In their new book The Human Brand, Chris Malone and Susan T. Fisk report on a study showing that top retailers who also offer e-commerce, including Walmart, show a surprising pattern when it comes to brick and click shoppers. The people who shop online with these major retailers are the ones who feel most loyalty to the retailer’s physical stores.
That is, it’s not online shoppers who choose to shop at Walmart.com — it’s Walmart shoppers branching out. While e-commerce companies like Amazon are able to gain customer loyalty without physical locations, major IRL retailers see traffic going only from the physical store to the e-commerce store, not the other way around.
For these retailers, online shopping is a convenience for their current customers, not a way to compete with the legions of online merchants. It’s not a way to bring people into their stores, either.
Does this mean that brick and mortar stores are still the most important part of retailing and e-commerce is a flash in the pan — or that brick and click retailers are, as Malone and Fisk suggest, doing a bad job online?
Deloitte recently reported that CPG companies are missing out on e-commerce opportunities. Their study checked how aware CPG leaders were of consumer feelings about shopping in brick and mortar stores and online. The methodology was simple: Deloitte surveyed thousands of consumers and then checked in with executives to see how well they could predict the consumers’ answers — sort of like a retail Newlywed Game.
The executives’ estimations were wildly off base on all these metrics:
- number of consumers planning to buy groceries and personal care products online
- number of consumers who dislike shopping in grocery and discount stores
- factors other than time that caused consumers to dislike IRL shopping for CPG products
- number of consumers who were “indifferent” about shopping in physical stores rather than online
- number of consumers who buy products for the first time online
- importance to consumers of in-home delivery
The executives surveyed were aware of the value of online marketing in driving brand awareness and repeat purchases of their products, but they were largely stuck in their belief that brick and mortar is where it’s at.
What’s more, even though 92% of the executives were aware that e-commerce is an important sales channel, fewer than half their companies had any clear plan for getting in on it.
CPG companies often rely on mass market retailers to set the bar. If consumers are bypassing big box retailers in their online shopping — unless they already feel loyalty to the physical store — then CPG companies who rely on those retailers for their information and worldview are relying on bad data.
How’s your company doing? Consumers expect their online purchases to triple in the coming years (the executives in the study predicted a 35% increase). More than half of them report that they dislike grocery shopping. 84% love home delivery. Most CPG executives in the study were not prepared. Are you going to be one of the companies that misses the boat?
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