The return to store in a digital-first, post-pandemic world
February 3 2021
by Haley Brown, Sheryl Kingstone, Jordan McKee
Since the onset of the COVID-19 outbreak, we have tracked the move in market activity to digital. By the time our survey fielded in July of 2020, nearly three in four consumers reported having shifted at least some of their in-store spending to online channels due to the pandemic. Our research shows that in response to this market pressure, many businesses are funneling a substantially greater amount of dollars into digital experiences over the near term.
With the initial systemic shocks of the pandemic fading, however, business priorities have shifted from scrambling to meet the technical challenges created by the sudden surge in digital demand, to a longer-term strategy for customer engagement and loyalty in a post-pandemic world. Key to this is the understanding of how consumers have changed their behavior during the pandemic, and what it all means for the in-store experience.
The 451 Take
The recent widespread exposure to digital technologies has resulted in a rapid maturation of the market, changing consumers' perceptions of what the in-store shopping experience should be. This is confronting merchants with a need to revamp their organization-wide digital experience strategy in order to stay relevant. But this is not a trivial task. As digital experiences become more deeply embedded along the entire customer journey, it has become table stakes for merchants and retailers to have a seamless cross-channel strategy with deeply integrated sales channels across online and in-store presences. Thriving in the new normal will require strategies that use digital technologies as a lever for the in-store experience and vice versa. Continued investment and innovation that aligns with consumer demands for convenience, context and control will be crucial to guide merchants to their return to store. Those that continue to view digital experiences in a vacuum will produce disjointed experiences both in-store and online, and will quickly fall behind.
Digital won't replace in-store, but will reshape it
For many retailers, the question has been whether recently adopted digital shopping behaviors will permanently displace in-store shopping habits. While our research shows that many consumers will likely adopt a broader preference for digital shopping and engagement as a result of the pandemic, nearly two-thirds of consumers still say that once COVID-19 restrictions are lifted, they will return to stores within a three-month timeframe. Of these consumers, 38% plan to shop in-store again as soon as possible, which creates an even greater sense of urgency for businesses to deliver on expectations for the return to store.
Merchants that offered digital alternatives as a bolt-on to the in-store experience earlier in the pandemic will face a bumpy road as they plan their return to store. Like the initial pivot to digital-first, the same pitfalls remain: 88% of consumers agree that having a negative experience either online or in-store makes them less likely to shop with that brand or retailer again. A prolonged alternation of lockdowns and reopenings during the pandemic has further blurred the lines between the in-store and online experience. Navigating this next phase successfully will first require businesses to understand the changing shopping expectations borne of the pandemic.
Convenience, context and control will optimize experiences
When looking at consumers' preferences for in-store shopping in light of the pandemic we see that:
44% of respondents to our survey agree they would shop in-store at a specific location if it was more convenient (e.g., no lines, ability to have out-of-stock products shipped to home).
40% of respondents to our survey say personalized in-store digital coupons and recommended products would encourage them to shop more in a physical store.
33% of respondents to our survey would be significantly less likely to shop with a retailer in the future if they were not able to manage their own personal preferences.
When considering these scenarios, there are underlying themes of convenience, context and control – the three C's – that emerge.
Figure 1: Shopping Behaviors in Light of the Pandemic Revolve Around the Three C's
451 Research 2020
Convenience, context and control are pervasive elements of the customer experience that underpin our analysis. They act as the common baseline that guides thinking around what consumer expectations for shopping have become, partly as a result of a pandemic, and running through both digital and physical interactions.
Merchants need to fine-tune a mix of these elements in all their engagements with consumers. The three C's, therefore, should be a rule of thumb for businesses when planning to improve and maintain both online and in-store customer experiences. Below, we highlight some of the top strategies that connect these components to encourage a return to store.
Convenience strategies: cross-channel fulfillment
Convenience, or removing friction, is the most fundamental aspect of improving customer experiences. This will be one of the most critical differentiators when it comes to getting digitally empowered consumers to return to store. According to our research, two in five consumers believe a convenient shopping experience across online and in-store, as enabled by cross-channel fulfillment options (buy online, return in-store, reserve online and pick up in-store), would encourage them to shop at a particular location upon reopening. This makes it the third-highest priority for consumers.
Of the services people tried for the first time during the pandemic, both usage and satisfaction were highest among cross-channel alternatives. The number one favorite was curbside pickup (30%). Two-thirds of those who had tried it were very satisfied with their experience. Curbside pickup and similar flexible fulfillment strategies have been a key alternative to in-store shopping, allowing businesses to leverage their physical presences within the bounds of COVID-19 restrictions. It has garnered significant attention over the past few months, with our enterprise research indicating that many businesses have begun to see the value of cross-channel, and its positive influence over consumer shopping behavior.
