People still prefer to make purchases in real (rather than virtual) stores, shopping for many is both a family ritual and a way to defuse oneself, relieve negative emotions or stress, have a good time, choose the new things for oneself or a gift for one’s loved ones to man. That is, a shopping trip is not only necessary, but also a pleasant thing. Therefore, in the usual form for us, stores will exist for at least the next several decades. Such conclusions were made by PwC experts during the global study “Total Sales” conducted in the fall of 2014 in the 19 countries of the world, including Russia. The aim of the study was to find out the mood of consumers, their addictions, requirements and wishes, and formulate conclusions and practical recommendations to retailers on the basis of all this.
In fact, everything goes for traditional retail is not so bad as it is predicted. It turned out, for example, that there are only two reasons why consumers shop online and that are not applicable to traditional stores: the ability to shop around the clock, 7 days a week, 365 days a year, and the lack of the need to go to the store. All other benefits of online trading can provide offline retail. Conventional stores, on the other hand, have three advantages that online stores cannot provide for objective reasons. They sound something like this: “I can see, touch and try on the goods”, “I can receive the goods immediately” and “I am more confident that the goods suit me.” Of course, their meaning varies, depending on the category of the product: rather, it is important for clothes and shoes, and not for books and toys. Some online retailers are trying to work in this direction, using some of the advantages of conventional stores in their work. So, the Lamoda Internet network delivers goods to your home and gives 15 customers minutes to try on. Any online store can organize express delivery, but for this it must have the necessary infrastructure. In general, one of the biggest drawbacks of making purchases in the online store is that in reality this process is not as fast as it seems. Understanding the reasons consumers are transitioning to online shopping will help retailers optimize their strategy. Let's sort them in order.
Expand Your Regional Network Reasonably
For Russians, a significant advantage of the online store, for example, is the “lack of the need to go to the store,” that is, the transportation problems of large cities and long distances in rural areas contribute to the development of online retail in Russia. Therefore, the retailer must understand to what extent it is necessary to pursue a policy of further expanding its physical retail network, instead of striving to ensure that certain regions are exclusively covered by the Internet channel. IKEA chose this path in Russia, having opened an online store aimed at the Far East, where the lowest population density in our country, and where the Swedish company is not present in the form of traditional stores.
On the other hand, a physical presence in a particular region almost always has a positive effect on the total sales of a particular retailer. According to a PwC survey, 28% of respondents would be more likely to make purchases via the Internet if a particular retail chain were present in their city in the form of traditional stores, while 24% said that they would buy on the Internet less often by going to the traditional sales channel. Obviously, the multichannel model creates a synergistic effect, forcing people to make more purchases both online and offline. “Rather, online sales complement the traditional sales channel, rather than crowd out it,” retailers say. The benefits of being online cannot be measured only by the volume of online sales, it has great potential for increasing sales in traditional stores. Very often people make a preliminary choice using the Internet, but then they go to a regular store.
Consider consumer stereotypes in your work
Another factor that retailers should consider is the required level of service in traditional stores. Online stores love because they are “open” 24 hours a day, without days off and holidays. Therefore, the question is: is it really necessary to maintain the long hours of operation of a regular store, or is it better to optimize them by reducing costs and redirecting the flow of customers during non-working hours on the Internet?
On the Internet you can find goods that for some reason are not represented in the physical store - this stereotype has already developed among consumers, and indeed - many retailers on the Web have a wider assortment, a number of positions are available only on the Internet. Thus, it is possible to further optimize inventory in stores by offering “long tail” products exclusively through the Internet.
Another stereotype that lives in the minds of consumers - the Internet is always cheaper. This does not always happen, but, nevertheless, more than half (58%) of Russians visiting the pages of online stores think of “lower prices”. This factor must also be taken into account, but more on that below.
Provide the buyer with the opportunity to quickly select goods
Experts asked customers what, in their opinion, the technologies used in the trading floor could make the shopping process easier and more enjoyable. Most Russian respondents indicated “the ability to quickly check the availability of the right product in another store in the network or in its online store” (44%). According to Yana Sachkova, director of Ile de Beaute’s online store and digital marketing, there are two options for effectively implementing the service in practice: sending customers to the nearest store where the goods they need are available, or an option to place an order and then pick it up goods in the same or another store network at a convenient time. Most retailers consider the availability of goods a very useful service, the technology is beneficial to retailers, as it allows you to save customers in the absence of some goods in a particular store. According to Olga Turishcheva, Marketing and E-Commerce Director of M.Video, buyers have the opportunity to not only check the availability of goods in other stores, but also to compare prices. The company is implementing a pilot project in Yekaterinburg, where sellers using tablets can at any time compare prices and adjust them if necessary. As a result, fewer visitors leave in search of a better bargain. This is one of the methods to increase the conversion rate (the ratio of the purchasers to the number of all store visitors).
