BLOG

A $4 Trillion Wake-Up Call for Brands

SHARE: Facebooktwitterlinkedinmail
Mar 08 2016, Posted by Gary Lee
Blog_4T-Wake-Up-Call_300x218

The latest U.S. government research reports came out a few weeks ago showing consumer retail spending for both eCommerce and brick-and-mortar.

Unless you’ve been asleep for the last 10 years, you know that eCommerce has consistently experienced double-digit growth each year.

Using the latest non-adjusted government numbers for 2015, eCommerce experienced year-over-year growth of almost 15%. In fact, by our analysis, since the government began tracking eCommerce sales in 2000, we’ve witnessed a compound annual growth rate (CAGR) of almost 16% through 2015 even when adjusted for inflation. Clearly eCommerce continues to see meteoric rise.

But what about brick-and-mortar?

Brick-and-mortar retail revenue continues to make up over 91% of all consumer shopping in our country (and globally). The latest government reports continues to support a statistic that always shocks people: despite the great rise in eCommerce, at the end of 2015, over 91% of all sales in the retail channel were still purchased in brick-and-mortar. Why? Because there is still a desire and need to touch, try, view and sample most products we buy.

2015 consumer spending in brick-and-mortar adjusted for inflation was virtually flat year-over-year since 2014, while eCommerce spending grew at almost 15%.
However, what’s clear and alarming from the latest numbers is that brick-and-mortar growth may be stymied. According to the latest growth numbers adjusted for inflation, brick-and-mortar commerce grew at 0% in the 4th quarter of 2015 compared to the previous quarter.

And year-over-year brick-and-mortar growth 2014 to 2015 adjusted for inflation was 0.12%.

2015’s flat growth in brick-and-mortar sales is a reversal of 5 years of growth. In 2010, brick-and-mortar sales adjusted for inflation grew 3.55% from 2009. 2011 saw 3.6% growth, 2012 saw 2.41% growth, 2013 saw 1.93% growth and 2014 saw 1.61% growth again all adjusted for inflation using the government’s Consumer Price Index numbers.

This should be a wake-up call for retailers and the brands inside these stores. It’s clear that brick-and-mortar retail still matters to consumers, given the over 90% of all U.S. sales that takes place there. But retail is changing, sales growth is deteriorating, and it’s time for some tough questions to be answered.

  • What do shoppers really want from the brick-and-mortar experience?
  • Why do they visit, and what do they do while there?
  • How does this physical store experience work with their online experience?
  • Where do shoppers ultimately like to purchase, and why?

As we witness eCommerce providers like Amazon, Bonobos, Warby Parker and many others successfully opening up physical stores outside of the traditional models and rapidly expanding, it should further cause brick-and-mortar retailers and brands to evaluate the role of their stores going forward.

So what to do? I have three suggestions:

  1. It’s now critical to start gathering real-time insights in-store.
  2. The costs of conducting quantitative and qualitative studies on shoppers has dropped precipitously as mobile technologies for panel selection and panel deployment allow firms like ours to deploy research studies quickly and affordably.

    And with technology now available to anonymously gather information on shoppers in-store at the brand level (gender, age, time with brand, attention time and others), it’s easy to gather analytics and insights in-store 7×24 just like we’ve done online forever, and use this information to better guide in-store marketing decisions. At InReality, we’re using this technology to A/B and even cohort test physical and digital marketing spend in-store. We can make better and faster decisions on what shoppers are doing, and why.

    And use this understanding to create unique, responsive experiences in-store for shoppers.

  3. In-store experiences need to become more agile/adaptive.
  4. It starts with understanding what and why shoppers are doing, and then creating unique experiences they can only get in-store. At InReality, we’re triggering digital content based on shopper presence, gender and other key metrics derived on the fly (any anonymously) to better provide smart, responsive experiences.

  5. It’s time to move beyond Omnichannel to Omnimeasurement
  6. As I’ve written before in The Guardian, brands have to move beyond omnichannel and toward omnipresence and omnimeasurement. Brands have to understand and anticipate what shoppers need and where they need it across all their brand locations online and physical, and measure shopper engagement at all points. We have to make it easy for shoppers to discover and engage with our brands in-store and online.

    Brick-and-mortar is not dead. And it’s not going away. There is a huge opportunity to get creative, differentiate and grow. But, new approaches and thinking for brick-and-mortar are needed; ones that allow for brands and retailers to continuously and quickly measure, learn and adapt, while also allowing for shoppers to have smart, responsive experiences in-store like they are accustomed to having online. It’s time for brands to get smarter about shoppers’ wants, needs and behavior, and take a fresh approach to in-store marketing to leverage a $4T market with real innovation and fresh thinking.

    For the latest insights on shopper behavior, I also recommend checking out:

    The 2016 Reality of Retail Report »

    Image Copyright: bmf2218 / 123RF Stock Photo

Post a comment