Exploding the myths about shopping and shoppers

Retailers need to look beyond the buzz surrounding retail and instead focus on specific aspects of consumer behaviour.

Fast fashion has become a buzzword for apparel makers.

Retail has been constantly reinventing itself, and participants race to keep up with what feels like a series of epic shifts in consumer preferences. Apparel brands are investing heavily in online shopping capabilities and introducing interactive features that complement apps and websites.

Retailers and manufacturers are rushing out new products to keep pace with the leaders of fast fashion such as Zara, H&M, and Forever 21, which launch new fashions every week or so.

But do consumers actually crave all of these changes? And which approaches can generate growth in this environment? Many manufacturers try to answer these questions using point-of-sale data, which often comes filtered by the retailers that gather the information, media coverage — which tends to focus on the new, and previous sales of their products — which reflect the past.

To get a clearer picture, we studied decisions made by 1500 apparel and footwear shoppers in the US. We asked them about everything from their initial motivation to shop, to the shopping journey itself, to how they felt after making purchases.

The results showed that retailers need to look beyond the buzz surrounding retail and instead focus on specific aspects of consumer behaviour. According to our research, many assumptions about the ongoing revolution in retail are, in fact, myths.

Below are five of our most surprising findings.

Myth: Shopping has become truly omnichannel. Fact: Most journeys are still overwhelmingly single-channel, though this is changing.

The buzzword of recent years has been omnichannel, meaning that consumers are thought to combine store visits and online interactions when shopping. However, while omnichannel is growing in importance, our study suggests that 83 per cent of shopping journeys still happen within a single channel — overwhelmingly in traditional stores, which account for almost 80 per cent of purchases today.

Retailers need to continue to focus on making their physical stores attractive to visit so that they ultimately become more-effective contributors to results. One area where they trail is knowledge of the customer. Online sites have a wealth of data on shoppers. In a store, however, a sales associate tries to guess a shopper’s tastes in real time. As a solution, technology could be used to customise the in-store experience by encouraging customers to swipe their smartphones as they enter, so that their profile could then be used to tailor the experience and offers.

Myth: The sales channel doesn’t matter. Fact: When consumers purchase online, they tend to buy more.

Shopping journeys concluding in online purchases have baskets that are 25 per cent larger, on average. When someone first visits a physical store and then purchases online, the effect is more pronounced: baskets are 64 per cent larger.

One reason is that free shipping often comes with a minimum basket size, so customers often select extra items to reach this threshold. Another is the greater product range online. Moreover, it is relatively easy to create impulse purchases online from data gathered about the shopper.

To benefit, retailers with physical stores should make a concerted effort to drive in-store customers to their website to make their purchases.

Myth: Online shopping is about instant gratification. Fact: Online journeys tend to be longer than in-store.

Shopping with clicks sounds like a speedy process. But consumers actually take more time online than when shopping in physical stores, and they make more stops. In fact, 57 per cent of shopping journeys that conclude with an online purchase begin with a consumer either first looking at another website (29 per cent), visiting a bricks-and-mortar store (15 per cent), or both (13 per cent) before transacting online.

This means that online shoppers are doing a lot of comparison, so online retailers should work harder to close sales quickly while they have the attention of the consumer. Removing hassles could help: more than 10 per cent of consumers indicated that they had abandoned a cart on a website and then bought the items elsewhere simply because they didn’t like the first site’s shipping or return policy.

Myth: The retailer doesn’t matter. Fact: Spend is dramatically higher at brand stores and websites than in multibrand stores.

Direct-to-consumer brand stores and websites generate revenues 86 per cent higher than purchases of those same brands elsewhere — and, of course, better margins. A specific store or site may make a brand feel more valuable to customers, inducing them to spend more than they would otherwise. Direct-to-consumer channels also help to develop (or maintain) a brand’s image.

Myth: Consumers always want something new. Fact: Very often, they are happy to rebuy the same or a similar item.

Fast fashion has become a buzzword for apparel makers, but many consumers are simply looking to replace an item they already have.

Acting on these findings implies going beyond technology fixes and making changes to a company’s structure. At a minimum, physical stores and e-commerce operations would benefit from better links.

Eventually, brands and retailers should integrate their
e-commerce units into the rest of their organisations, replacing channels that compete for sales from the same customer with a structure that puts the customer first. In the future, customers will decide where and how they shop, and the apparel business must make this as smooth — and profitable — as possible.

Copyright 2018 Harvard Business School Publishing Corp. Distributed by the New York Times Syndicate.