The Death of Retail Stores in Canada is Greatly Exaggerated: Study

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The death of bricks and mortar retail stores may be greatly exaggerated, according to results of a new study by Microsoft, Retail Council of Canada and research tool WisePlum.

It found that it’s not a retail apocalypse that’s taking place in the industry these days but really a transformation.

Diane J. Brisebois, President and CEO, of the Retail Council of Canada, says she was not surprised that 90 per cent of retail activity in Canada is still in-store.

Diane J.Brisbois, President and CEO of Retail Council of Canada

“I think it’s simply because bricks and mortar has been around much longer than online retail and so it’s to be expected that it still represents the great majority,” says Brisebois.

The survey of 5,000 Canadian consumers found that bricks-and-mortar stores capture most of the retail sales in every major vertical. The report, From Omni-Channel to Frictionless Retail: Insights on Today’s Consumer With Advice and Tips for Retailers found that for discount, grocery and department stores, more than 90 per cent of sales occur in store.

The study showed that consumers like the physical retail store experience because it offers instant gratification with the ability to browse, compare prices, read flyers, touch product, and purchase.

“What I did find fascinating is that while online shopping is still new compared to traditional bricks and mortar, it has not taken very much time for customers to expect the same kind of experience online as in-store,” says Brisebois.

“In the study, consumers who were surveyed were very honest about what irritated them both in-store and online . . . The customer is expecting a friction-less experience regardless of where they shop . . . Consumers want a quick and convenient experience when they shop – no matter what channel they use.”

The study found that online shopping is gaining ground, particularly with younger shoppers. Physical stores need to offer entertaining, exciting and engaging experiences that differentiate a retailer from an online-only competitor.

“The study really supported what we call total retail which means it’s not good enough to just be online. Retailers are not good enough to just be a bricks and mortar retailer. You have to be a total retailer which means you need to be where the customer is,” says Brisebois.

“That’s the reason we’re seeing a transformation. Not an apocalypse. But a transformation . . . The reason you need to be good in all channels is that a lot of studies have shown that a customer shopping in your different channels will usually spend more than a customer that just shops in one channel, which explains why the online retailers like Amazon . . . have gone from the pure play online to also looking at bricks and mortar . . . When a retailer is able to provide that, a retailer gets a larger share of the customer’s wallet.”

She says emerging technologies are going to draw consumers into stores and retailers need to change their one-time purchase mindset to one that builds experiences around the customer’s actual lives.

The study showed that problems encountered with online transactions far exceed in-store purchases but this does not dissuade online consumers from referring friends to an online store versus a physical one.

“For online retailers to continue to grow their market share, they will have to invest in their user experience,” says Paula Courtney, Product Owner and General Manager at WisePlum. “Our research found 34 per cent of Canadians would chose a different channel for repurchasing an item if their original channel choice wasn’t as easy as they thought it would be. Building a good customer experience is critical if you want your customers to return.”

The study also showed customers initiate 2.7 activities on average before completing an in-store purchase. But lineups, lack of staff and other inconveniences can easily frustrate a consumer looking for instant gratification.

Online experiences take longer with customers initiating an average of 3.4 activities such as price comparisons, reading reviews and comparing products before making a purchase.

The study clearly demonstrates retailers must strive to provide customers the ability to interact and shop across channels, creating a fluid and frictionless brand experience.

“Retailers need more than another study that quotes facts and statistics about the Canadian consumer. From the beginning, it was our goal to provide not only a benchmark of the marketplace but also a tool that helps them answer the question – So what?”, says Dave Rodgerson, Retail Industry Lead for Microsoft Canada. “Working together, we have created thought leadership that will help Canadian retailers understand how to react and remain successful in this time of digital transformation.”

The white paper can be found here: https://www.retailcouncil.org/from-omnichannel-to-frictionless-retail.

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