Report: Digital technology impacts 100% of retail

Bricks and mortar retailers are being urged to use digital technology to engage with their customers even if they don’t sell their products online.

New insights from Kantar Retail suggest that the total impact that digital technology has on retail is 100%, even though digital sales are less than 10% of total retail spend.

Traditional stores can take advantage of the effects that digital is having on shopping experiences by engaging with customers online and across multiple touchpoints in addition to traditional expertise and service levels to drive sales in the store.

Amid all the alarm surrounding “showrooming” – the trend of checking out a product in a store before finding it cheaper online – analysts from Kantar Retail have found that the process is more likely to work in reverse. Kantar says as customers scan the internet for reviews, information and price comparison they often then go to a store for expert advice and to buy the product.

Digital purchases only account for around 8% of retail sales in the US and UK – and are likely to grow to around 10% in the next few years – but studies show that 50% of purchases are influenced by online, with shoppers researching online before purchasing in-store.  

“Some retailers are concerned that people use their stores just to check out a product that they will later buy online. But one could argue that Amazon is the biggest showroom for bricks-and-mortar retailers,” notes Anne Zybowski, vice president at Kantar Retail.

The total “impact” of digital on retail is closer to 100% as shoppers’ expectations of shopping experiences are shaped by their time spent online. Smart retailers try to engage with their customers online, even if their online sales account for only a very small proportion of sales, and then use their expertise and superior customer service once the customer is in the store.

According to Kantar Retail, this “10:50:100” framework of digital – 10% sales, 50% influence, 100% impact – is resonating with retailers who had previously discounted the digital effect on their sales.

“Digital’s impact on retail is the new reality,” said Zybowski. “This past holiday season was evidence of how online retailing 24/7/365 is impacting the bricks and mortar world that we have traditionally understood so well.” She added: “Think about your own holiday shopping. What percentage was done online? And beyond your purchases, what role did mobile and digital tools play in your shopping and planning process?”

The dominance of digital over all of retail was proved in the run-up to the Christmas holidays and is likely to be seen again in an early Easter.

In the UK, Argos’ tablet and smartphone apps helped mobile commerce grow by 125% over Christmas. Tesco showed that e-commerce does not have to mean home delivery – 5% of their half-million food orders in the week before Christmas took advantage of their Click & Collect service.

Digital is even blurring the distinction between holiday time and shopping time with Amazon’s Boxing Day sale starting on Christmas day.

“What was once a day of rest from commerce is now a leisure activity as consumers use new technology to hit the digital shops,” says Zybowski.  “And, that opportunity is open for bricks-and-mortar stores to engage with customers even when their stores are closed.”