Oracle Retail has released new research confirming what we already know – most consumers will choose a low price over a good in-store experience, assuming the products are the same. Consumers also place location and having a range of options above in-store experience, according to the research.
This comes as many retail chains are trying to salvage the profitability of their bricks-and-mortar operations by improving the shopping experience. Most notably, J.C. Penney’s and Sears have staked their continued existence on the idea that customers will shop at stores that offer better experiences.
Oracle Retail senior director Sarah Taylor called the finding, “counter-intuitive.”
The report, called The Evolution of Experience Retailing, surveyed people over the age of 18 in the US, UK, Russia, Japan, Germany, China, and Brazil. It found that location, choice, and price are the three most important considerations when it comes to buying choices. Personalization and experience – two lauded concepts – were far less important motivators in all the surveyed countries.
There are still gains from improving the in-store experience, however. Stores that offer seamless omni-channel shopping can capitalize on showroom shoppers by adding free wi-fi in stores and ensuring that online purchases can be picked up and returned in store. Companies such as Macy’s, with smart inventory management, can actually bring shoppers into their bricks-and-mortar locations from their e-commerce portals, maximizing revenues from all channels.
Taylor suggested that retailers should invest in service and in seamlessly merging online and in-store experiences.
But there are limits to this strategy. Today’s consumer is knowledge rich and, increasingly, cash poor. Bricks-and-mortar retailers can no longer count on their product knowledge, customer service, and experience to prop up foot traffic.
Retailers with heavy investments in bricks-and-mortar can still use technology to boost sales. They can target consumers through social media, using information shared online to make personalized offerings. But this strategy only works if the retailer is able to offer lower prices than their competitors, otherwise consumers will just take their suggestion and buy it at the cheapest online retailer.
Despite finding that personalization and experience are not the main drivers of shopping decisions, the report urged retailers to push ahead with those projects.
“These are the early days of the art of engineering meaningful personal retail experiences, identifying the role of the mobile device as key for retailers to engage with customers at the immediate and individual level,” the report said.
“Consumers want to browse and engage on mobile devices, researching up to the point of purchase, so retailers need to consider new ways of making recommendations, showing availability and incentivising the customer with custom data that motivates a buying response while avoiding any disappointments.”
Building a two-way relationship with the customer is key, because that’s the source of the data that builds the personalization. To motivate the customer in this way, stores have to have integrated business plans – from e-commerce to merchandizing to supply chain.
They also need the operational excellence to guarantee fulfillment. Head office operations need to be integrated to provide total fulfillment from all sources across all channels, so customers have the maximum access to products from all shopping platforms, and they can trust that the inventory will be available.
“Only once retailers achieve this operational flexibility, can they really focus on putting the customer at the heart of their business, enabling customer priorities to become business priorities and delivering an experience that meets the needs of the individual,” the report said.