The Future of Shopping
Introduction
For retailers, one of the main concerns at the moment is the emergence of an online channel to conduct sales. Online retailing becoming attractive for many businesses as more consumers opt for it. However, brick-and-mortar retailing is still the most perverse form within the United States, and most other major economies. It is impossible for a retailers to overlook the significance of the internet in determining sales. Some have cited that it is difficult to tell online shopping apart from in-store retailing because online marketing campaigns may attract foot-traffic into physical stores. Further, some store sell their products online, but the customers have to visit a store to pick such product; blurring the distinction between the two forms of shopping (Hortaçsu, 2015, p. 89-91).
This work compares online shopping to in-store shopping, particularly where each is likely to end up in the future. There are obvious changes. For most part, the future is vague; but it is possible to understand present trends, and those likely to come up, and suggest where each form of retailing is likely to be in the future. The initial parts of the work looks into the trends in retailing that are likely to define the nature of shopping in the future. The work also looks into current trends of growth, or decline in each sector.
The Future
Developments over the last few years can hint to the likely nature of shopping in the future.
Online-Shopping
Online retailing is one of the emerging trends in the industry; many retailers are striving to adapt. The main reasons given for this development is the easy access to the internet, and the fact that most people use smartphones; the latter being the most significant factor. For some time now, internet has been accessible to most shoppers, but the introduction of the smartphone has meant that (online) shopping is at the palm of people’s hand. Approximately two thirds of U.S. consumers own a smartphone, and more online shopping is presently done through these phones as compared to desktops, 51% compared to 42% respectively (Ruddick, 2015).
In 2016, global mobile spending is expected to triple to reach $300 billion. Overall sales, including in-store shopping, are on the rise. Lower unemployment rates, and increased consumer confidence into 2016 are the main reasons for this. In the U.S., online shopping only makes up about 6% of total retail sales. However, there has been a growth of more than 15% each quarter for in online-retailing for the last two years. This trend, if it continues, would have a profound impact on the nature of retailing in the future (Ruddick, 2015).
In-Store Shopping
Despite constant growth in online-sales, in-store sales still dominate the market and make up more than 90% of total sales (Sosa, 2016). Major store chains like T.J. Macc Parent TJX Cos., and Costco Wholesale Corp. continue to post gains while Wal-Mart and Dollar Tree Inc. are planning to open hundreds of stores in the near future. It would seem that in-store chopping-or foot traffic- has a definite future. However, it is important to note that there are other factors influencing the industry. Greater growth in online-retailing has meant that many customers are opting out of foot-traffic.
Although the most notable consequence of the development, and use of smartphones has been increased online sales, chain-stores have also used this technology to collect relevant information. For instance, ShopperTrak is a Chicago-based data firm that has installed tracking devices at 40,000 U.S. outlets to collect information about shoppers; by detecting their smartphones. Such initiatives are geared towards benefiting from some of the value that is luring customers towards online-shopping. It is possible to acquire information about the location of shoppers, trends, and individual preferences. For a retailer, such information is critical, and can be used to benefit from above-average earnings.
Current Trends
The future of shopping will be significantly be influenced by the currently observable trends. In a survey conducted to test the rise of online shopping, participants had to fill a form provided to them. The key reason for online shopping was cited as convenience, with many partipants rating the experience above 4/5. There were no clear differences between genders. However, younger shoppers below the age of 35 were keener on online shopping than older consumers.
Online-retailing
The internet is the main contributing factor in the emergence of online-shopping. It has introduced a new channel for manufacturers, and retailers to reach and/or target consumers. For the developed world, internet is easily accessible to the public. This is not necessarily so for some of the developing economies. However, it is notable that there has been an incessant increase in the number of people with easy access to the internet; regardless of region. The smartphone has been one of the main facilitators of online-shopping. About two thirds of Americans use a smartphone; of which 80% use it to do online purchases. Most online stores have incorporated mobile-friendly set-ups (Castañeda, 2011).
For most part, the success of a business in recent history has been determined by its competitiveness in the market. Most businesses sought competitive advantages that can ensure their survival. However, the access to the internet means that there has been a shift that encourages enterprises to collaborate.
The main reason for the rapid growth in online-retailing is convenience. Retailers can put up websites to sell their products; available at all times to consumers. It takes a lot of effort to “foot-traffic” to stores to purchase products. Online-shopping avoids this step, further, it is a mobile form of shopping that is accessible at all times. Customers can compare prices, products, and reviews before making a purchases; benefits not available at brick-and-mortar stores. Many retailers, such as L.L. Bean are now offering free shipping to customers for products purchased at their stores. Many retailers that do not offer free delivery allow customers to make online purchases, but have to pick up the products at a store.
More consumers are expected to have easy access to the internet, and to smartphones. More retailers are exploiting this opportunity to offer products and services though this channel. It is likely that online-shopping will continue to grow and become more effective as more retailers improve their processes (Stephen, 2010, p 215-6). However, online sales only make up a negligible portion of the aggregate sales; in-store shopping is still the most popular form.
It is expected that more regulations will be enforced on e-commerce; which is likely to affect the operations of online-shopping (Serrano-Cinca, 2010). These effects are likely to stabilize the sector, but also to slow its growth. Its future, hence, is less certain.
