Deloitte Digital’s “Digital Divide” studies have disproved some of the most common industry myths in the United States retail climate over the past few years. In 2012, we revealed that the dreaded “showrooming” habits of consumers actually resulted in more and not fewer purchases. In 2014, we demonstrated that the digital habits of consumers along the shopping journey were accelerating at a much faster rate than people expected. For 2016, in addition to the U.S. study, we decided to tackle a bigger question: are these trends specific to the U.S. market, or are there differences around the world? To find out, we surveyed thousands of consumers in nine different worldwide markets (see list below), resulting in millions of comparative points of data published in the 2016 report “Navigating the New Digital Divide: A Global Summary of Findings from Nine Countries on Digital Influence in Retail.”
What we discovered is that digital devices do in fact impact in-store shopping behaviors around the world. Simply put, digital technology and easy access to digital information not only affects sales within digital channels, but also has a much broader impact on in-store sales and in-store consumer behavior – a concept we refer to as “digital influence.” These key learnings not only provide guidance for current retailers operating around the world, but also for those looking to expand their presence overseas.
Digital influence factor: The percentage of in-store retail sales influenced by the shopper’s use of any digital device, including desktop computers, laptop computers or netbooks, tablets, smartphones, wearable devices, and in-store devices (e.g. kiosks, mobile payment devices.)
Mobile influence factor: The percentage of in-store retail sales influenced by the shopper’s use of a web-enabled mobile device, including smartphones.
What we found is that digital is fundamentally influencing in-store customer behavior across the board, but at different rates of impact and through slightly different mechanisms, depending on the country.
So what must retailers do to take advantage of digital influence? First, they need to close the gap we found between consumer expectations and the current digital offerings of retailers. We refer to this gap as “the new digital divide.”
The New Digital Divide
In order to compete, retailers must not only understand the evolving digital needs of their customers, but anticipate and shape their needs, as well. With more shoppers – both in the developed and developing worlds – gaining access to technology that will allow them to be “connected” 100 percent of the time, retailers worldwide need to advance their own offerings to fit the behaviors of this new consumer.
Not surprisingly, we found that digital influences consumer behavior across all countries evaluated, but the detail behind this influence varies based on country and by micro-characteristics within the market. The trends we identified on the impact digital has on in-store shopping around the globe can be grouped into three key takeaways.
- There is no single path toward digital adoption or optimization. While all countries studied are heading in the direction of increased digital adoption and usage, the progression is taking place at a considerably different pace depending on the starting point. The developing world will not necessarily follow in the footsteps of the most digitally developed countries today. In some cases, emerging markets appear to skip adoption stages experienced previously by developed markets, and therefore may quickly advance along the adoption curve. The “lift and shift” digital strategy playbook is likely not appropriate for retailers looking to expand globally.
- One digital “size” does not fit all customers within a given market. Even within a single market, digital behavior is as unique as a person’s thumbprint. It depends on who the consumer is, what stage it is in the shopping process, and what he or she is looking to buy. Of course, demographic factors like age and income play a role in shaping shopping habits within each market, but the type of shopping category also affects these behaviors. We found that consumers use digital tools differently based on what they’re shopping for.
- Across the world, consumers are demanding digital tools and features to execute their own shopping journeys. Consumers utilize digital in order to plan their decision-making and spending in ways beyond retailers’ full control. The use of third-party social media, for example, has a clear impact on shopping and buying decisions. Simply creating a unique digital interface or app is not going to reshape or contain consumer behavior. Retailers must look for opportunities to re-assert their influence along the shopping journey.
Regardless of culture, digital has a significant impact on in-store retail, and is dramatically more valuable than viewing digital through the lens of pure online sales. Ultimately, these tools and channels can extend the retailer’s reach beyond the traditional shopping trip and generate incremental revenue and profit across all channels. While this may sound simple, customers are still left unsatisfied and underserved by current digital offerings, which means retailers are leaving money on the table.
How retailers should proceed
In the end, digital and its growing influence in the retail industry represent revenue and profitability for these businesses around the globe. Given the presence and growth trend of digital influence across many markets, we believe that retailers must have a strong physical and digital presence to succeed in the long term. Retailers must continue to assess the broad and complex impact of each channel on the other. Retailers who do not get ahead of these trends with a full range of tools that consumers will embrace face real and powerful threats to their success and survival.
We encourage you to dig deeper and learn about trends in each market. Please follow the links below to learn more about our point-of-view in each market.
The six developed markets included in our study were:
The three developing markets* included in our study were:
*For purposes of this analysis, we have defined developing markets as those with internet and digital device penetration significantly less than 100 percent – in the range of 20 to 50 percent.
Kasey Lobaugh is the chief retail innovation officer and omni-channel retail practice leader for Deloitte Consulting LLP. This post is excerpted from the Global Digital Divide Executive Summary, led by Lokesh Ohri, Senior Manager, Deloitte Consulting LLP, and co-written by Deloitte LLP managers Caroline Hoyle and Gunangad Chowdhury.