The death of brick and mortar retail?

As retailers continue scaling back, questions are growing about how to combat current trends. In an effort to address this, KSM’s latest study digs in to which marketing elements drive consumers into physical stores, and why…

Anyone paying attention to brick-and-mortar retail activity over the past couple years knows it hasn’t been a pretty picture for some. Store closings and consolidations across 2015 and 2016 have steadily grown, with all retailers facing rising pressure to compete more efficiently and effectively in an increasingly online world. In just this year alone, eight big-box retailers announced plans to either completely close or partially scale back their physical presence, according to bankrate.com. In all, these announcements represent more than 1,518 planned U.S. store closings for some considerably large retailers thus far in 2016. And with thousands of additional closings announced across smaller brands, the harsh reality is clear that for many, this trend has no end in sight. 

Though beyond the doom and gloom, brands and marketers know one undeniable fact: brick-and-mortar stores will never completely die off—at least not anytime soon. Having a place where the public can physically interact with a brand or product still carries a lot of weight in both the minds of consumers and retailers. Other reasons for optimism include select examples of success seen amidst the ongoing carnage, like fast-fashion groups such as H&M, Zara, Uniqlo and Primark continuing to press on with U.S. expansion plans (even though recent sales figures point to an overall slowdown for this sector, with Uniqlo in particular just conceding its need to diminish future developments due to underperforming suburban markets, according to numerous sources). 

While some organizations are rightfully looking at this instability with fearfulness, others see the opportunity to reimagine operations in ways that weren’t previously possible, thus reducing inefficiencies and overall costs. In other words, it’s becoming a hall pass for brands to make drastic changes that will ultimately benefit their efforts well into the future. So with that in mind, how can brand marketers work alongside these operational shifts to continue driving shoppers into stores during this key transition period, and beyond? KSM and ORC International set out to answer exactly this in our most recent retail shopping report, the 2016 Brick-and-Mortar Consumer Study (BMCS), which gathered 1,000 responses from a representative sample of U.S. adults. 

Top influencers driving shoppers into stores

It’s interesting to note that while online sales are taking a bite out of retail location revenues, the top marketing influencers currently driving shoppers to visit stores aren’t necessarily the newest formats. The most influential marketing sources driving in-store shopping (listed as “extremely” or “very” influential by respondents) are “store circular ads,” “email ads or coupons” and “TV ads,” which were selected by 40 percent, 37 percent and 30 percent of total audience members respectively. Not exactly a shining example of evolving consumer media habits. 

What’s more, these rankings represent only slight changes from last year’s Holiday Shopping Study (HSS) data, which was also conducted by KSM. Though one noteworthy shift happened for television, which moved up two spots this year from being listed as the fifth most influential driver of in-store shopping in 2015. Direct mail ads and in-store signage took the number three and four spot in the rankings that year, behind store circular ads and email ads or coupons, which landed at first and second place respectively. 

Moving back to this year’s BMCS data, exterior store signage (26 percent) and direct mail ads (26 percent) rounded out the top five list for marketing formats that consumers found influential in driving them into stores. Various online, radio and print publication ads were listed as less influential overall, though still considered effective by consumers to a certain degree. 

Of particular note is that these in-store shopping influencer findings mostly hold true even when analyzing different age groups. While this may be unsurprising to those thinking about Generation X and baby boomers, seeing millennials listing store circulars and TV among their top influencers is sure to catch some off guard. That said, their influencer rankings do sit differently than those of the older generations. Taking the top spot for millennials at 42 percent are email ads or coupons, followed by a tie for second place at 35 percent for TV advertising and exterior store signage. Store circulars and direct mail round out the top five at 30 percent and 29 percent respectively. 

Beyond the strong presence of traditional formats in millennials’ top rankings, another interesting aspect appears in their data set. Overall, they seem to be more receptive to a much wider array of marketing channels than other age groups. For instance, radio advertising is the format listed lowest in their rankings, yet it is still considered extremely or very influential by 21 percent of millennial respondents. Compare that to the lowest rankers for Gen X and baby boomers, which were online banner ads at 12 percent and 7 percent respectively, and the gap becomes clear. In all, the median percentage of responses listing a format as extremely or very influential for millennials’ lowest five rankers is 23.8, whereas the median for Gen X and baby boomers’ lowest five is 14.5 and 7.6 respectively. 

