@SowreLab: The Future of Retail

How digital interactions influence retail investments for physical stores

How digital interactions influence retail investments for physical stores

May 15, 2015

via ierceretail.com

Digital to influence 64 cents of every retail dollar spent in physical stores

Digital interactions are expected to influence 64 cents of every dollar spent in brick-and-mortar retail stores by the end of the year, amounting to $2.2 trillion. The projection suggests that digital influence has grown from 2012’s 14 cents spent of each dollar in a physical store.

According to Deloitte Digital’s latest study, “Navigating the New Digital Divide,” the use of digital devices, such as tablets and mobile phones, now has a considerable impact on how much shoppers are spending in brick-and-mortar stores. However, retailers aren’t capitalizing on the digital trends of in-store consumer behavior as much as they could be, according to the report.

“Retailers often use the wrong metric—e-commerce sales—to indicate whether their digital strategy is working,” said Kasey Lobaugh, principal of Deloitte Consulting and Deloitte Digital’s chief retail innovation officer. “Last year, e-commerce sales represented $300 billion, or just 7 percent of total retail sales, while digitally-influenced store sales were over five times higher, topping $1.7 trillion. Retailers that prioritize and design digital functionality with the sole purpose of driving sales in the e-commerce channel marginalize the consumer experience and risk ceding authority to competitors.”

In addition, the research indicates that the top 25 established retailers are losing market share to smaller players with more focus on their digital strategy. In total, these established brands have lost 2 percent of their market share, or $64 million, to smaller stores.

While mobile influence is up, the consumer trend of using smartphones for in-store price comparisons is down 30 percent from one year ago. However, the influence of phones alone on in-store sales—more likely to be used to make a purchase—was up 28 percent in 2014 from 19 percent in 2013.

Almost half, 49 percent, of Hispanic and Latino consumers use social media during their shopping journey, compared with 32 percent across all ethnic groups.

Digital has had the largest impact on the baby/toddler and home furnishings categories, up from 39 percent last year to 52 percent in 2014 and accounting for more than half of all brick-and-mortar sales in that sector.

Last year was an important year for digital commerce, especially the fourth quarter, which accounted for 81 percent of the entire year’s digital commerce growth. Much of this Q4 surge can be attributed to holiday fervor, such as the kind seen on Black Friday. On Green Monday, e-commerce sales reached $1.6 billion, up 15 percent from 2013, and Cyber Monday racked up $2 billion in sales, making it the biggest online spending day in U.S. history.


Andrey Golub– @Retail Lab Manager

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