Innovative Retail Technologies

MAR-APR 2017

Innovative Retail Technologies (formerly Integrated Solutions For Retailers) is the premier source for innovative yet pragmatic technology solutions in the retail industry.

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What Good Does Digital Do? Part of the reason retailers may be falling back on looking to digital to merely sell and forget the rest is because they hold very dim views on how much digital has an influence on stores. In 2015, Forrester estimated that 52% of retail sales were influenced by digital activities of consumers, and that this influence will reach 59% by 2018. 1 These estimates are based on actual consumer behavior, rather than looking at retailer results or expectations. But when you compare these estimates to retailers' own perspectives, the credit retailers give to digital influence is sparse (Figure 3). Fourteen percent of respondents report that they have no way of measuring the online influence of store purchases, and 11% expect that this will still be a problem three years from now. And the shift from today to three years from now is very linear — as we found last year, rarely do any respondents indicate an expected big jump in online's influence on stores. Most moved from one bracket to the next, as a plurality reports that 10 to 5% of store sales are influenced by digital this year, and 29% expect that it will move to 25 to 50% in three years — well below the 59% that Forrester is predicting, based on consumer behavior, within the next two. The Challenge O f Measuring Influence We will be the first to admit that measuring cross-channel influence is hard. There is little precedent for measuring such things. Consumers value their privacy, and while they want the relevancy that comes from better understanding cross-channel behavior, they definitely do not appreciate creepy tracking methods that might make measuring cross-channel influence easier. But retailers will never crack cross-channel influence if they do not use digital- channel data for more than just driving sales in digital channels — and that problem clearly exists, as respondents prove when they rate the value of different kinds of digital-channel data. To be clear, we asked, "Beyond sales and demographics, how valuable are each of these digital-channel data sets for driving your company's omni-channel strategy?" No option garnered a majority response of "a lot of impact." Instead, retailers report that things like online market basket affinities and online cart abandons have "some" impact — and over a quarter of respondents report that they don't look at online cart abandons as a data point worth considering at all as part of their omni-channel strategy. What's most interesting about this data, however, is in the revenue cut (Figure 4). Clearly, as retailers in the $1 to $5 billion revenue band struggle against larger competitors with more scale, they are turning to digital insights as a potential source for differentiation. One would expect smaller retailers, as being more resource- constrained, to be the ones doing the least. But instead, it is the Mar-Apr 2017 14 Email data Technical data Digital market basket abandons Digital market basket for affinity Digital "path-to-purchase" data 54% 50% 52% 31% 48% 38% 29% 31% 29% 41% 13% 15% 17% 25% Data Impacting Omni-Channel Strategy — A Lot Of Impact (Beyond Sales & Demographics) $250M-$999M $1-$5B >$5B 45% 23% 25% 52% 13% <$250M 42% Figure 4: The Largest Retailers Are Not The Ones Driving Innovation

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