Flexible fulfillment options rank as the second-highest business priority (31%) to deepen customer loyalty. Moreover, 41% also strongly agree that omnichannel purchase experiences (online sales coupled with store pickup, store-returns or in-store sales with a ship-to-home option) help drive in-store sales.
According to this same survey, at present, only half (51%) of businesses currently offer buy online/in-app and pickup in-store, and only 44% currently offer buy online/in-app, return in-store. As digital and physical shopping experiences become even more deeply intertwined, we can expect the recent momentum of cross-channel will continue to fuel demand for flexible fulfillment strategies into the near future, becoming table stakes for the in-store shopping experience.
Contextual strategies: personalized coupons and recommendations
Personalization, as enabled by the appropriate context, is key to encouraging engagement and loyalty through relevant and meaningful interactions. While personalization has been an important part of the customer experience for years, it has predominantly remained exclusive to the online shopping experience, with limited application in-store. However, we see that among the growing cohort of digitally empowered consumers, contextual strategies that leverage digital technologies are driving a return to store.
As we previously observed, two in five consumers say that receiving personalized coupons and/or recommended products would encourage them to shop more in-store following a rollback of COVID-19 restrictions. Additionally, in our survey, nearly a third say the ability to redeem exclusive in-store promotions and rewards (e.g., based on their location) would encourage them to shop at a particular store upon reopening. Enabling contextually based shopping experiences is emerging as an effective strategy to encourage the return to store, and can drive revenue. One in 5 (21%) respondents in another survey cited their intent to increase spending at a store if they received a more personalized experience.
In order for businesses to effectively capitalize on these strategies, however, they must be able to capture and synthesize appropriate context clues in the form of customer data. Enterprises' current investment priorities reflect this, focusing on key enabling contextual technologies for the first time. Intelligent personalization technologies (47%) and customer data/intelligence platforms (43%) were the top martech investments of digitally driven enterprises in our survey. Yet only 54% of organizations believe they currently have a strong ability to create and deliver personalized experiences for customers, such as using behavioral data, past purchases or stated preferences. Personalization and contextual interactions will remain a pervasive part of the customer experience moving forward, requiring the continued investment and focus of brands and merchants.
Control strategies: managing personal preferences and self-service
With the world changing overnight and many forced to turn to totally new shopping methods, giving consumers back a sense of control by allowing the ability to engage and interact on their own terms has become even more important to the customer experience. As we previously noted, a third of consumers are significantly less likely to shop with a retailer if they are not able to manage their own personal preferences. While the shopping journey has largely been dictated by the retailer or merchant in the past, this desire for greater autonomy over the individual shopping experience, in part fueled by the pandemic, is leading to a rise in self-service support, both online and in-store.
About a quarter of consumers say a self-service kiosk to find product information without the need for assistance from a store associate would encourage them to shop at a particular location upon reopening, while a third say the same about the ability to pay without having to interact with a sales associate (self-checkout, avoiding lines). Particularly as retailers are forced to grapple with rapidly changing sentiments and levels of comfort toward interpersonal interaction, providing alternatives that give consumers the ability to have an in-store shopping experience that aligns with their individual preferences will help drive in-store sales.
Enterprise reaction to digitally empowered consumers' demands for a greater sense of autonomy and self-service is surprisingly low. Of the initiatives to deepen customer loyalty, self-service customer support (24%) emerged at the bottom of the stack in terms of ranked priority. While control will remain a core aspect of the customer experience moving forward, retailers and merchants are now held to a different standard, and are expected to remain responsive to shifting consumer sentiments as we move into a post-pandemic world.
Figure 2: Overview of Experiences That Encourage In-Store Shopping vs. Businesses' Ability to Deliver
451 Research 2020
Few things can replace the in-store browsing and buying experience, and many consumers – and businesses – are itching to resume in-person activities. However, now more than ever, creating a deeper link between the physical and digital has become a basic requirement, with a need to embed digital experiences that deliver on elements of convenience, context and control along the entire customer journey.
Digitally transforming the in-store experience to align with consumer demands for the three C's will require businesses to invest in technologies that empower both end consumers and front-line store associates with digital information. We see that mobile device and/or tablets are one such area of investment gaining traction. When shopping in a retail store for clothing and fashion, consumers in our survey said they are either interested in and/or would even pay more for streamlined customer service from store associates with mobile devices that can quickly access their customer profile and preferences (54%), or for a faster checkout experience anywhere in the store with an associate using a mobile device (71%).
Additional investments in foundational technologies like point-of-sale systems, product inventory and endless aisle, which provide digital support to store associates to enable new experiences in-store, cannot be overlooked. However, only a quarter of surveyed enterprises are looking to revitalize their physical stores with digital technologies and experiences – it emerges as the lowest-ranked commerce initiative. Businesses that fail to see that the pivot to digital encompasses the in-store experience will quickly fall behind.