8 Myths & Facts of the Disruption in the Retail IndustryCigniti Technologies
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There’s online shopping. And then there’s multichannel retailing.
“As online shopping continues to grow at the expense of store visits, the premium in the future will be on creating unique, brand-defining experiences that keep customers coming back—whatever the channel.” ~ PwC’s Annual Global Total Retail Consumer Survey February 2015.
Multichannel retailing, though leading to a real opportunity, is marred by hypes and myths, and it is by no means an easy task for the movers and shakers of the industry to have a seamless growth path.
8 Myths that Mar the Multichannel Industry
Like any other industry, Multichannel retailing is also marred with its fair share of hurdles and misconceptions. PwC’s annual global survey of 2013 helps demystify some of the myths, and help brands understand the challenges of multichannel retailing.
Myth 1 – Social media will soon become an indispensable retail channel.
Social media is taking the world by storm at a rate of about 2000 apps per day. There are about 1.9 million apps seen in the US App Store, out of which 1.7 million are available for download. Hmm. Cause of worry for the retailers? No. Because, not only almost 65.5% of U.S. smartphone users do not download any new apps – but rather continue using the one’s already installed.
While people check out a lot of sites, only a fraction – about 5% – really use them to make purchases.
Myth 2 – Store will become mainly showrooms in the future.
While it is true that more and more people these days first try to get as much information online about products they want to buy, yet, only about 2% of these people really buy the products only. The rest still prefer to enjoy the experience of visiting and shopping in a physical store. However, there are a few areas where the number of online buyers is increasing steadily are video games, music, books, and movies.
Myth 3 – The tablet will soon overtake the PC as the preferred online shopping device.
Even though there’s an obvious explosion of tablet devices in the market, and there’s an increase in the number of people who use tablets to shop online – still there’s a large fraction of people who prefer to use the comfort of using their PCs to shop online.
Myth 4 – Domestic retailers will always have a ‘home field’ advantage over the global retailers.
Though it is usually believed that a domestic brand will always have an upper hand in one’s own country – the retail industry is playing quite a leveller on this front. Retailers – domestic, or foreign – have an equal chance to grow and thrive, provided they have the required assets to beat the other.
Myth 5 – Global online pure players will always have advantage over domestic online pure players.
Agreed that Amazon and eBay are huge in terms of global online presence. But then, they still are not yet aware of the local flavours across the globe – in a way the local retail shops are. They are trying, but are still far away from getting into the skin of all the buyers across the globe. It will take time. A lot of time – especially without having a physical presence.
Myth 6 – Retailers are inherently better positioned than brands, as they are closest to the customer.
There’s no denying the fact that consumers are attracted towards buying stuff online as it’s the ‘in-thing’ and there sure are a lot of very tempting offers online – but then, a lot of brands and retailers have started their specific retail outlets that offer almost similar discounts, and in addition the comfort of checking the product first physically.
Myth 7 – Online retail is cannibalizing sales in other channels (– or the Death of Brick-and-Mortar Retail Myth).
- So is the myth. Well, brick-and-mortar retail was a $4 trillion market in the United States in 2013. And if that sounds a tad bit old piece of news, here’s some from the last year:
- Laura Heller, 28th February 2015: ‘Brick And Mortar Stores Matter More Than Ever’
- Shellie Karabell, 7th July 2015: ‘Brick-and-Mortar Retail Is Alive and Well’
- Forbes, 15th Oct 2015: ‘Three Ways Brick-and-Mortar Stores Are Closing In On Online Retailers’
Myth 8 – Low price is the main driver of customer spend at favourite retailers.
- Day 1: ‘Hey, this is the best online deal! It is so unbelievably low-priced. I’m placing an order right-away!’
- Day 5: ‘Oh no! Remember the low-priced product that I ordered online? It was delivered in a broken condition!’
There. Yes, low-price is very attractive and will always make you want to buy – but then, the above is not something that we have not heard. I’m not saying that this happens always. But, there’re instances that such things happen – and it is not a good feeling. The retail shops win hands down here. Agreed that in both cases – online vs retail shopping – you get an option to exchange. But then, it’s easier to digest the fact that you picked up something that did not fit compared to something that you waited to experience and it came in a not-working condition.
In short – quality and experience will always win over the price effect.
However, for all this disruption to yield its desired outcome and business benefits for the retail industry, investing in software quality will prove to be the key enabler.
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