Retailers in price wars are losing their best customers
Retailers need new ways to engage the informed consumer
Competition has been fierce to offer the lowest prices, the steepest discounts, and the fastest free shipping - often to the detriment of merchants whose lower order volume can't make up losses in margins. In fact, proliferating touchpoints and the meteoric rise of online-only merchants have forced the retail industry into a 'race to the bottom', according to the Kibo 2018 Consumer Trends Survey.
The survey results suggest that the tide is turning. In a world where sales and discounts are ubiquitous year-round, shoppers are increasingly looking beyond price to distinguish what sets merchants apart. Among the offerings survey participants identified as crucial to today's shopping experience:
- Rich online content that incorporates peer reviews and early transparency into inventory and fulfillment options
- Personalized experiences that factor in shoppers' purchasing history and other past interactions with the brand
- Store experiences that deliver optimal experiences for each shoppers' needs
Based on responses from 3,000 U.S. consumers, the report suggests that retailers and branded manufacturers can differentiate themselves in a crowded marketplace by showcasing their most unique assets.
Consumers indicated that while price is still the primary factor in purchasing decisions, consumers are increasingly seeking out the differentiated shopping experience - one that provides a rich, informative, and personalized online and in-store experience.
Some 61% of survey participants named price as the top factor influencing purchase decisions, however that percentage is down by more than 12.8% year over year. By contrast, the importance of the shopping experience doubled, and the percentage of participants naming the variety and speed of fulfillment options as deciding factors grew by 1.3x and 3x, respectively.
More than half of survey respondents said they expect extensive content on branded manufacturer websites, suggesting that product images, videos, reviews, detailed specifications, comparison guides, and other consideration tools are all good investments.
Inventory access and availability are crucial, with more than half of survey participants said they expect a manufacturer's site to have items in-stock, while 45% believe they'll find a greater variety of products available, and 40% believe manufacturers will have more items than retailers.
Buy Online, Pickup In-Store (BOPIS, or 'click and collect') is now considered a mainstream offering, with 67% of survey participants having used it in the past six months. Furthermore, shoppers widely recognise that BOPIS offers not only free order fulfillment, but also a degree of flexibility and control not available via home delivery.
The ability to inspect items in the store before taking them home was the BOPIS benefit whose importance grew the most year over year - suggesting that stores' tactile experiences are important brand assets. Substantiating this finding is shoppers' increasing willingness to engage store associates for assistance finding items; 57% of survey respondents said they've done so, an 18.75% increase from 2017. More than two-thirds of respondents said they expected those associates to have access to their order histories, suggesting expectations are high for knowledgeable interactions that draw on shoppers' past interactions across touchpoints.
"As merchants struggle to thrive in the era of Amazon and increasingly look for ways to engage consumers, the key is to understand what factors influence a consumer's buying behavior," said Tushar Patel, CMO for Kibo. "These behaviors are ever-changing and the goal of Kibo's annual report is to better gauge where those changes are so retailers and manufacturers can evolve their shopping experience to meet and exceed customer expectations. This year it is increasingly clear that while having fair and consistent pricing on all channels is extremely important, merchants have an incredible opportunity to engage shoppers with seamless experiences that include flexible fulfillment options such as buy online, pickup in store. Shopping has changed and brands must adapt today to thrive tomorrow."
Sources: Kibo / The Marketing Factbook.
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