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Retail Trends: “Advice Theft” Becoming Rarer

July 8, 2015 by Andreas Schmitz 0

Until recently, a phenomenon known as “advice theft” was common practice for many consumers: Taking a look at products in store, and then buying online. Not anymore.

Today, consumers often find out about products online via a laptop or smartphone, but then buy in store. Retail expert Dr. Kai Hudetz talks about the reasons for this turnaround, and how retailers can capitalize on this trend and strengthen their position. He also explains the success factors for the individual sales channels, and discusses the importance of the cross-channel concept.

Even until very recently, it was almost normal to take a look at products in store, compare prices online, and then to buy online and have the products delivered to the front door. Why have things now changed?

“Today, more than 40 percent of sales and more than a third of all in-store purchases are the result of the average customer first having researched the product in advance online,” says Kai Hudetz, Managing Director of IFH Institut für Handelsforschung GmbH (Institute for Trade Research), Cologne, and its e-Commerce Center Cologne (ECC).

“Today, more than 40 percent of sales and more than a third of all in-store purchases are the result of the average customer first having researched the product in advance online,” says Kai Hudetz, Managing Director of IFH Institut für Handelsforschung GmbH (Institute for Trade Research), Cologne, and its e-Commerce Center Cologne (ECC).

Consumers have learned that they can return items to Amazon, Zalando, and other online retailers if they do not satisfy their requirements. This means they do not need to protect themselves further. Even until recently, one in four customers has indulged in “advice theft”, that is, visiting a store to learn about a product, but purchasing elsewhere. Today, the cross-channel research and buying process often runs completely in reverse. Customers do their research online, increasingly via mobile devices, and then purchase in store. Five years ago, around one in five consumers did this. Today, it applies to almost 40 percent of in-store purchases.

In your study “Cross-Channel Upheaval”, you describe the influence of catalogs, online Web shops, and in-store shopping on purchase behavior. Which channel is winning?

In recent years, there has been a clear shift in sales away from printed catalogs that are shipped in high volumes, to online stores. More than forty percent of sales and more than a third of all in-store purchases are the result of the average consumer having first researched the product in an online store in advance. Catalogs do of course still exist, but now only account for around fourteen percent of purchases. The Internet has become the number one research tool, not least owing to developments in the mobile sphere. Another mistake that is often made is to judge online shops primarily by sales; it is clear that they are extremely important in attracting purchases.

Which criteria must today’s retailers fulfill in order to meet customer expectations?

Generally, it’s about giving customers a choice. Of course, the products that are displayed online must also be in stock, the products should be sent to an easy-to-find shopping cart at the click of a mouse, payment must be reliable, and finally, it should be possible to return goods that were purchased online in the store. Customers are difficult to predict. If the sun is shining, they visit the store and buy there. If it’s raining, they buy from their couch. At Ernsting’s Family, for example, four in every five online orders are collected in store, which shows just how important it is that these cross-channel functionalities exist.

How complex is the channel excellence that you call for?

There are now hardly any retailers left who have a poor online presence. Cross channel has become more complex. Various systems need to be coupled together, and a couponing system must function across all channels. Although this merging of CRM, checkout systems, and online data is no small task, it is feasible. Interestingly, it is often the staff who are the critical bottleneck factor. In retail, sales personnel often check in the online store if a product isn’t in stock in their branch. Perhaps this is also because they don’t gain any commission from such sales.

Cross channel is the future of retail despite still having one or two problems. Amazon and Zalando became major players as purely online retailers. Can we now look forward to seeing just as large a presence on the high street as in the online world?

Zalando has already opened stores in Berlin and Frankfurt. In Manhattan, Amazon has leased a large floorspace for open sales, and in the US state of Indiana is already testing a system for returning goods that were bought online. So yes, new branch concepts and flagship stores demonstrate that real-world sales are becoming increasingly important for online retailers: Even for today’s online giants.

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