Study Shows Digital Influence On Retail Growing At Rapid Pace

By Christine Kern, contributing writer

Capitalizing on digital influence in retail.

Retailers can’t see the forest for the trees when it comes to the effectiveness of their digital strategies, according to a new report from Deloitte Digital.  The study found that retailers often lack a full understanding of effectiveness of their digital strategies because they’re looking at “channel-specific sales” rather than gauging how digital connections are also influencing in-store sales.

"Retailers often use the wrong metric – e-commerce sales – to indicate whether their digital strategy is working," Kasey Lobaugh, principal, Deloitte Consulting LLP and Deloitte Digital's chief retail innovation officer, explained in a press release. "Last year, e-commerce sales represented $300 billion, or just seven percent, of total retail sales, while digitally-influenced store sales were over five times higher, topping $1.7 trillion. Retailers that prioritize and design digital functionality with the sole purpose of driving sales in the e-commerce channel marginalize the consumer experience and risk ceding authority to competitors."

The report, “Navigating the New Digital Divide: Capitalizing on digital influence in retail,” surveyed thousands of consumers to determine how they engaged with digital while shopping and to quantify how it influenced in-store purchasing behaviors. The study found that, with the growing influence of digital, there is also a widening divide between consumers’ digital expectations and the retailers’ ability to deliver. 

In 2014, in-store sales driven in part by mobile and web were $1.7 trillion, five times that of web sales, according to the report. And Deloitte that digital-influenced sales — sales in which consumers have used a device to shop at some point in the process — will account for well more than half (64 cents) of each dollar spent, a total of $2.2 trillion by the end of 2015.

While 6.5% of retail sales ($305 billion) took place online and 93.5% took place in stores ($4 trillion), many retailers and retail studies continue to focus on that divide. But this study shows that seeing those sales in terms of silos is interfering with the big picture and the role that the web and mobile play in driving sales in all channels.

The study also found:

• Consumers who use digital while they shop in-store convert at a 20 percent higher rate compared to those who do not use digital as part of the shopping process.
• Digital influence varies by category, from 31 percent for the food and beverage category all the way up to 62 percent for electronics, and  shoppers curate different shopping experiences using digital.
• Nearly 8 in 10 consumers (76 percent) surveyed interact with brands or products before arriving at the store, and are therefore making digitally-influenced decisions much earlier in the shopping process.​

Ultimately, the report concludes, retailers need to stop focusing on when shoppers hit the buy button as the most important moment.

 “Instead of measuring moments that matter during the shopping journey, retailers continue to focus on measuring the buy button – the point at which they actually have the least influence,” Deloitte Consulting LLP director and study co-author Jeff Simpson said in the release.

“Retailers that simply track channel sales and fail to measure the influence of digital along the entire path to purchase can miss key indicators of performance and customer behavior. Retailers should focus on designing and building customer experiences that play to how their customers are shopping for their products – rather than direct consumers to the point of purchase if what they really seek is inspiration or information.”