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Digital insights shared in the Desert

5/19/2015

With a title like chief retail innovation officer, Kasey Lobaugh spends a lot of time peering into the future to assess where the retail industry is headed.


The principal with Deloitte Consulting did just that May 18 at Manhattan Associates annual Momentum conference where he elaborated on new research showing that digital interactions are expected to influence 64 cents of every dollar spent in retail stores by the end of 2015, or roughly $2.2 trillion.


The figure is up considerably from 14 cents of every dollar that was identified when Deloitte Digital first conducted a similar study in 2012.


Looking ahead, Lobaugh told the more than 1,000 attendees at the omnichannel retail oriented event that digital is poised to influence 90% of sales while conceding that time frame assumes the unlikely prospect that technology remains in its current state. The forward looking viewpoints shared by Lobaugh are contained in Deloitte Digital’study called, “Navigating the New Digital Divide,” that was released just prior to supply chain leader Manhattan’s event in Phoenix.


From Lobaugh’s perspective, one of the key takeaways from the survey of more than 3,000 consumers conducted Nov. 21-26, 2014 and Jan. 13-20, 2015 is that retailers often use the wrong metric – e-commerce sales – to indicate whether their digital strategy is working.


“Last year, e-commerce sales represented $300 billion, or just 7%, 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,” Lobaugh said.


Another potentially troubling finding of the research for large retailers is that marketplace volatility amplifies the significance of capturing and accurately measuring digitally-influenced sales. The research indicated that in the last five years the top 25 established retailers have lost 2% of their combined market share, which equates to $64 billion, while smaller players that have entered the market with digital at their core have multiplied.


“We are seeing a real change in the competitive dynamics, with digital as the great equalizer. The findings indicate that the large retailers are collectively losing ground to the much smaller competitors,” Lobaugh said.


Other findings of the research confirmed some developments that may be already familiar to retailers. For example, initial fears about showrooming proved to be overblown. While mobile influence is up, price checking is down. Consumers surveyed indicated they are 30% less likely to use smartphones to perform price comparisons in-store than they were a year ago even as the influence of smartphones alone on in-store sales rose to 28% in 2014 from 19% the prior year.


In addition, the study confirmed that digitally influence shoppers are converted to buyers at a 20% higher rate and they also spend more money. Another fairly well documented behavioral trend identified relates to shoppers access to information on the path to purchase and the diminished important of the shelf as the moment of truth.


Nearly 8 in 10 consumers (76 percent) surveyed interact with brands or products before arriving at the store. Shoppers now make buying decisions at other points in the shopping journey, where they find ideas and inspiration, research product information, validate performance through reviews, and even make purchases online to pick up in store.


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