During the height of the pandemic e-commerce surged. Experiences may not have been great, but shoppers were willing to deal with the hurdles.
Now we’re in a different landscape as shoppers return to physical stores. A new research report by ChaseDesign states that the number of retail customers using “buy online, pickup in-store,” or BOPIS, all the time declined by one-third (45% down to 32%) last year and is expected to shrink further in 2022. Shoppers depending on home delivery of groceries purchased online will also fall in the near future by almost one-quarter, the report said.
The upshot is that in-store shopping remains the dominant channel for purchasing consumer goods and is expected to grow in 2023, according to the report.
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This indicates to me that now is a good time for food and drug retailers to reenergize e-commerce experiences to boost momentum.
Infrastructure Investments Are Part of the Solution
It’s important to recognize that retailers are not standing still when it comes to investments in their e-commerce infrastructures. Most of the bigger chains in particular are making heavy investments. A case in point is Target, which said recently that it plans to open three new package-sorting centers during the next year — two in greater Chicago and one in the Denver area — to advance its approach of using stores to fulfill online orders. These centers receive goods from stores and forward them to customers.
Customer Experience Is Crucial
Infrastructure investments are important but won’t automatically win the game for retailers. Strategies that enhance customer experience are most likely to lead to success.
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Engaging shoppers: Consider the case of regional grocery retailer H-E-B, which edged out Amazon and Amazon Fresh in receiving the top ranking in Dunnhumby’s inaugural e-commerce Retailer Preference Index. H-E-B also outdid Walmart, Sam’s Club, Kroger, BJ’s Wholesale Club and Sprouts Farmers Market. What made the difference for H-E-B? It was the combination of a simple and easy-to-use shopping experience with a terrific emotional connection with customers, Dunnhumby said. Other retailers can learn from these strategies.
Going beyond convenience: E-commerce is often thought of as a convenience channel, but retailers need to realize that price is also a crucial factor for many shoppers. Dunnhumby’s recent Consumer Trends Tracker found that many omnichannel shoppers, who buy both online and in-store, are struggling financially. The tracker found that omnichannel shoppers are more likely to have children and pets as part of their households, and as a result have a harder time balancing budgets. Retailers need to be aware of these dynamics in planning strategies.
Managing out-of-stocks: The Dunnhumby Tracker also discovered that perceived out-of-stocks online are 7% higher than in-store, which underscores the need for e-commerce to better handle operational fundamentals.
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The Ultimate Goal Isn’t Just About E-commerce
There are a lot of ways to enhance e-commerce strategies. But the retailers’ goal shouldn’t just be to get consumers to buy more online. Symphony RetailAI recently reported that households that shop for groceries both in-store and online are growing at a rate of 10% year over year, making them extremely valuable to retailers. The analysis also found that omnichannel customers are more loyal than their in-store-only counterparts.
The reality isn’t about a contest between online and in-store, but rather about lifting both of these selling channels. After all, consumers will ultimately decide how they want to buy. The job of retailers is to support those needs.