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Omnichannel Retailing - US - May 2019

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
Overview
The state of retail
What you want to know
What we see
Defining omnichannel shoppers
What you want to know
What we see
Drivers and barriers
What you want to know
What we see
Key trends
What you want to know
What we see
The role of technology
What you want to know
What we see
What it means
DEFINING OMNICHANNEL
Omnichannel is not a trend, it’s the “way we shop”
Figure 1: Shopping method, February 2019
Four out of five consumers are multichannel shoppers
Figure 2: Multichannel shopping, by generation, February 2019
Figure 3: Multichannel shopping, by household income, February 2019
THE MARKET – WHAT YOU NEED TO KNOW
Retail industry past the point of apocalyptic panic
Ecommerce is small, but mighty
Retail sales dominated by five types of businesses
Positive economic climate supports the retail sector
Population trends serve as leading indicators for future of retail
MARKET SIZE AND FORECAST
Retail industry continues to post gains
Figure 4: Total US retail sales and fan chart forecast, at current prices, 2013-23
Figure 5: Total US retail sales, at current prices, 2013-23
Ecommerce outpaces total retail by 4:1, but comprises only 10% of total sales
Figure 6: Ecommerce share of total US retail sales, at current prices, 2013-23
Figure 7: Total US retail ecommerce sales and fan chart forecast, at current prices, 2013-23
Figure 8: Total US retail ecommerce sales forecast, at current prices, 2013-23
MARKET BREAKDOWN
Five sectors encompass three out of four retail sales
Figure 9: Percentage of total retail sales by kind of business, 2018
Clothing and accessories top digital sales
Figure 10: Share of ecommerce sales, by product category, 2016 and 2018
MARKET FACTORS
Economy
Macroeconomic indicators mostly positive for retail industry
Figure 11: Consumers’ plans for tax refunds, February 2019
Figure 12: GDP change from previous period and consumption expenditures, 2007-18
Figure 13: Disposable personal income change from previous period, January 2007-January 2019
Figure 14: Consumer confidence and unemployment, 2000-March 2019
Figure 15: Consumer Price Index change from previous period, January 2017-February 2019
Impact of tariffs could lead to price increases
Population
America’s youth set to grow the fastest
Figure 16: Population by generation, 2018
The youngest generations are also the most diverse
Figure 17: Population by race, Hispanic origin and generation, 2018
Other demographic trends
Other factors
Channel blurring occurs as store openings outpace closings
More ways to jump online means more ways to shop
Figure 18: Devices used to access the internet, February 2019
THE CONSUMER – WHAT YOU NEED TO KNOW
Online preferred for browsing, stores preferred for buying
CPG categories see fewer multichannel shoppers
Lower prices, elevated convenience drive shoppers online
Technology is connective tissue between channels
Different channels have different strengths, but consumers seek consistency
Click-and-collect services bridge online and offline experience
Bringing the fun back to in-store shopping
SHOPPING METHODS BY SHOPPING SCENARIOS
Online for browsing, stores for purchasing
Figure 19: Shopping methods, by shopping scenarios – Net, February 2019
Opportunity to drive impulse purchasing online
Figure 20: Shopping methods, by shopping scenarios, February 2019
SHOPPING METHOD BY ITEM
CPG categories lag when it comes to multichannel shopping
Figure 21: Multichannel shopping versus single-channel shopping, by item, February 2019
Searching and buying channel preferences closely mirror each other
Searching
Figure 22: In-store versus online shopping, by item – Part one, February 2019
Figure 23: In-store versus online shopping, by item – Part two, February 2019
Figure 24: In-store versus online shopping, by item – Part three, February 2019
Buying
Figure 25: In-store versus online buying, by item, February 2019
Shopping for replenishment purposes more likely to be confined to one channel
Figure 26: Online searching versus buying, by select items, February 2019
CHANNEL DRIVERS
In-store wins on everything but price and convenience
Figure 27: Channel drivers, February 2019
Figure 28: Channel preferences for customer service, product quality and reliability, by age, February 2019
Both channels have merit when it comes to speed
Figure 29: Channel preference for speed, by age, February 2019
Stores move toward experiential retailing
Figure 30: Everlane Cashmere Tour event social media promotion, December 2018
Shoppers go online when looking for convenience and a better deal
Figure 31: Channel preference for speed, by age, February 2019
OMNICHANNEL SHOPPING BEHAVIORS
When it comes to digital tools and tech, younger consumers lead the way
