Shopping malls and online shops continue to play important roles in the world of modern retail. While consumers are rapidly engaging in digital channels, findings have it that most of them still want to see products physically before making a purchase.
Also, an online shop, which used to offer cost advantages, such as lower overheads, has seen rising return rates and increasing customer expectations around free and faster shipping, which can take a bigger bite out of profits.
Retailers have been advised to balance and optimise their online and in store operations because, while physical stores still dominate retail, online shopping is growing at a faster pace.
However, though online shopping is growing at a steady pace, profit margins are not. Rising online costs are also forcing retailers to strive for a careful balance between online shopping and shopping mall. Online sales profits are being weighed down by free delivery, free return, and packaging costs, resulting in a lower margin than physical stores. One growing problem is that consumers are taking advantage of free delivery and free returns to see products in person, a challenge that’s becoming a problem for online retailers. “There’s a new trend that people are buying multiple sizes of things to try them out at home and then return them.
As it is believed that shopping malls will likely dominate retail for years to come, dealing with the overhead and liabilities that are part and parcel of mall operations such as rent, utilities and staffing can still be a worthwhile investment. Physical stores offer consumers the ability to see the products before they buy and provide shoppers with the instant gratification of being able to immediately take their items home with them after paying. Malls also give consumers the chance to actively engage with store persons, ask questions, and make enquiries about other products that they might be interested in.
A recent survey reveals that 85 percent of consumers still prefer shopping in stores and seeing products before making a purchase decision. More than a third of respondents (36 per cent) said they don’t like waiting for items to ship, and 90 per cent said they are more likely to make a purchase when receiving assistance from a knowledgeable store associate.
Online retailers, such as Yudala are also testing the waters with physical stores, Jumia travels has a presence in Ikeja City mall. Mr P, a South African clothing retailer with presence in all shopping malls in the country, has also opened an online shops in an attempt to broaden their brand’s reach. The report said the retail space continues to be in flux, but the direction of the flux is different from what many had previously projected, with online outlets trying to penetrate the malls distribution channel rather than the other way around.
But, despite the surge in online capabilities, mobile applications and other technology advancements, majority of consumers still want the tangible experiences offered by physical stores.
The ability to see, touch and feel products as well as take items home immediately rank highest among the reasons consumers prefered shopping in stores to online.
By a fairly wide margin, the primary motivation for shopping in stores is to see and try out products before purchasing. However, some notable differences exist among shoppers, depending on their gender, age and location.
But while physical stores still hold primacy in shopping experience, seven per cent of respondents say online is the only way they shop, a trend expected to grow in the coming years.
To see, touch, feel and try out items is the top reason consumers choose to shop in physical stores as against online. With 62 per cent of shoppers wanting to kick the tires, retailers must take full advantage and up their game to create compelling in-store shopping experiences. Forty-nine per cent consumers say they choose stores over the web because they want to take items home immediately. This suggests that next-day, let alone two-day shipping, cannot fully replicate the immediate gratification of buying products in store and taking them home. Its why speed to market and figuring out last-mile delivery expectations keep retail executives up at night.
One in five shoppers cites easy returns as key reason for shopping in stores. Despite the robust online shopping movement, roughly another fifth (18per cent) of consumers still seek the enjoyment and likely social aspect of going shopping in stores.
The ability to ask store associates questions ranks fairly low on the list of reasons to shop in stores. Accustomed to having information at their fingertips and on their mobile phones, consumers don’t seem particularly motivated to seek answers from store employees or at least, not a good enough reason to go to the store.
When breaking down the data further, significant differences exist between genders when deciding whether to shop online or in stores. From the female perspective, it’s all about the ability to see, touch and feel items. Two-thirds (66 per cent) of female shoppers say trying-it-out is a deciding factor for shopping in stores. Shopping for products with a high fashion percentage, like apparel and accessories or home furnishings, is a likely driver.
While seeing or trying out products is the top-ranked reason given by men (59 per cent) instant gratification ranked next as important. A higher share of men (54 per cent) than women (47per cent) say taking items home immediately is why they shop in stores.
Comparing the average, a higher percentage of young (less than 35 years) and old shoppers (65+) cite the need to see, touch, feel and try out items as the primary reason they shop in stores. This appears to be indicative of age groups that have more time on their hands to go to stores and shop around.
An interesting relationship came up between age and instant gratification. Compared with older shoppers, a higher percentage of younger shoppers say they shop in stores to take immediate possession of items. For example: 62per cent of 18-24-year-olds cite taking items home immediately as a reason they shop in stores, compared with just 40per cent of shoppers aged 65+.
The youngest age segment (18-24) also over-indexes on returning items more easily, enjoying the in-store experience and interacting with store associates compared with the overall consumer population.
The key figure that stands out when looking across location types: urban versus suburban versus rural shoppers, is the low percentage of rural shoppers, who say they only shop online (four per cent) compared with the seven per cent national average. Undeveloped or under-developed logistics and delivery infrastructures in rural areas likely come into play here.
Conversely, a significantly higher share of rural shoppers (71 per cent) say the reason they shop in stores is to see, touch, feel and try out items. Often needing to drive long distances to shop, rural consumers may well consider in-store shopping an event and a time investment, so they want to be sure to get the items right.
Malls hold an advantage for its ability to satisfy shoppers’ needs to try out products and immediately take them home.