E-commerce accounts for almost 9% of retail sales in the U.S. today and has been growing nearly three times faster than brick-and-mortar sales since 2010. The assumption by shoppers, the media and industry players alike is that consumers increasingly prefer online over in-store shopping and that e-commerce will eventually overtake brick-and-mortar as the primary shopping channel.
Though prevalent, this assumption is false; online channels may be growing their share of retail transactions, but consumers’ shopping preference is omnichannel: combining multiple channels for a single purchase.
Channel surfing: beyond the point of sale
In determining the relevance of different shopping channels, focus is all too often placed exclusively on the point of transaction, sometimes called the point of sale, where the actual purchase of a good or service takes place. However, this focus oftentimes neglects the importance of other key stages of the purchasing process, frequently referred to as the shopping journey (Figure 1).
Figure 1: Key stages in the shopping journey
Source: CBRE Research, 2018.
Each stage of the shopping journey can take place either offline (in-store), online (phone, tablet, computer) or a combination of the two. Consumers are increasingly choosing to mix different channels for a single purchase. For example, a shopper may choose to research a product on a phone, test the product in-store, decide to purchase the product in the store, but make the actual purchase online at home. This is a phenomenon CBRE terms “channel surfing.”
Digital influencing physical
Most official data comparing e-commerce and brick-and-mortar sales focuses solely on the point of purchase, which obscures the importance of other channels in the shopping process. One study by Forrester Research, however, suggests that 38.5% of in-store purchases were digitally influenced in 2017 (meaning that customers may have researched, browsed or price-compared online before purchasing in the store). This percentage has been rising steadily since 2014 and is forecast to exceed 41% by 2022, indicating continued growth in consumers’ omnichannel shopping habits.
Figure 2: Percentage of offline sales that are digitally influenced
Source: Forrester Research, 2018.
Physical influencing digital
The influence of brick-and-mortar stores on consumers’ online purchases is harder to quantify, but retailers generally find that offline channels can help drive online sales. Several major retailers report that their online sales decline in markets where a brick-and-mortar location is closed; conversely, they report that online sales increase noticeably in markets where a new store is opened. These trends offer further evidence that consumers prefer combining channels to make a final transaction, and that having access to multiple channels to research, test and purchase a good or service facilitates sales.
One of the most compelling pieces of evidence that brick-and-mortar locations can help drive online sales is the clicks-to-bricks trend, in which pure-play e-tailers open physical stores. For many online-only brands, offering consumers brick-and-mortar locations enables stages of the shopping journey that many customers prefer to do in-store (testing products and deciding on a purchase) and is key to unlocking revenue and profit growth beyond what is available with an online-only presence.
What does this mean for retailers?
As omnichannel becomes the dominant consumer shopping trend, it is critical for retailers to present customers with multiple channel options that are well-integrated. The channel-surfing consumer seeks a seamless transition between digital and physical options throughout the shopping journey, and those brands that can cater to this demand are best positioned for growth in an omnichannel world.
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