Article

Crawford Davidson
Crawford Davidson 19 November 2019

The Future of Retail: Online vs Offline

As we get bombarded with stories of blood on the high street and commentators keep saying we are moving from a world of physical shopping to online-only, it seems more and more unsubstantiated statements about the future of retail are being thrown around. Among these is the idea that online shopping is irreversibly leading the way in consumer preferences. Therefore a concrete understanding of the future of the online:offline relationship is essential for planning ahead and ensuring that evolving consumer preferences are accounted for.

Too many retailers are reliant on assumptions and lack the necessary insight on their customers to know just what their spending preferences are/or will be. We recently commissioned some research to understand whether consumers 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 showed very clearly how uninformed assumptions about the future of online and in-store retail may be both misleading and commercially damaging (see table for results). Radical differences were apparent from product category to product category. 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.

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Few customers exclusively favour online purchasing over bricks-and-mortar stores, and vice-versa. In reality, the customer journey covers a number of touch points that are both online and in-store and both must be integrated rather than being kept in two separate silos.

It is clear that different product categories have varying online:offline profiles, so a breakdown of how customer behaviour differs across product ranges could help to re-evaluate the balance between sales channels and any forward marketing planning. The expected move to online purchasing was confirmed for many areas, particularly for mobile phones, computers and electronics with a 9% increase in online purchases for these products. Also, sports equipment and clothing are predicted to increasingly be purchased online with a 6% increase and a large 11% rise within Generation Z.

However, for a group of retail sectors, the results showed no move at all towards online shopping, and in fact an increase in, in-store shopping. The biggest decline is expected in the fresh food (12% drop) and non-perishable food (9% drop) categories, meaning people are very happy to still visit a supermarket in person. Similarly, gardening products, shoes, alcohol, household products and personal hygiene products are all expected to move towards in-shop purchasing, showing a clear increase in interest for in-store shopping for certain products. 

Understanding purchasing trends in the next five years is invaluable for shaping any business’ marketing strategies. Whether you are facing an increase or a decline in online shopping, knowing where your customers will focus their attention will give you an edge over your competitors, particularly if you are able to leverage this information to grow your business.

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