Millennials also felt strongly about exterior store signage as a driver of in-store shopping. While total audience responses ranked exterior signage as the fourth most influential driver, millennials listed it as tied for the number two spot alongside television ads. Furthermore, when adding “somewhat influential” to the “extremely” and “very” influential responses (essentially segmenting influential against non-influential sentiments), exterior signage moves into a tie for first next to email ads or coupons, with 74 percent of millennial respondents feeling it has some level of influence over their decision to shop in physical stores. Reasons for this vary, but a range of sources from the U.S. Census to urban planners place a large segment of this population in higher-density urban and suburban areas, and car ownership rates for this subgroup are also much lower than they are across older age brackets. Naturally, these considerations make them more prone to traveling through dense retail corridors, where signage is abundant. 

So why do consumers essentially feel that a group of tried and tested formats are overall, the most influential drivers of in-store shopping? One potential conclusion to draw is that online shoppers are often served ads over the web, while brands trying to get someone into their physical stores tend to launch messaging on more traditional formats. But with the state of today’s cross-channel messaging, that theory doesn’t go far enough. A more likely culprit, is the concept of reach. Television and email combined are certainly a powerful duo. The mass audience of TV, mixed with the dynamic nature of email can make for a lasting impression. Thus, when a person thinks about what specifically drives them into a store, a larger percentage is more apt to recall the messages delivered across these wide-reaching vehicles. Store circular ads on the other hand are likely high on the list because many consumers associate them solely with in-store activities. 

When searching for the right marketing balance, many in the retail industry are still figuring out how to grow their evolving online operations in a way that doesn’t siphon overall revenue away from other essential business areas. With that in mind, what are the ultimate brand takeaways from this data? The simplest is that for both consumers and marketers, old habits die hard, and sticking with proven formulas isn’t necessarily a bad thing. That, and the fact that television advertising, especially when paired with other cross-channel efforts both in print and online, is still one of the most effective and extensive (in terms of reach and brand building) media vehicles around. Because all of these channels work in tandem, this fact will likely remain in place for a while regardless of the current growth in online ad spend that’s working to match consumers’ expanded media habits. In essence, these influencer results demonstrate that a solid mix of messaging across all channels, with a heavy-up on television, email and possibly even store circulars, should prove successful for driving in-store traffic. 

But what keeps in-store shoppers engaged?

Of course determining which media and marketing tactics drive customers into stores is important, but how about understanding the tactics that are keeping those same individuals coming back? When asked to select their top three incentives for return trips, 63 percent of respondents marked exclusivity in terms of in-store sales or discounts as their top reason, and 53 percent put exclusive rewards or loyalty programs. These elements were followed by the ability to order online and pick up in-store, which netted 37 percent of total audience responses. 

A distinct theme arises from this data. These consumers care most about exclusivity, value and convenience when choosing to visit stores multiple times. Service issues and tech integrations are not as top-of-mind for them. To further illustrate this, consider that answer options focusing on the latter elements earned far lower percentages, starting with knowledgeable sales associates at 14 percent, and going as low as 5 percent for brand engagement through social outreach. Clearly, enticing these individuals through targeted marketing efforts that highlight exclusive offers, rewards and flexible pickup terms is the best plan of attack. 

Similar angles present themselves when analyzing what shoppers prize as useful information when they are “looking into visiting a particular store location.” For instance, 83 percent of respondents stated that seeing the price of an item would be either extremely or very helpful when conducting shopping trip research. Inventory availability of a certain item came next, with 78 percent finding this information extremely or very helpful, followed closely by 73 percent selecting store location details. This breakout likely points to the idea that many consumers conducting pre-shopping-trip research already have a specific product in mind. It also reinforces the concept that a retail brand’s online presence and site functionality is always of the utmost importance, regardless of whether it’s encouraging online sales, in-store shopping or a mix of both. What’s more, these answers bolster the notion that value and convenience are strong influencers for in-store shoppers, which shouldn’t come as a surprise to retail marketers. 

Looking at general enticements that encourage shoppers to specifically choose in-store experiences over alternatives, matters of exclusivity and convenience again present themselves. The ability to touch a product or try on clothing was ranked as a top-three perk by 69 percent of respondents. This aspect is obviously something that only a physical retailer can offer, and one that will always set brick-and-mortar apart from online shopping. In second place comes the perceived ease of item returns at physical stores, which was selected as a top-three perk by 47 percent of respondents. This latter percentage actually represents an increase from 2015 numbers, when just 41 percent of shoppers listed the in-store return process as being a convenience that made them choose store visits over online shopping. Also of importance, is that this sentiment doesn’t waver much across age groups, with nearly the same percentage of millennials, Gen Xers and baby boomers feeling this way. Apparently, web retailers still have some work to do in terms of convincing shoppers that their return process is convenient. 

