Editor’s note: Jon Christens is director of communications at media agency Kelly Scott Madison, Chicago. This article is an edited excerpt from Kelly Scott Madison’s fall 2016 issue of State of Media.
This is the first of a two-part article looking at the state of brick-and-mortar retail. In Part I we will look at what is driving in-store shopping, focused on understanding the tactics that keep individuals coming back. Part II will discuss how consumers are taking to new retail technology that is aimed at keeping them engaged as well as to optimize the in-store experience.
Anyone paying attention to brick-and-mortar retail activity over the past few years knows it hasn’t been a pretty picture for some. Store closings and consolidations across 2015 and 2016 have steadily grown, with retailers facing rising pressure to compete more efficiently and effectively in an increasingly online world. In 2016 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. 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 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. 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? Kelly Scott Madison (KSM) and ORC International set out to answer this in our most recent retail shopping study, the 2016 Brick-and-Mortar Consumer Study (BMCS), which gathered 1,000 responses from a representative sample of U.S. adults.
Store circulars still work
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, e-mail 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 2015’s Holiday Shopping Study data, which was also conducted by KSM. One noteworthy shift happened for television, which moved up two spots in 2016 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 e-mail ads or coupons, which landed at first and second place, respectively.
Moving back to the 2016 BMCS data, exterior store signage (26 percent) and direct mail ads (26 percent) rounded out the five top 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 e-mail 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 e-mail 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 e-mail combined are certainly a powerful duo. The mass audience of TV, mixed with the dynamic nature of e-mail 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 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, e-mail and possibly even store circulars, should prove successful for driving in-store traffic.
Keeping in-store shoppers engaged
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 are always of the utmost importance, regardless of whether the goal is to encourage 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 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. 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.
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.