Insights on Marketing & Technology

Consumers combine in-store and online shopping behaviors

Brick-and-mortar retailers that are facing decreasing turnover, despite an increasing visitor turnout, may think that consumers are getting fickle. Arguably, however, consumers are actually less fickle than ever – they simply want everything. It is no longer the case that some people want better in-store service, while others prefer having a greater range of choices available online. Instead, they want both. Likewise, it is not true that some consumers want upscale, high-street luxury, whereas others want the cheapest bargain-basement deals. Again, they want both.
    From 1995 to 2006, the share of global consumers who answered in the affirmative to the two questions: “I always like to buy things on sale”, and, “I like to buy products with prestigious brand names”, doubled from 11 to 22 percent. In the offline world of 1995, buying brand-name goods meant paying dearly, while in 2006, it just meant going online for a better deal.

Smartphone shopping
Furthermore, shopping needs do not necessarily arise in shops or when browsing the Internet; they arise when there is a need for consumption. The need to buy food for dinner does not appear at 5 PM, but whenever you start thinking, “What are we going to have for dinner tonight?”. It may occur during the morning commute to work, during the workday, or on your lunch break. Whenever it happens, consumers are increasingly going shopping as soon as the need arises – by reaching for their smartphones.
    Smartphones are already integral to the shopping experience, with one third of European smartphone owners using their phone to make small payments, scan product barcodes or download coupons. In this way, smartphones are turning the online shopping experience into a mobile and “in-line” affair in the sense that shopping is becoming part of the flow of activities in peoples’ everyday life – and is therefore in line with their daily schedules. Shopping is not simply about going online as we may have thought of it back in 2006. Understanding the evolution of the in-line shopping phenomenon will be incredibly influential for those who want to be commercially successful in the retail space. For half of the product categories we have looked at, Europeans profess to preferring a combination of online and in-store shopping over online only, which leaves plenty of opportunity for entrepreneurial retailers!

Merged consumer behaviour
The fast-moving consumer goods market is already in the midst of transformation, but given that durable goods are already becoming connected (cars, home stereo systems, bathroom scales, cooking thermometers, vacuum cleaners and even toilets now have apps), discretionary consumption is also moving rapidly towards in-line shopping. Product-specific apps extend the purchasing process to include additional features as they become available (new engine performance settings for cars, new sound codecs for home stereos, etc.) and these will be purchased in-line, on a situational basis, as part of the experience of using the product. In this way, the distinction between online and offline is disappearing as we speak. Normal behaviour that was previously thought of as inherently offline or online, simply merges into a single, coherent whole as consumers integrate information-based behaviours into everyday life in real time. Consumers with mobile apps are making purchase decisions in direct association with the activities that provoke their shopping needs.
    This new, merged consumer behaviour will completely change the rules for retailers but not necessarily make stores obsolete. In 2011 and again in 2012, Ericsson ConsumerLab asked urban dwellers across the globe how satisfied they were with city life. The top satisfaction drivers were the availability of restaurants/cafés, shopping areas and entertainment facilities, as well as mobile network coverage. In other words, a key reason why people like cities is because of all the shops that cities have. Yet, they exhibit seemingly paradoxical shopping behavior. They flock to shopping areas in cities – but once there, they increasingly shop online.

The best of both worlds
This is happening because consumers realize, almost without reflecting upon it, that through smartphones and other devices that offer constant connectivity, they now can have the best of both worlds: For starters, consumers want the in-store experience to be more like online shopping, where they have price transparency, easily visible offers and freedom from jostling about with other customers. 64 percent like shopping online whenever they want, while 33 percent dislike that they cannot shop in retail stores at any time. But intriguingly, consumers also want online shopping to be more like an in-store shopping experience, where they have the ability to see, touch and try things. For 59 percent, a major benefit of shopping in-store is that they can take their purchases home directly, while 30 percent dislike waiting to receive online purchases.

What’s your in-line strategy?
Understanding how consumer demands are forcing stores to become more like online merchants, and online merchants more like stores, will be a critical aspect of successful retailing moving forward.
    Today, even though many retailers, if not most, offer both in-store and online options to customers, a remaining issue to be addressed is the fact that in-store and online often seem to be treated as separate profit centers or separate units within the company. The lesson here is that consumers do not think about in-store and online as being distinct entities. So the question becomes:
    When will you start thinking about shopping like your customers, and formulate a genuine in-line strategy for your business?  

Michael Björn

Michael Björn is Head of Research at Ericsson ConsumerLab, which focuses on consumer research, social behavior and understanding the ways people act and think.

All data sourced in this text comes from Ericsson ConsumerLab Analytical Platform. European data covers France, Germany, Italy, Spain, Sweden and the UK. Analyses were developed in a joint cooperations between Ericsson ConsumerLab and the Copenhagen Institute for Future Studies.