Figure 32: Engagement with/interest in omnichannel offerings, by age, February 2019
Use of tech
Leading with digital to transform physical
Figure 33: Use of in-store digital devices, February 2019
Cashierless tech
Figure 34: Amazon Go demonstration, May 2019
Figure 35: Usage and interest in ability to track total spending while shopping, by household income, February 2019
Pickup and returns
Shoppers like having the option to pick up or return online orders at a store
Figure 36: Purchasing online and picking up or returning to a store, by parental status, February 2019
USE OF MOBILE
Nearly four in 10 shoppers consult their mobile device while shopping in-store
Figure 37: Mobile phone shopping and buying while in-store, February 2019
Two thirds of mobile shoppers check prices on their phone while in a store
Figure 38: Reasons for using mobile device in-store, February 2019
Figure 39: Reasons for using mobile device in-store, by generation, February 2019
Store associates increasingly empowered with mobile devices
Figure 40: Interaction with tech-enabled store associates, February 2019
ATTITUDES TOWARD OMNICHANNEL OFFERINGS
Channel consistency matters
Figure 41: Attitudes regarding pricing strategies by channel, February 2019
Younger consumers will share personal information to get customized recommendations
Figure 42: Attitudes regarding personalization, by age, February 2019
ATTITUDES AND BEHAVIORS TOWARD BUY ONLINE, PICK UP IN-STORE SERVICES 
Consumer interest is there, but BOPIS not seen as a mandatory
Figure 43: Engagement or interest in option to purchase online and pick up in-store, February 2019
Figure 44: Important factors when deciding whether or not to buy online, November 2018
Saving money and time are key benefits
Figure 45: Top five motivations to use buy online, pick up in-store services, February 2019
Satisfaction is high
Figure 46: Walmart grocery pickup direct mail, April 2019
Figure 47: Buy online, pick up in-store shopping experience, February 2019
Retailers are testing various approaches to BOPIS
DELIVERY PREFERENCES 
Delivery options expand to meet consumers on their terms
Figure 48: Delivery preferences, February 2019
Consumers want flexibility and choice
Figure 49: Interest in delivery enhancements, February 2019
Young men most open to new forms of delivery
Figure 50: Interest in delivery enhancements, by gender and age, February 2019
PREFERRED TYPES OF IN-STORE EXPERIENCES
It’s all about elevated convenience and fun
Figure 51: Reasons for shopping at a physical store, February 2019
Event-based experiences can draw audiences to stores
Figure 52: Ikea Facebook ad, May 2019
Figure 53: Types of in-store experiences, February 2019
Technology and social opportunities can draw younger consumers to stores
Figure 54: Select types of in-store experiences, by age, February 2019
Nearly all omnichannel shoppers can be reached with five types of experiences
Figure 55: TURF analysis – Types of in-store entertainment, February 2019
KEY PLAYERS – WHAT YOU NEED TO KNOW
Omnichannel isn’t an option, it’s a mandatory
Transforming for omnichannel shoppers isn’t easy or cheap
Stores are a critical part of omnichannel, but there isn’t enough room for them all
Ecommerce expands to encompass mobile, voice and social
WHO’S LEADING?
Large retailers with deep pockets have an advantage when it comes to omnichannel
Figure 56: Walmart Big Game Commercial – Grocery Pickup – Famous Cars (Extended Cut), January 2019
KEY CHALLENGES
Channel-centric versus consumer-centric
Omni doesn’t mean being all things to all people
Being truly omnichannel comes at a cost
WHAT’S NEXT?
As one door closes, another opens
Emerging forms of commerce
Delivery by drones
AI continues to shape...everything
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Fan chart forecast
Consumer survey data
TURF methodology
Direct marketing creative
Abbreviations and terms
Abbreviations
Terms
APPENDIX – THE MARKET 
Figure 57: Total US retail sales, at inflation-adjusted prices, 2013-23
Figure 58: Total US retail ecommerce sales and forecast, at inflation-adjusted prices, 2013-23
Number of households with children reaches lowest point in a decade
Figure 59: Households, by presence of own children, 2008-18
More people are living alone
Figure 60: Single-person households, 2008-18
Figure 61: Median household income, in inflation-adjusted dollars, 2007-17
Figure 62: US gasoline and diesel retail prices, January 2007-March 2019
Figure 63: Percentage of total retail sales by kind of business – Grand total and with some sector exclusions, 2018
Figure 64: Total US retail sales excluding gas stations, at current prices, 2010-18
APPENDIX – THE CONSUMER 
Figure 65: Table – TURF Analysis – Types of in-store entertainment, February 2019

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