Omnichannel Customers More Loyal, Spend More
February 1, 2017,
By Cristina Fernández
Editor’s Note: This is the first of a three-part series exploring how home retailers are shifting strategies to accelerate omnichannel success. Next month’s article will offer ideas for making stores more experiential.
It has been years in the making. While consumers started their shift toward online purchasing more than 10 years ago, today they feel comfortable buying pretty much anything online, including furniture.
Online-only retailers realize that having a physical presence can boost business. This is why we are seeing brands like Casper mattresses open pop-up stores and partner with West Elm. In other sectors it is even more prevalent, with retailers that started online like Bonobos and Warby Parker opening a significant number of stores. Even Amazon, the largest online retailer by a wide margin, has opened several book stores and is looking for grocery store locations.
In recent years, one of the most successful turnaround stories in retail is that of Best Buy. It succeeded in narrowing the gap with Amazon by upgrading its website, making its stores more experiential, leveraging buy-online-pick-up-in-store (BOPIS), and shipping items from stores to lower delivery costs and reduce travel time.
Many statistics make the case for integrating the digital and physical presence:
- Omnichannel consumers spend more. According to Walmart, its omnichannel customers spend 1.7 times more than store-only customers; J.C. Penney reports its omnichannel shopper spends two times more; and Nordstrom says its omnichannel shoppers are worth four times more than single-channel shoppers.
- Online research rules. Nearly 90 percent of customers start their research online. As a result, while physical store customer traffic is down, conversion is up.
- Mobile sales are growing rapidly. Consumers spend 75 percent of their digital time on mobile devices (smartphones and tablets), and, as a result, retailers are investing in mobile-optimized websites and/or apps. Mobile now represents more than 50 percent of digital traffic at many retailers.
- BOPIS is smart business. BOPIS can represent up to 40 percent of online sales at retailers such as Home Depot. Once in the store, 25 to 30 percent of consumers pick up additional items.
- Consumers prefer to return online purchases in store. At Nordstrom, 60 percent of online returns happen in stores, which is yet another opportunity to upsell customers with coupons or other incentives.
In 2017, omnichannel will remain a key area of discussion and investment for home retailers. Also, digital marketing, improving the store experience and differentiating product assortment are top of mind. We expect some of these best practices to be adopted by retailers that are earlier in their transformation.
- Omnichannel shoppers spend 1.5 to 4 times more than single-channel customers.
- Consumers spend 75 percent of their digital time on mobile devices.
- BOPIS can represent up to 40 percent of online sales.
- Online customers prefer to return items to stores, offering retailers another impulse sales opportunity.
Cristina Fernández is director and senior analyst at Telsey Advisory Group focused on the home furnishings industry. Prior to joining TAG in 2011, Fernández was a research analyst at UBS Securities and an auditor at PwC. She holds an MBA from NYU’s Stern School of Business and a BS from Georgetown University.