Online or offline?

Understanding the online-offline balance of your customers’ buying intentions is crucial for future planning, says Crawford Davidson.


Chaos on the high street means that many unqualified statements about the future of retail are being thrown around as certainties. Among these is the notion that online shopping is irreversibly swallowing up physical stores’ share of customer purchases.

The food sector may have fewer concerns about this trend than other industries – 5.5% of total food sales are online1 – but there is no room for complacency. A concrete understanding of the online-offline balance is invaluable for planning ahead and ensuring that evolving preferences are properly catered for.

Your business must be able to intelligently predict whether customers will be spending online in greater numbers or choosing to visit you in-store. The resulting insights could be the determining factor that differentiates you from the competition.

In our experience, too many retailers fail to thoroughly research how their customers shop and are therefore reliant on unfounded assumptions. Our latest study clearly demonstrates how this approach can be highly damaging, especially for businesses selling food products.

The study asked respondents whether they expected to buy more online or in-store across different product categories in five years’ time. A net percentage score was established to broadly indicate the expected direction of online purchasing in the next five years.

The results vary across product groups, with fresh food and non-perishable food businesses expected to see the largest drop in online purchasing, receiving a net score of -12% and -9% respectively. These are significant figures and store managers must be primed to receive the additional footfall and provide high-quality customer care.

Integrating online and offline

This is not to say that all attention should shift to physical channels. Rather, the key is to build a clear and holistic picture of your customers’ habits across all channels. Few customers exclusively favour online purchasing over bricks and mortar stores, and vice versa.

In reality, the customer journey covers a number of touchpoints that are both online and in-store and these two arenas must be integrated rather than being analysed as two separate spheres. Collating and understanding customer behaviour in this way is becoming the norm and it is an invaluable means of retaining customers and also determining how they can be better served to ensure repeat custom.

This may seem like a monumental task for your business but there are many effective tools and techniques for tracking touchpoints that are not being used enough in the industry.

How might the future view influence your business strategies? We have seen that different product categories have different online-offline profiles so a root-and-branch breakdown of how customer behaviour differs across your product ranges could help to re-evaluate the balance between sales channels.

Though the survey attests that consumers are expecting to increase in-store purchasing of food items, they may be increasingly likely to look for other health and lifestyle items online, with sports equipment and clothing receiving a +6% net score in our survey. If we focus on younger Generation Z respondents (aged 18-24), this score rises to +11%. With insights such as these, your marketing efforts can be adjusted appropriately and concentrated on the channels that are most likely to reach your target customers.

Thinking outside the inbox

It is clear that downscaling in-store operations for your food products may be a serious error, when your business should in fact prepare for greater influx in the coming years. Your personnel must be poised to provide the service that is lacking online.

Consumers are now increasingly informed about healthy eating but this also gives rise to numerous fads and trends that are not always based on sound scientific information. This is an opening for you to ensure that your staff can provide authoritative and accurate advice to customers, making your store a go-to location for customers who are already enthusiasts, as well as more tentative shoppers who simply need a friendly face and clear guidance.

Additionally, in-store services or treatments can help you take advantage of increased footfall and encourage more of it. Data on the local demographic and evolving customer trends and interests will also ensure that your business stays ahead of the game.

Your online marketing must complement these efforts rather than standing apart. Our previous research shows that a strategic combination of physical and online marketing materials generates a higher incremental revenue than either of these channels alone2.

Even if we are spending more time online, it does not necessarily follow that email marketing or online adverts will be the most effective. Consider how many email addresses you have personally and how actively you monitor each account. UK consumers typically have two to three different email accounts and 44% of us send all marketing email to a secondary account3, which is likely to receive less attention. On the other hand, physical marketing such as a brochure or catalogue that has been carefully tailored using customer profiles may be more likely to attract attention, without needing to compete in a cluttered inbox.

Summary

Intelligence on the expected balance of on- and offline purchasing in the next five years is invaluable for shaping marketing strategies for independent businesses and drawing maximum benefit from allocated marketing budgets. No business can afford to spend on marketing without thorough research into their customers’ needs and what types of communication they are most receptive to.

Independents have the benefit of flexibility, allowing for innovation and creative thinking, as well proximity to customers, which creates opportunities for dialogue. Crucially, assumptions should not be accepted without investigation; tales of doom about the onslaught of online purchasing do not have to be taken at face value, as the reality for your business may look quite different.

Whether you are facing an increase or a decline in online shopping, knowing where your customers are headed will give you an edge over your counterparts, particularly if you are able to leverage this information astutely to strengthen and grow your business.

Crawford Davidson is MD of the Go Inspire Group

Go Inspire provides a complete approach to data marketing, covering database build, loyalty programmes, analysis, strategy, campaign execution and fulfilment.

References:
1. ONS, Comparing “bricks and mortar” store sales with online retail sales: August 2018.
2. Go Inspire Group, Hobson’s Choice, December 2018.
3. Direct Marketing Association, Consumer email tracker 2017.

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