Observatory of new technologies and their uses.
5 Stars Store
Omnichannel retail, the key word in Europe and the USA
After the Retail Big Show in New York last January, Echangeur attended the Euroshop Show (16-21 February in Düsseldorf, Germany).
This international show dedicated to commerce and retail is only held every 3 years! With more than 100,000 visitors from 95 countries, Euroshop brought together approximately 2,000 exhibitors working in sectors such as POPA, fixtures, commercial architecture, point-of-sale fitting out, sales promotion, dynamic display, refrigeration, etc.
With these nearly 2,000 exhibitors from 53 countries, over half of whom from European countries, Echangeur offers you a swift overview of the consumption patterns of Europeans: what proportion does e-commerce represent in Europe compared with retail outlets? What behaviour, web-to-store or store-to-web?
E-commerce in Europe is growing more quickly than in the USA…
The European e-commerce market was worth €312 billion in 2012, and has shown an annual growth rate of 19% compared with 2011, quite rare nowadays. It is even thought to have risen to 21% in 2013, thereby exceeding that of the United States (estimated at +13% by RetailMeNot) for the same number of cyber-consumers (175.2 million in Europe, 171.2 million in the USA). Great Britain, Germany and France are the main countries stimulating the sector. They alone represent nearly 80% of spending in Europe.
Another similar behaviour pattern is buying frequency: 13.3 purchases in Europe against 13.9 in the USA.
But spending on the American market is still markedly higher than spending in Europe: an average spend of €82.50 in 2013 (46% more than the European average of €56.40). as for annual spending by online purchasers, the Americans, with purchasing totalling €1,143 in 2013 spent 52% more than Europeans (€751 on average) but are only 4% ahead of Great Britain (€1,094).
Great Britain overtakes the USA as far as e-commerce as a proportion of retail sales is concerned
e-commerce as a proportion of retail sales is still low in spite of everything: in France it represents 7% of retail sales excluding food, according to Fevad (2012 figures), whereas RetailMeNot estimates it at 6% in 2013 (2014 forecast: 6.9%).
Unsurprisingly, the most mature market in Europe is Great Britain (12.1% in 2013), ranking even higher than the United States (10.6% in 2013)
European omnichannel retailing practices
Europe has quickly adopted new behaviour patterns relating to the use of smartphones and tablets.
The use of smartphones and tablets to make online purchases exploded in 2013 in all countries (whereas it remained limited in 2012), thanks to sharp growth in the equipment penetration rate.
From a sample group polled by PWC, the buying frequency on smartphones rose to 43% against 30% in 2012, and to 41% against 28% in 2012. Multi-screens are gradually becoming a normal consumer pattern!
Europeans do showrooming
According to the TNS Sofres “Mobile Life” survey, 54% of Europeans visit the store before buying online, 30% even do so on their mobiles. Obviously the main appeal is price comparison (for 31% of them), followed by consulting friends (25%) and taking snapshots (23%). For 15% of them, the mobile is used to check product details, 14% of them use it to check whether the item is in stock in another store, 14% use it also to see whether it is easier to order the item online with their mobile.
But the store is still the key part of the path to purchase…
The store is still the key part of the path to purchase, as is underlined by the “Buyers’ Web” survey published by PWC in February 2014.
But it is above all their multichannel behaviour that is noteworthy. Europeans have thus settled the matter: they want both the Internet and stores. And they are forcing retailers to create greater interdependence between the channels.
The success of preparing one’s purchases remotely, which has made spectacular inroads with drive or Click & Collect, clearly bears this out. 73% of Europeans regard it as an excellent way of attracting them to a particular
Another figure to note, according to a Cap Gemini survey entitled “From Clicks to Bricks”, is that appointment-making services are offered by 42% of American retailers against 7% of European retailers. Whereas 42% of them would like to be able to make an appointment on the Internet with an expert salesman. Which opens up broad prospects…
Omnichannel retail is still the strategic response to stores in the face of new consumer behaviour.
Even if e-commerce still represents a small proportion of sales, online purchases are undoubtedly growing. In 2014, online sales will grow 11.9 times faster (European average) than sales in traditional retail outlets. In France, the rate of growth in online sales will even be 17.3 times higher! In this respect the United Kingdom, which is still regarded as retail heaven (with nearly 300,000 retail outlets according to Ubifrance), holds a special place in the European market.
In its “Retail Futures 2018” survey, the Retail Research Centre points out that searching for the best price and time savings characterize the consumer of today and of 2018. Online retail meets these consumer demands and is expected to continue.
From 12.7% in 2012, it is expected to rise to 21.5% between 2018 and 2020. The survey forecasts that 22% of stores will have closed by 2018. Only 220,000 of the 300,000 stores of today are predicted to remain!
The omnichannel notion is therefore still the key, and strategic thinking about bricks-and-mortar stores is needed. “Retailers must formulate clear strategies geared to new consumer habits : fix the number, type and location of their bricks-and-mortar stores; and link up their bricks-and-mortar stores, web sites and other channels such as social media in a coherent way”
e-commerce is a global phenomenon, but the economic and cultural differences between countries, combined with different regulations, have a direct impact both on e-commerce and on bricks-and-mortar retail. All these factors should be taken into account when considering e-commerce at local level, because the marketing of retail outlets favouring several distribution channels is correlated with online sales strategies. Certain retailers will for instance decide to reduce the number of their stores but enlarge their selling space, whereas others will prefer to increase their numbers while downsizing them.
At present, retail chains are adapting to improve their offers and ensure complementarity of their services through different distribution channels. Furthermore, faced with the growth in “click & collect”, retailers are increasing their efforts to improve the supply chain, thereby favouring swift development of the value chain.
For retailers’ property assets, the consequences will be felt and will directly impact on demand and rental values, which continue to rise in “prime” districts, whereas they are tending to fall in secondary neighbourhoods where bricks-and-mortar stores may become online order collection points, according to a survey entitled “Global perspective on retail” (Etude & Conseil Cushman & Wakefield).
However, even if e-commerce drives down rental values, the large retail parks and top locations in city centres, favoured by their large customer catchment area, geographical position and accessibility, have real potential to set themselves apart, attract consumers and offer them new services, such as home delivery. “The combined success of bricks-and-mortar stores and e-commerce will be a true competitive advantage for retailers and retail parks.
Technology and e-commerce provide important information about consumers and their shopping behaviour, and are effective levers for customizing the customer relationship. Bricks-and-mortar stores will continue to have their reason for being and will allow retailers to offer consumers an innovative shopping experience that cannot be done on the Internet” concludes Christian Dubois, Managing Director of the firm.
Consequently, it is hardly surprising to see the different store formats that have sprung up in recent years, from the arsenal store to trucks; they are all avenues with a bright future for bricks-and-mortar stores