the cup is looking a bit more than half-full this year, as the Forrester/NRF survey, which is primarily focused or larger national and regional brands, finds that 43 percent of brick-and-mortar brands expect a net increase in the number of bricks-and-mortar stores they operate by the end of 2018 compared with 2017. Only 16 percent expect a net reduction in physical locations.
New brick-and-mortar outlets are particularly key this year since 42 percent of retailers surveyed say that “faster delivery of online orders is their top customer-facing priority.” Many plan to use stores to achieve that goal.
In addition, 21 percent say “omnichannel services,” such as buy online, pick up in-store are taking precedence over other marketing issues. About 15 percent of survey respondents pointed to ship-from-store as a fulfillment priority.
“More brands plan to open stores versus close them this year, which proves that the physical retail store is not doomed as many think it is,” says Forrester VP and Principal Analyst Sucharita Kodali. “Smart retailers understand that the two go hand-in-hand, but customer-obsessed retailers will continue investing in areas like omnichannel to provide customers with the seamless on and offline experiences they expect and now require. This year’s survey proved that while they have work to do in 2018, retailers are moving in the right direction.”
Personalization Within Reach
In terms of the methodology, The State Of Retailing Online 2018 was fielded in October, November, and December 2017 and is based on 76 complete and partial responses from North American retailers.
As for the breakdown of the respondents, 83 percent of the participating companies were multichannel retailers, with 17 percent primarily online-based multichannel retailers (more than 50 percent of sales online) and 46 percent store-based multichannel retailers (more than 50 percent of sales from physical stores). Fourteen percent were pure-play retailers, and 11 percent were manufacturers selling direct to consumers; 39 percent of respondents generated $1 billion or more in annual sales in 2017, 70 percent generated more than $100 million, 13 percent generated $10 million to less than $100 million, and 8 percent generated less than $10 million.
Among the other topline findings of the survey:
- “Personalizing the shopping experience” is primary goal for 15 percent of store-based retailers.
- Technology for use by store associates to complete those “omnichannel” services was ranked most highly by 12 percent of survey participants. To support their store associates providing service to customers, 61 percent of retailers surveyed plan to spend more on employee training.
- 70 percent of retailers surveyed noted that online conversion rates – the number of people browsing an item online who actually follow through and make a purchase online – was up in 2017. Further good news: 62 percent said repeat customers were up and 57 percent said average order values had increased.
- Surprisingly, given the focus on mobile, on-the-go consumers, online sales coming from desktop computers are still double those of mobile browsers; that said, mobile purchases are growing 36 percent per year versus 8 percent on desktop.
- And just as apps like Instagram are expanding click-to-buy options, mobile app-based sales are growing at an annual rate of 16 percent; accordingly, 89 percent of retailers plan to increase investments in mobile initiatives.
Concentrate On Apps — And Improve SEO
For retailers looking for the right balance between the declining desktop and the rising spending driven by mobile, the report concludes that “apps are optional, but a strong desktop experience is not.”
“Mobile phones are ubiquitous within our lives, but mobile commerce hasn’t yet dominated all of e-commerce, much less all of retail,” writes Forrester’s Kodali. “This fact is even more pronounced for apps: With few exceptions, most shoppers simply don’t use them. Because desktop devices still dominate e-commerce transactions, retailers should not be distracted by mobile and instead must focus at least as much on traditional desktops as they do on phones.”
As for a list of “improvements” retailers want to make this year, SEO topped the list with 79 percent of respondents saying that is the most important they expect to enhance this year ahead of email marketing (68 percent), product detail page rebuilding (60 percent), and paid search marketing (53 percent).
At the bottom of that “store improvements” list is “free shipping,” which is a priority for only 32 percent of survey participants.
Retail Execs: Dubious On Digital, Yet Easily Distracted
The report also finds some retail executives still having difficulty on deciding what should be important — and what shouldn’t be.
For example, only “a few retailers” say they plan to invest in technologies like voice activated commerce and augmented reality this year. (And only 3 percent say they expect to put money behind beacons as 21 percent look to devote more resources to expanding the endless aisle concept.)
The report says many technologies are considered “speculative commerce investments that run the risk of becoming obsolete because the technology landscape is certain to evolve rapidly.”
At the same time, retailers have more fundamental challenges: For example, many have not yet implemented tried-and-true omnichannel capabilities like endless-aisle solutions, Kodali writes.
“Furthermore, many retailers are not well organized for digital success: 33 percent of the retailers surveyed said their company did not have a well-defined omnichannel fulfillment strategy in place, and 33 percent don’t have the right metrics in place to measure how effective their omnichannel experience strategy is,” Kodali says.
The report finds that many retail leaders remain unconvinced about the notion of “digital transformation.” In essence, there is wide understanding of the concept of digital transformation in retail, but there are too many that simply don’t accept the fundamental ways in which people discover and transact in a store.
While in some retail quarters, there is a lack of enthusiasm for embracing more digital tools, in other cases, Forrester finds, “bright, shiny objects” still entice and distract retail brand execs.
“Ensure first and foremost that you implement and effectively execute tried-and-true solutions like endless aisle and in-store pickup,”Kodali says. “Focus first on eliminating customer pain points and making the store associate more effective, and do not chase whatever is hot.
“Celebrate digital successes within your organization,” Kodali adds, “continue to educate top management regularly about consumer expectations, and spread the word throughout the organization about the benefits and wins that come with embracing digital solutions.”
By David Kaplan
