Consumers favour omnichannel options

November 3, 2017
by Emily Atkins

(Photo: Georgijevic; iStockimages.com)

Retail is facing unprecedented challenges. While brick-and-mortar stores remain popular for consumers in today’s unified commerce environment, online options are drawing traffic away from the store.

In a recent consumer survey conducted by JDA Software Group, Inc. about 54 percent of respondents reported they prefer to shop in store over other channels, like online, mobile and social media, but the other half—46 percent—prefer to skip the store altogether in favour of digital channels.

For the grocery sector, 99 percent of adults prefer to buy at least some of their groceries in person, according to The State of Grocery Shopping, a separate survey commissioned by the International Council of Shopping Centers (ICSC).

Together, the two recently released surveys demonstrate that omnichannel strategies are becoming increasingly important for retail survival.

JDA’s survey confirms that services promoting convenience will be crucial in maintaining brick-and-mortar shopping. For instance, a quick and easy shopping experience was favoured over a personalized experience by three in four respondents, and year-over-year data showed a steady 44 percent increase in convenient buy-online, pickup-in-store (BOPIS) adoption since 2015.

“Our 2017 Consumer Survey highlights the changing role of retail stores,” said Jim Prewitt, vice president of retail industry strategy at JDA. “While there has been speculation of a ‘retail apocalypse,’ that doesn’t seem to hold true for consumers. No longer the only channel for shopping, brick-and-mortar stores are still a key cornerstone for a quick and easy shopping experience and the facilitator for popular fulfillment options, like BOPIS and buy-online, return-in-store (BORIS).”

“The grocery sector remains relatively unimpacted by the growth in e-commerce sales,” said Tom McGee, president and CEO of ICSC. “Consumers are heavily invested in the types of food they purchase and they want to be able to select the best and the freshest to take home.”

Is BOPIS a cure for the store?

According to the JDA survey, half of respondents used BOPIS services in the last 12 months, a 44 percent increase since JDA’s 2105 survey. By offering incentives, however, that uptick could rise significantly; 80 percent of shoppers would consider using the service if retailers offered price discounts or incentives. This would in turn add value to the consumer shopping experience, while pushing retailers to differentiate themselves among competitors through special offers.

“While some retailers are already testing out ways to incentivize consumers to choose BOPIS services over home delivery, our research found that this could be a successful way to capture shopper attention in today’s competitive marketplace and further validate the role that BOPIS will play in the success of retail stores,” said Prewitt.

“By offering incentives to shoppers to use BOPIS, like discounting, retailers are driving more foot traffic into stores, and potentially, buying more than they intended to, once they arrive at the store, boosting store sales.”

There is also a strong generational divide in shopping preferences. The ICSC study showed that millennial shoppers demonstrate distinct behaviours. For example, nearly one out of four millennials (23 percent) shops three or more times a week for groceries, and even when ordering online, 81 percent of millennials go to the store to pick up their grocery order.

“Millennials have been called the foodie generation and blend that with their command of technology and we see some changes in grocery purchasing behaviors, which will drive all grocery retailers to make appropriate modifications in their business model to address the way they shop,” McGee said.

In addition to leveraging existing store inventory and streamlining shipping, BOPIS provides another sales conversion opportunity for retailers. Of the JDA respondents that use BOPIS services, 40 percent “sometimes” made additional purchases in-store.

Of course, BOPIS adoption remains tied to consumers’ desire for convenience. Of the respondents who have used BOPIS services, avoiding home delivery (39.61 percent) and wanting the product sooner (33.14 percent) remain the top reasons for selecting the fulfillment option.

On the grocery side, ICSC found that nearly three out of four consumers make purchases online (74 percent) and then pick up their order in store. Only one percent of consumers solely buy their groceries online and never go into a store to buy groceries. More than four out of ten (44 percent) have their grocery purchases delivered to their home and over one-third (36 percent) have items shipped by mail or courier service to their home. Fifty-four percent of the high-end supermarket shoppers who buy online have the retailer deliver the groceries to their homes—the highest of any type of online grocery shopper.

Service is key

Issues with BOPIS services continue to be associated with mismanaged staffing. In the JDA survey 23 percent found that store staff took a long time or were unable to find the shopper’s order in their store system, and 16 percent found there were no dedicated staff in store for BOPIS purchases. This shows the need to refine workforce management to make new fulfillment channels competitive.

Returns also drive consumers into stores

When it comes to returning items bought online, having to pay for return postage and packaging continues to be the biggest frustration for consumers. Nearly one in three shoppers has leveraged buy online return in store (BORIS) services this year, up from only 20 percent in 2016.

Almost half of respondents (44 percent) used BORIS services because an item purchased online was not what they expected it to be; this is up by over 10 percent from 2016. Over 30 percent used BORIS services because they did not want to deal with the hassle of return deliveries, and almost one in five respondents (17 percent) believed they would receive their refund/exchange faster.

Methodology

JDA collected responses from 1,058 US-based consumers, 18 years and older, via a third-party provider to determine the findings of its 2017 Consumer Survey. Among those surveyed, 53 percent were female and median income was recorded between $50,000 and $74,999.

The ICSC State of Grocery Shopping survey was conducted online by Opinion Research Corporation on behalf of ICSC from August 21-23, 2017. The survey represents a demographically representative sample of 1,012 adults 18 years of age and older.