Merchants that don’t properly understand and take advantage of how their customers pay online via smartphones, tablets or home computers might not be getting the full picture of what leads to their purchases, and the result may be millions in lost revenue, new research out this week suggests.
Indeed, digital interactions influence 36 cents of every dollar spent in the retail store, or approximately $1.1 trillion, according to the study “The New Digital Divide” from Deloitte Digital. By the end of this year, the total will climb 50 percent, or to $1.5 trillion of total store sales, according to Deloitte.
"Mobile and online transactions represent only a sliver of total retail revenue potential,” Kasey Lobaugh, principal, Deloitte Consulting LLP and Deloitte Digital’s chief retail innovation officer, said in an April 28 release. “Retailers that narrowly focus on digital commerce – rather than the full journey that leads to a purchase – often fail to recognize how their customers shop and make decisions in the store. The result is a digital divide between what consumers do and what retailers deliver. This gap not only threatens overall revenue, but requires retailers to reset the way they measure and invest in digital efforts."
An independent research company conducted the online survey for Deloitte Digital between Nov. 15 and Nov. 22 last year. The company polled a national sample of 2,006 random consumers for the research.
Mobile-influenced sales in stores have reached $593 billion, suggesting smartphones’ influence on store sales has far surpassed the rate at which consumers make a purchase directly on their phones, Deloitte Digital’s data show, citing eMarketer research that estimated mobile commerce sales at roughly $40 billion today.
Consumers using a device while shopping make a purchase at a rate 40 percent higher than those who do not use a device. Additionally, Deloitte Digital found, 22 percent of consumers spend more when using a digital device, and just more than half of those shoppers reported spending at least 25 percent more than they had intended. Moreover, 75 percent of respondents said product information found on social channels influenced their shopping behavior and enhanced loyalty.
This finding correlates to recent small-business hiring trends, where a social media expert topped the most-sought-after position among such companies, according to recent survey data from American Express.
"Each interaction is an opportunity for a retailer to enhance the customer experience and tell its brand story,” said Jeff Simpson, director of Deloitte Consulting LLP and co-author of the study. “However, retailers often measure success solely on how many widgets they sell through their Web or mobile sites."
For example, he said, retailers might regard online shopping-cart abandonment as a failed conversion when, in reality, it may represent a customer who started his wish list in the online basket but chose to purchase the items in the store. In that case, digital engagement may have led to a sale in the physical store.
“This impact is much higher when measured holistically across the organization and regardless of channels, rather than force-fitted to a single point of purchase,” Simpson said.
Separate Deloitte research found that so-called “digital omnivores,” or those consumers who own a trio of tablets, smartphones and laptops, continue to grow. The company’s eighth edition of the “Digital Democracy Survey” report showed that more than one third (37 percent) of U.S. consumers are now digital omnivores, up 42 percent from the a year earlier. Driving that growth is continued tablet adoption, which was up 33 percent, and smartphone ownership, which was up 18 percent increase.
Despite that growth, however, many consumers remain wary of using mobile devices for financial purposes. According to a recent study by Metaforic, 68 percent of non-financial app users said they’ve refrained from adopting such apps because of security-related fears.
And their reluctance was justifiable, as 19 percent of financial app users either had personally experienced a security breach or knew someone who had, and Android malware is up more than 1000 percent from a year ago.