Overall, shoppers are asking physical retailers to provide them with something they absolutely can’t get through online shopping. Whether that be in-store only sales or deals, rewards programs that encourage visits or the notion that when a product can be easily and immediately found via search, it will often encourage a shopping trip—the common themes of value, convenience and exclusivity persist. 

New retail technology: boon or bust?

As a whole, 2016 survey figures show that some consumers are still struggling to find usefulness in utilizing their mobile devices while shopping in stores. Even though 33 percent indicated they plan to use their mobile device while visiting a store to find or redeem promotions or coupons, 29 percent stated they don’t plan to use their mobile device while shopping at all. These numbers represent somewhat of a backtrack from 2015 HSS responses, when 44 percent claimed they would use their devices to find promotions or coupons and just 27 percent felt it wasn’t necessary for in-store shopping. While year-over-year fluctuations like this are expected, it seems that retailers haven’t made much progress lately in convincing certain shoppers to engage on second screens. 

The question then becomes, who exactly are these individuals that don’t utilize mobile devices when shopping? Unsurprisingly, most are baby boomers, with 40 percent claiming this distinction. About 30 percent of Gen X respondents said the same, and just 13 percent of millennials shunned phones while shopping in stores. So what’s the good news for tech-savvy retailers? That leaves a majority of consumers, across all age groups, stating that they do utilize mobile devices in these circumstances. Of course the younger the consumer, the more likely this will be the case, but the lesson here is that shoppers from every generation are finding ways to connect while browsing in stores. 

Besides searching for deals or coupons, what else are they doing on these devices? Tied for second place, 24 percent of respondents claim they take pictures to share potential purchases with their network prior to buying, while another 24 percent use price comparison apps. The popularity of seeking public approval by sharing photos on social prior to purchasing is certainly an interesting phenomenon. A 2015 survey conducted by fashion site Shopa found that “chelfies” or changing room selfies, were driving purchasing decisions for all genders. Men look for an average of four likes on a photo prior to committing, while women seek an average of three likes. KSM’s findings show that this activity isn’t just limited to younger audiences. Of those who say they do this, 40 percent are millennials, 29 percent Gen Xers and 30 percent boomers. 

Viewing ratings or reviews, checking other stores’ sites and looking up item availability came lower down in the activity rankings at 21, 20 and 19 percent respectively. These were followed by using retailers’ in-store apps, which appeared lowest on the list at 15 percent. The bottom ranking for apps could be due to either low popularity from consumers, or simply a lack of brand apps in existence. Regardless, it doesn’t bode well for the concept of custom app development for retailers, and reinforces the idea that optimizing a brand’s site to work well across all devices (especially mobile) is a more cost-effective strategy in the long run. 

Push notifications have also received a lot of buzz over the past few years, and for good reason. Anytime a retailer can establish a direct and uninterrupted link with its customers, positive things usually happen. That said, only 21 percent of total respondents have ever received a mobile alert that subsequently caused them to enter a store. As to be expected, audience members who did claim to have taken this action skew younger, with 49 percent being millennials, 29 percent Gen Xers and 22 percent being boomers.  

The content of those alerts were most often focused on coupons or ongoing sales, with 47 percent and 39 percent marking these two options, respectively. Though ultimately, push notifications targeting in-store shoppers still have much ground to make up in terms of proving to be effective. Evidence of this can be seen when revisiting the breakout of marketing elements that consumers claim are most likely to drive them into stores, where just 14 percent of total respondents feel mobile alerts or push notifications are either extremely or very influential. As technology and devices continue to evolve these sentiments are bound to grow, but for the time being retailers would be better served following the same advice as given for apps; test any of this activity through third-party providers rather than spending money and resources to build custom interfaces. 

New technologies currently in place and ones coming down the line to help physical retailers maximize customer data collection and efficiencies are also exciting aspects to ponder. Though as is the case with many new developments, it seems that privacy issues are leaving some with conflicting feelings about in-store behavior monitoring. Of total audience responses, 31 percent claim they don’t like it at all, while 37 percent say it’s not a bother if it benefits the customer. That left just 13 percent saying they outright like the idea of behavioral tracking, and 20 percent unfamiliar with this technology. Similar to online behavioral advertising (via AdChoices), it appears that an education campaign needs to be launched in order to boost positive feelings and understanding about the beneficial ways that retailers plan to use in-store tracking data. It remains to be seen who would pick up that torch, but the National Retail Federation is certainly a likely candidate.

