The interplay of online and in-store retail


As one of the authors of our Global Brand Simplicity Index, it is hard for me to isolate one finding that I find particularly more insightful than the others: picking a favorite insight feels as wrong as picking a favorite child. However, as journalists have asked me questions, there is one set of findings that has gotten me thinking even more than others: the relationship between simplicity and retail.

The study shows that online retail is definitely winning over in-store in large part due to simplicity. Online retail makes it easier to compare items, which helps consumers find the best price. However, the in-store experience still has a lot to offer. Shopping in-store helps people verify that they’re buying the highest quality available. Also, the ease of the return process is strongly in their favor. So what are the implications for retailers and their business/channel strategies?

1. Retailers would best be served by segmenting audiences appropriately. For example, price shoppers are going to overwhelmingly buy online while premium shoppers are more likely to still buy in-store.

2. If you want to encourage in-store purchases, feature the return process as a selling point. Buyers who consider returning certain items will be more likely to buy in-store.

3. If you want to encourage online over in-store purchases, create and feature an easy-to-use return process for online purchases. Zappo’s success is in large part due to this and Amazon has begun installing pickup locations in 7-Elevens.

4. If your products are offered both in-store and online, make sure you are using these two channels synergistically. If in-store is used to assess quality, put offers in place that will encourage purchases rather than subsequent online price shopping.

5. For luxury brands and big ticket items, the lesson is that in-store still matters more than online if you want to command premiums. So, the brand that figures out how to create an online experience, which enables shoppers to assess product quality, will have a distinct advantage over competitors.

Real world interactions are still necessary to assess the quality and craftsmanship of items sold online or in-store. The key for retailers is finding ways to prevent the online channel from completely commoditizing their offerings. Rather than having shoppers make price comparisons and then purchase online, a richer in-store experience, geared at reinforcing premium and quality touchpoints should help generate more sales in the store.

Brian Rafferty is the Global Director of Customer Insights for Siegel+Gale.


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