Wi-Fi - to every trading floor
In second place among the technologies that the shop should be equipped with for customers - wireless Internet. The presence of wi-fi in the trading floor can make shopping more attractive, according to 31% of respondents. According to retailers working in the perfumery and cosmetics segment, wi-fi is an indispensable attribute for them, the technology not only improves the customers ’buying experience, but also provides an excellent marketing tool for the retailer and increases the level of service in stores. Of course, many visitors to stores and shopping centers have the opportunity to access the Internet using 3G technology, but still the retail should consider providing wi-fi access in their sales rooms.
Yourself a cashier
Buyers are often in a hurry and do not want to spend time queuing at the cash register, so self-payment was in third place in demand. This is a good service for those in a hurry and those who don’t really want to communicate with the store staff, retailers say. First of all, such a service would be in demand in stores with a large flow - in supermarkets (and in some places it already exists), large single-brand stores of shoes, clothes and accessories, and would also be useful to those who want to distinguish themselves from competitors by the quality of service.
Of the other technologies that, according to customers, it would be worthwhile to equip trading floors — the ability to pay for purchases using a mobile phone or using the store’s application, sales staff’s tablets to display alternative offers, video screens showing selected or available products, and mirrors to make photo and share it with your friends.
Challenges for Stores
According to John Kalinich, senior vice president of multi-channel trading and e-commerce at Deckers Brands (Ugg, Teva shoe brands), one of the main challenges of offline stores is that tech-savvy and well-informed shoppers just don't have to walk a lot shopping. This loss of traffic means fewer opportunities for unplanned, spontaneous purchases. Customers are increasingly coming to the store for a specific purpose and are less likely to make spontaneous purchases. “The days are gone when shoppers wandered around without firm intention to buy something and, suddenly discovering something attractive, made spontaneous purchases,” he said.
Another problem is pricing: prices in ordinary stores should be the same as in online stores, which means the retailer does not receive any profit. Increasing transparency of pricing contributes to a further decrease in prices among competitors, therefore, there is less revenue per 1 sq. meter of retail space and a smaller margin in this revenue, the profitability of the store is falling, which forces to optimize the retail space of stores and develop new formats. The format of retail stores is changing: they are becoming experimental sites for both online purchases and purchases through other sales channels.
Showroom vs. Webrooming
The tactics of "showrooming" are very effective - when a regular store is used as a showroom, where you can touch and touch the goods, then buy them in an online store. To the question “Have you ever looked for a product in a regular store, but then decided to buy it on the Internet?” 68% of respondents answered positively. But the same number (70%) stated that they acted exactly the opposite: they chose products on the Internet, and purchased them in a regular store, following the tactics of “web roaming”. 80% of Russians surveyed at least once made a purchase in an online store after choosing a product in a regular store. Among the factors influencing the decision to look after a product first in a store and then buy it via the Internet is the best price on the Internet; the opportunity to see, touch or try on a product; the convenience of receiving the goods right at home, and not in the store; lack of goods in stock at the store; recommendations and advice of sales staff. For such fans of online trading in the trading floor, you can make "virtual shelves", which will showcase the goods presented in the online store. Or you can install terminals through which you can immediately place an order.
At the same time, among the reasons that determine the model of behavior “choice on the Internet, buying - in the store” - the need to see the goods, touch or try on; the ability to immediately pick up the goods, without waiting for delivery; lack of shipping fees; product reviews on the Internet; the ability to compare competitor prices; lack of necessary goods on the Internet; best price in store. To attract a large share of buyers, online retailers could offer fast or free delivery. As for the “reading reviews”, it turns out that the Internet has a significant impact on both online sales and traditional ones, and Russian retailers need to understand exactly how this affects their business, which means they will have to work with social networks, bloggers and forums (For more details, see our article “SMM in the promotion of shoe brands” in the “Your Business” section, under the heading “Promotion”) Large networks are actively working in this direction, motivating people to post reviews on their websites. At the same time, one must understand: it does not matter what kind of feedback a buyer leaves - good or bad, because in the first case he will attract new customers, and in the second it will be an opportunity to improve work and service.
An interesting detail: people who have experience in choosing a product in an ordinary store and buying it on the Internet are more likely to shop in foreign online stores (about a quarter of all orders made by Russian buyers). This indicates serious competition in the e-commerce market, although the weakening ruble made the foreign offer less attractive. Nevertheless, domestic retailers must take into account the factor of cross-border competition, one of the means of successful struggle here is the effective use of the advantages of geographical proximity to customers.
As you can see, buyers “go” to the Internet primarily in search of better offers and promotions (this is the first reason - the best price), these are people who purposefully go to different stores, shopping at prices in search of a better purchase. Therefore, the only strategy that will work in a multi-channel world will be the policy of equal prices across all sales channels. The most advanced retailers have already realized this. “In our online store and ordinary stores the same prices are set. We believe that only a multi-channel model, which involves the effective use of physical distribution to support the work of both traditional and online stores, can bring success. And the buyer gets the same impression regardless of the choice of the sales channel: he has access to the entire assortment of goods at the same prices, and he sees uniform events (promotions) for the promotion of goods, ”commented Olga Turishcheva. Sellers must ensure that customers can use various channels throughout the entire cycle of their interaction with the product or brand.
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