Finally, when looking at the emerging in-store technologies that shoppers find exciting, the themes of convenience and time savings continue to present themselves. Touch-screen kiosks are listed as the most intriguing, with nearly 40 percent of respondents ranking it highly on an interval scale. Next came near-field communication shopping with 32 percent ranking it high, which is interesting given its relatively technical nature, and rounding out the top three high rankers is mobile pay at 30 percent. Virtual reality or augmented reality experiences and smart dressing rooms fell in the middle of rankings, while advanced display, personalization and tracking technologies (e.g., holograms, 3D printing and beacon tracking) came last. 

In the end, overall enthusiasm with new in-store technologies isn’t particularly high for the average U.S. consumer. This could be due to underexposure, since these type of executions are often only installed and valuable at flagship stores, or it could be due to general disinterest.  

Time and again, it has proven in this data that unless something is increasing value or saving time, it doesn’t fall high on the priority list for most consumers. Retail marketers should certainly take note of this, and ensure that their marketing efforts are finding the right balance in order to drive robust store traffic well into the future.

Summary of Findings:

Marketing that drives consumers into stores: The most influential marketing sources driving in-store shopping are “store circular ads,” “email ads or coupons” and “TV ads,” which were selected by 40 percent, 37 percent and 30 percent of total audience members respectively.

Television gaining ground? TV’s second-place spot as a marketing influencer driving in-store shopping represents a jump of two spots this year in the overall audience rankings from being listed as the fifth most influential driver in 2015.

Millennial myth-busting: Millennials list store circulars and TV among some of their top marketing influencers that encourage them to shop in stores, which is sure to catch some off guard. Taking first place for this age group at 42 percent are email ads or coupons, followed by a tie for second place at 35 percent for TV advertising and exterior store signage. Store circulars and direct mail round out the top five at 30 percent and 29 percent respectively.

What keeps in-store shoppers coming back? When asked to select their top three incentives for return trips, 63 percent of respondents marked exclusivity in terms of in-store sales or discounts as their top reason, and 53 percent put exclusive rewards or loyalty programs. These elements were followed by the ability to order online and pick up in-store, which netted 37 percent of total audience responses. Ultimately, U.S. shoppers care most about exclusivity, value and convenience when choosing to visit stores multiple times.

Helpful information when searching for a store: 83 percent of respondents stated that seeing the price of an item would be either extremely or very helpful when conducting shopping trip research. Inventory availability of a certain item came next, with 78 percent finding this information extremely or very helpful, followed closely by 73 percent selecting store location details. This breakout likely points to the idea that many consumers conducting pre-shopping-trip research already have a specific product in mind.

Why choose physical retailers over online shopping? The ability to touch a product or try on clothing was ranked as a top-three perk by 69 percent of respondents. In second place comes the perceived ease of item returns at physical stores, which was selected as a top-three perk by 47 percent of respondents. This latter percentage actually represents an increase from 2015 numbers, when just 41 percent of shoppers listed the in-store return process as being a convenience that made them choose store visits over online shopping.

Social acceptance: 24 percent of respondents claim they are taking pictures to share potential purchases with their social network prior to buying. The popularity of seeking public approval by sharing photos on social prior to purchasing is certainly an interesting phenomenon. KSM’s findings also show that this activity isn’t just limited to younger audiences. Of those who say they do this, 40 percent are millennials, 29 percent Gen Xers and 30 percent boomers.

In-store mobile activity: A majority of consumers, across all age groups, state that they utilize mobile devices while shopping in stores. Across total responses, 33 percent indicate they find or redeem promotions or coupons, 24 percent of respondents claim they take pictures to share potential purchases with their network prior to buying, while another 24 percent use price comparison apps. Viewing ratings or reviews, checking other stores’ sites and looking up item availability came lower down in the activity rankings at 21, 20 and 19 percent respectively.

Mobile alerts: Just 21 percent of total respondents have ever received a mobile alert that subsequently caused them to enter a store. As to be expected, audience members who did claim to have taken this action skew younger, with 49 percent being millennials, 29 percent Gen Xers and 22 percent being boomers.

Data tracking and privacy issues: Privacy issues are leaving some with conflicting feelings about in-store behavior monitoring. Of total audience responses, 31 percent claim they don’t like it at all, while 37 percent say it’s not a bother if it benefits the customer. That left just 13 percent saying they outright like the idea of behavioral tracking, and 20 percent unfamiliar with this technology.

Methodology: This report presents the findings of a survey conducted among a demographically representative U.S. sample of 1,011 adults, comprising 503 men and 508 women. Completed interviews are weighted by five variables: age, sex, geographic region, race and education, to ensure reliable and accurate representation of the total U.S. population 18 years of age and older.