Expert Column: How Grocers Can Prep for the First Truly Digital Christmas
The critical Christmas shopping season is here and to no surprise, digital is more important than ever when it comes to influencing, choosing and even buying gifts. That is true every year but as we reach the end of 2014, we are also approaching some watershed moments.
According to a recent research survey by Toluna, 73% percent of mobile device owners plan to use their devices for holiday shopping. And 84 percent of shoppers use digital tools before and during their trips to stores. Deloitte recently estimated that more than 50 percent of all Christmas purchases would be influenced by digital engagement and interactions.
The ecommerce growth rate is almost four times as fast as the overall rate of growth for retail sales.
If 2014 is truly the first digital Christmas, what is driving rapid adoption and usage of digital shopping tools? What trends will endure beyond this holiday shopping season into 2015 and beyond?
Four dynamics are key: two that positively drive digital engagement – utility and ubiquity; and two that could be inhibitors – security and saturation.
Utility of the digital tool is paramount to success. Time-starved shoppers facing bewildering numbers of product options rely on digital to help them make choices. One of the most used in-store apps is Amazon, but not for the reason you think - 90 percent of Amazon.com visitors purchase elsewhere. Yes, shoppers are price comparing but rating and reviews are pivotal - research demonstrates that products with an average 3+ star rating are 45 times as likely to be purchased as those without. Amazon is also influential in another utilitarian development – visual search. Although their Firefly Phone has not had the success they wanted or expected, it has undoubtedly set a new behavior in motion, one that will surely grow in coming years. Finally, the digital wallet. It’s unlikely that shoppers will use multiple formats, so which one will win out? Personally, I wouldn’t bet against the simplicity and beauty of Apple Pay.
Success in digital is also hinged on its ubiquity. Does your digital solution pass Google’s “Toothbrush Test" (you use it at least twice every day)?
What about those digital headwinds – security and saturation. Ryan Brain, partner and national consumer business leader at Deloitte in Canada advises, "Shoppers are starting to rethink how they shop given the recent breaches of personal data…. Ultimately, consumer patience will wear thin and retailers that fail to prevent and proactively address security breaches will risk the loss of substantial brand trust as consumers look to shop elsewhere." I agree, and while Target might have been exhibit A, the question of who’s next seems to be on everyone’s lips. The reality is, consumers and retailers need to be more vigilant with their data.
Saturation is the other sleeper trend to watch. Forester predicts that digital advertising expenditure will surpass TV advertising spend by 2016. Now if you consider that the cost per ‘000 can be as low as 1 percent of traditional TV – or put another way for the same expenditure you can deliver 100 times as much advertising – expect more ads. Beacons, this year's must-have technology, are going to exponentially increase retailers’ potential to serve the right message to the right shopper in the right place at exactly the right time. Get it right and the shopper will value the brand and retailer for understanding them and their needs. Get it wrong and cross the line from interruption to intrusion and shoppers will block you out of their digital eco-system as fast as you can say “spam.”
The conclusion that embraces all these trends is value – provide real utility that is valuable to the shopper, demonstrate your value by being an active part of their everyday lives, value their privacy, and value their time and attention.