Forrester: physical stores will account for 72% of US retail sales in 2024

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Physical retail continues to generate the bulk of retail sales – and will remain so for some time.

Despite all the attention to e-commerce, 72% of retail sales in the United States will still be in physical stores in 2024, according to a new study from Forrester.

Even during mandatory pandemic-induced closures and with additional safety concerns, consumers have shown they will continue to shop in the store when they feel it is a viable option.

The top reasons to buy in-store are to test products (47%) and be able to walk away with an item after purchase (38%), according to Forrester. Consumers also like to make returns in physical stores. Forty-one percent said online returns were difficult, and more than a third of consumers said it discouraged them from buying online. More than half of those surveyed said they prefer in-store returns.

Post-COVID consumers are both digitally savvy and channel independent, Forrester noted. They are willing to explore more shopping options (52% of US online adults enjoy trying new brands) and are more likely to take advantage of Digital ‘self-service’ environments (63% spend time comparing products before making a purchase.) This combination has raised the bar for retailers, said Forrester as they rethink, rethink and are reorienting their store environments beyond simply offering touch experiences.

Retailers are also looking for stores to provide them with a competitive advantage over newer, more agile pure-play retailers by using locations as a source to capture and evaluate customer interactions. As a result, they need to rethink in-store experiences with more up-to-date use cases, less friction, better data integration, and lower operational overhead.

STORE DESIGN
Retail store design hasn’t changed significantly in decades, according to Forrester, and needs a critical refresh to meet the consumer’s omnichannel and experiential demands. The company recommends using a “6E” strategy to create “designed” stores that deliver significant improvements to the customer experience, achieve operational excellence and generate specific business results.

Forrester’s strategy is described below.

• Engage customers. It is difficult for any retail store to differentiate themselves from a plethora of similar product offerings available through digital channels. The main objective will therefore be to engage customers. Dick’s House of Sport is an emerging model (the “Experience Center”) that focuses on activity and entertainment. This includes enhanced in-store app functionality, augmented reality (AR) and virtual reality (VR) experiences, and in-store product personalization.

• Emulate electronic commerce. Savvy retailers will harness the best of e-commerce and integrate it into their store. The key difference between a store visit and an online visit is knowing who that customer is and creating the experience just for them. Online, it’s easy to track device history to person and across devices, but in-store that aspiration is tough.

• Increase impact. Retailers need to think outside the box when designing stores to support branding initiatives, programs and efforts across the business. They are also to serve as ships of opportunity. Guitar Center offers product repair services in its stores – a service that would require a lot more logistical complexities and overhead for an outright retailer.

• Empower associates. In 2021, 37% of global shopping influencers surveyed in the retail industry plan to invest internally in omnichannel projects and 31% plan to invest internally in AI. Why? As they juggle omnichannel fulfillment priorities, including pickup and packaging, curbside delivery, and returns and exchanges, retailers need to streamline their operations to ensure a positive customer experience, as well as healthy margins. Digital professionals are turning to solutions that help them serve every customer in a way that person might want to buy, as well as become smarter about the way they work.

• Activate information. In 2020, 46% of data and analytics decision makers in global retail and wholesale companies have already implemented data management and analytics initiatives to improve their complete view of the customer through canals. In addition, 27% of them are currently implementing these initiatives. As in-store tracking becomes more accessible and integrates with online tracking, retailers will be able to engage customers by leveraging a lucrative omnichannel view of the customer using zero and first party data sources.

The challenge: to collect customer consent for such practices and manage the data with care. With AI-powered tracking and decision tools, retailers will break down silos within their organization and work in unison to serve the customer and reward store associates for their omnichannel efforts, while respecting preferences. of consumers in terms of confidentiality.


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