Thinking in terms of bricks versus clicks is outdated – bricks-and-clicks is the current and future retail reality; especially in emerging markets, including South Africa.
This is the word from Nielsen’s new global research “What’s in-store for online grocery shopping – Omni-channel strategies to reach crossover shoppers”, conducted in 63 countries to assess consumer behaviour and attitudes toward in-store and online shopping across product categories; with an emphasis on groceries and fresh produce. It explores patterns across product categories; investigates the key influencers and barriers that affect the decisions of “trialists” (purchased online in the past but not recently) and “considerers” (currently don’t buy online but would consider buying) in adopting online retail models.
Nielsen South Africa head of retail services Gareth Paterson says: “We found that the most effective strategies to engage shoppers starts with an in-depth understanding of how shoppers make purchasing decisions– both online and in store, while considering the blurring across both options, then offering touchpoints that are specific and relevant to their needs.”
When asked what products or services are currently purchased online, many South African respondents said travel (53%), event tickets (52%), books/music/stationery (45%), IT and mobile (40%) and fashion (38%), while items such as fresh groceries, packaged grocery food, medicines and pet food are mostly accessed in-store.
Travel and event tickets are also purchased online with greater frequency than offline, while books/music/stationery and IT and mobile are purchased to the same extent on and offline, and Fashion is still purchased with greater frequency in-store.
For fresh produce (fruit, vegetables, meat and dairy), the most effective online activation strategy is offering a full money-back guarantee for products not meeting expectations.
Other high-influence activation strategies include offering the same produce free with subsequent purchase, freshness labels and the ability to make special product requests to suit individual needs, such as green bananas, ripe tomatoes, lean cuts of meat.
Paterson comments: “When it comes to the information sources used to aid purchase decisions in the fresh grocery category, visits to the physical store is top (56%) followed by word-of-mouth (41%), newspapers or magazines (32%), and websites containing coupons or discounts (30%). Our respondents cited online user reviews and blogs or special interest websites at the bottom of the list”.”
While online and offline switching behaviours suggest that most consumers choose to buy fresh and packaged groceries and medicine or health-care products in store, the use of online shopping options is growing, especially among tech-savvy Millennials.
In South Africa, which has a 49% internet penetration, 51% of those sampled say they would go to a physical store to buy groceries and would not consider buying online, 40% are not buying online but would consider it, 6% have bought online but not recently, and 3% buy online regularly.
When asked if they had confidence that their personal information on a retailer’s website is secure, the majority of South African consumers (57%) said they did but 13% somewhat disagreed and seven percent strongly disagreed. Another question dealt with problems of internet connectivity with 42% saying they felt this was a problem in South Africa.
To encourage online purchases of any consumable products, retailers will need to address consumers’ concerns. A full refund for product that doesn’t match consumers’ expectations is most influential among ‘trialists’ and ‘considerers’, but other strategies include same day product replacement, free delivery above a minimum spend, tracking progress of delivery online and free delivery from Tuesday to Thursday every week.
In line with global trends, the most important source of information used in purchasing decisions are traditional touchpoints. Visits to a physical store are helpful for all product categories, but they’re clearly the most influential source for fresh grocery products.
For all categories, digital platforms and social media are more influential in purchasing decisions in developing markets than advanced ones, highlighting a greater importance for integrated omni-channel marketing strategies in developing markets.
Some disruptive trends that will continue to drive connected commerce growth include:
* Business model innovation – New models are gaining traction, and South Africa is no exception. While no single model is right for everyone, the challenge is to determine how to take the best of the online and offline worlds and blend them in a way that deepens the shopper relationship and experience.
* Rising connectivity – Exponential growth will occur in emerging markets and South Africa, driven largely by the spread of mobile devices and increasing access to affordable data.
* Digital payment disruption – Mobile is helping to address one of the major challenges for online retailers: the largely unbanked population in much of the developing world – mobile money services is enabling new consumers to engage in e and m commerce for the first time, driving additional consumer spending.
* Rising economic prosperity and consumption-led growth – Growing consumer purchasing power and the rising middle class will be a growth engine for consumption, with young, digital natives being a powerful force for future consumption.
* Urban living – Up to 64% of South Africans live in urban centres, which have better digital and physical infrastructure necessary to facilitate connected commerce growth.
Overall, it’s clear that digital retailing gives consumers more ways to shop and greater access to products and services than even before. Consumers are also embracing the freedom of shopping whenever and wherever they please, as growth in online sales outpaces bricks and mortar to capture a growing share of retail spend in many markets around the world.
While these measures show more sales going online; actual consumer behaviour is a little more complicated, as the lines between online and offline channels continue to blur.
Paterson comments: “Simply adapting to keep pace is no longer sufficient; to create maximum ROI in an omni-channel environment, winning brands and retailers must know their shoppers – their demands and how and what they’re buying online and in-store- and then leverage the specific touchpoints that will maximise their shopping experience.”