I’ve been following the retail analyst reports over the past few weeks. One summed up the holiday shopping season as “ho hum,” due to lack of hot products, bad weather and one fewer weekend during the holiday shopping season.
Overall, “bricks” are losing out to “clicks.” A ShopperTrak report found 2.7% YTY revenue increase during the critical November to December shopping season, yet foot traffic dropped nearly 15%. The growth, tepid as it might be, is driven by a continuing shift online, where mobile sales are “booming.”
That’s point one of the “new normal” in holiday shopping and I suspect all shopping — Mobile. According to a Baynote survey, 60%+ of 2013 shoppers used a smartphone to research products, check prices, get and redeem coupons. All of these stats up significantly vs. 2012.
But mobile is just part of the story. Some shoppers still want to visit real stores, and when they do, it better be easy to pick up goods ordered online, redeem e-coupons and do even more comparison shopping. Baynote found about one-third or shoppers want “pricing, in-store availability and product pick up visible on the e-commerce site.” Presumably the other two-thirds are fine with staying home and waiting for the product to be delivered!
OK, fine. Mobile is hot, stores are not. Shoppers want an easy shopping experience. Not particularly new news.
The elephant in the room, however, is simply this: LOW prices are what really moves consumers. Much of their mobile activity is about finding deals. This can’t be good in the long run for retailers, especially big box stores like Best Buy. While some consumers (including me) value a great in-store shopping experience, the tide is clearly shifting towards a “give me the best deal” consumer mindset.
I predicted some time ago that Best Buy would have to start matching online prices (read: Amazon), and they have… and then some. Ironically, I picked up a new Kindle at Best Buy for less than the price available on Amazon.com. But wait, there’s more. When I checked out, I got another $50 gift card.
So is this the future of box stores — get in your car when you want to save money? I don’t see how this can possibly work long-term. But as a consumer I happily took the deals.
In other transactions, I bought two Lenovo laptops over the holidays. One from Best Buy and the other from Amazon.com (as the storefront for another retailer). In both cases, the deal is what got me to buy, not the shopping experience.
This is a sobering new reality for retailers. Retailer loyalty may not be dead but its health is clearly deteriorating. Online and mobile shoppers have an arsenal of tools available to pick the products they want, and get the best deal.
All of this will force a restructuring of retailing in the coming years, in my view. Retailers either need to offer a truly compelling shopping experience and unique products (like Apple or Burberry) or face the music and start cutting costs and offering deals (everyone else).
For additional info, you can download Baynote’s Annual Holiday Survey 2014 (registration required) or see the infographic below.