According to the Walker Sands Future of Retail study, the third annual consumer survey has documented the changing habits of today’s shoppers as more buying has shifted to e-commerce. On the surface, it might feel like the future of retail has stalled. For example, this year’s study shows that e-commerce has reached a saturation point in many ways, and consumer excitement has waned for some of the sexiest emerging tech.
Digging deeper into the data, says the report, retail technology space is still undergoing a major transformation, happening mostly behind the scenes. The study, based on a survey of more than 1,400 U.S. consumers, outlines four key areas where retailers should focus their attention this year:
Growing importance of the supply chain
Over the past three years, findings have shown that seamless shipping, delivery and returns have become more and more important to consumers, making them primary future drivers of e-commerce growth. Fulfillment, says the report, has become a top investment area for retailers, with 29% of capital expenditures last year going toward solutions like transportation and logistics, delivery options, order management, inventory visibility and returns management.
Integration of in-store and online experiences
While e-commerce is now a routine part of consumers’ lives, this year’s study reveals there’s still a clear preference to shop in physical stores for most product categories, but also a receptiveness to blending the online and brick-and mortar experiences. While less than a third of retailers had implemented beacon technology in 2015, seven in 10 consumers would be willing to opt into in-store tracking and mobile push notifications if they were properly incentivized by retailers.
Bringing the in-store experience online, virtual reality e-commerce, or v-commerce, seems to be entering the early-adoption phase and could represent the next big integration area for the in-store and online shopping experiences, says the report.
The rise of luxury e-commerce
Luxury goods have been the clear laggard when it comes to consumers’ willingness to shop online. But the product category saw a dramatic spike this year, with the number of consumers who have purchased a luxury item like high-end jewelry in the past year more than quadrupling from 2014. This finding supports analyst predictions that online sales of luxury goods will triple to around $80 billion by 2025, making it one of the fastest-growing areas of e-commerce.
Slow mobile payments adoption
Privacy and security concerns remain the primary reasons that consumers are hesitant to use mobile payment applications. Though adoption has essentially remained flat year over year, about a third of consumers have used these applications. Still, says the report, U.S. mobile payment transactions are expected triple in 2016 to $27 billion, a sign that a few eager early adopters and the growth of Apple Pay could eventually force more widespread changes in consumer behavior.
The future of retail hasn’t plateaued, but simply in an investment and adoption phase during which retailers’ practices and consumer behavior hasn’t caught up with technology. As a result, this year’s study is much more pragmatic than visionary, focusing on practical recommendations over aspirational technology, notes the report.
Importance of Supply Chain
While e-commerce seems to have reached a saturation point when it comes to the number of consumers who shop online, the study continues to show a steady increase year-over-year in the frequency of purchases. Almost a third of consumers now shop online at least once a week, and almost three-quarters do so at least once a month, says the report. And the number of consumers who shop less than once a month has dropped from 38% to 27% over the same time period.
Frequency of Shopping Online
Shopping Online Frequency
Source: Walker Sands Future of Retail Study 2016
Integration Of In-Store And Online Experiences Key Findings
Among those who would consider virtual reality shopping, the product categories generating the most interest include clothing and apparel (57%), consumer electronics (41%) and household goods (40%).
In another indication that consumers want their online and in-store shopping experiences to merge, says the report, 63% say they would be interested in fitting rooms outfitted with VR technology that would allow them to virtually try on items while in store. As the lines between the two retail worlds get blurrier, VR could bring them together in a seamless and integrated way.
Virtual reality is still in its infancy, notes the report, with early applications mostly focusing on video and gaming. But VR e-commerce solutions are already hitting the market, with Gear Commerce predicting that v-commerce will grow to more than $425 million in sales in 2016.
The report concludes by saying that, in the coming years, we expect to see that consumer preference for buying specific products in a brick-and-mortar store or on a website will decline, and most shoppers will gravitate toward the best brand experience, regardless of physical or virtual location, and embrace the best of both worlds.
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