In-Store Shopping
Foot-traffic retailing constitutes a vast majority of the aggregate sales. The popularity of this form of making purchases is made possible by a culture that has been cultivate over the last few decades. Large malls make it possible for consumers to make all their purchases at a single location that might have ample parking, and set up to enhance customer experience. It is notable that the recent entry of the online-channel of making purchases has had a considerable impact on the operations of most chain-stores. The main reaction is that of integrating the online platform in their framework to allow customer make online-purchases.
Notably, in-store retailing has been on the decline. The emergence of e-commerce platforms such as Amazon. Inc., and EBay has lured many consumers from foot-traffic. In 2015, Sears Holdings Corporation closed more than 200 store across the U.S.; a trend noticeable across the industry (Banjo, 2015). It does not offer much hope for the future of this form of retailing. However, total sales from chain stores role considerably; but not as much as those of online-sales. The main reason given for the decline in customers numbers have been the state of the economy, and changes in consumer habits/preferences.
It is important not to read too much on the overall closure of chain stores across the nation; which has been on the rise. The numbers show that the total sales from these same stores have been on the increase. The closure of the stores has been viewed by many retailers as a way to cut costs. Retailers are mainly seeking to be efficient at offering their services to customers; for instance, it may be more profitable to open one large store than have many small ones within a specific location. The main cause of the decline in this sector has been the changes in consumer preferences. More consumers are keen on practicality of the products they purchase; they are no longer just compliant buyers.
An emerging trend in chain stores is that they are continually integrating the internets as a sales channel. Some, like L.L. Bean are already offering free delivery to customers. Wal-Mart purchased Kosmix, a social media, platform for $300 million. The trend is geared towards coping, and managing change as the market shifts (Murdock, 2016). It blurs the line between on-line, and in-store shopping since they integrate both forms of retailing; analysts are referring to this trend as omnichannel retailing.
Expected Developments
Another factor in determining the future of retailing/shopping are the expected trends that will influence the sector.
Online-Shopping
In-Store Pick Up
One of the most notable trends in online-shopping is the introduction of in-store pick up, or pick-up depots. Wal-Mart has already introduced an in-store pick up option for its online sales. This development is, and will remain, a popular options for already established retailers aiming to keep up with the increase in online sales. Sears, and Kmart have also introduced a similar service and deliver the online purchases to customers’ cars. Small-scale enterprises without stores will likely resort to setting up deports where customers can pick up their purchases. Some farm stores in Florida now allow customers to make online purchases, and pick the produce at a drive-through (Heller, 2011).
Mobile Apps
With a significant portion of online sales being conducted through the phone, it is just a matter of time before specialized mobile apps are availed to make transactions easier. It is expected that access to smartphones will only increase, and that more business will resort to the internet to make online sales (Heller, 2011). There is likely to be a wide variety of apps available to consumers; some may compare prices, but most are likely to be made exclusively for specific stores such as Wal-Mart. Such apps may be used to personalize the shopping experience to lure, and retain customers.
Daily Deals and Sales
With constant contact to the customers, one of the likely outcome is that there will be deals and sales over shorter periods of time. In most chain stores, deals and sales last over extended periods to offer customers the opportunity to participate. The online platform means that customers can participate at any time, and within any location. It is a trend that is already noticeable with sites like Ruelala, and OneKingLane (Cian, 2015).
In-Store Shopping
Brick and mortar store will also undergo major upgrades in the near future.
Fulfilment-center shopping
The recent emergence of online sales has resulted from a number of advantages it offers its customers; for instance, convenience. However, in-store sales still dwarf those sold on the internet. Retailers are likely to resort to turning brick-and-mortar stores into fulfilment centers. Amazon is one of the major players installing these centers near its customers. The difficulty that many on-line stores have is that they have limited warehouse infrastructure, but this is not the case for many chain-store. It will be easier for physical stores to adapt to these development, and serve more customers based on their warehousing capabilities.
Making Foot-Traffic a Better Experience
The in-store experience is likely to be transformed over the next few years. The recent dominance of chain store has meant that little attention has been made to engage customers who visit chain stores to make purchases. The lure of online-purchases has partly been a result of the lack of in-store consumer experience. This is likely to change as competition heightens. When shoppers visit store in the near future, they will likely have a great experience. For instance, Tesla Motors Inc. allows its customers to use a touch screen to customize their cars. Such a trend is likely to be picked up by other enterprises, and made more appealing to customers (Bogaisky, 2014).
Use of Various Channels
Recent rapid growth in online-sales is not necessarily bad news for physical stores. However, it is important to understand the factors that facilitate such trends. A likely outcome of the availability of many channels is that chain-stores are likely to blend them more in a way to attain maximum benefits (Prabuddha, 2010, p. 1938). For instance, social media can be used for marketing purposes while psychical stores can incorporate activities that engage clients; possibly making them loyal customers.
Summary
The recent surge in online sales is a sign of future domination of the channel. Its main reason for success has been convenience; buyers can make purchases at any time, and place. Further, increased access to the internet and the smartphone has propelled the channel to be a significant emerging trend in the industry. Many retailers are finding ways to cope, or adapt to the capabilities and consequences of online shopping. Increased participation of these players will only heighten the significance of the channel. It is conceivable that it will remain as one of the most influential shopping channels in the industry.
The dominance of in-store shopping has been unsettled by the entry of the internet into the sector. There has also been a large closure of chain stores across the country as the number of customers decline. It is a concerning trend in the industry, particularly to the large retailers such as Sears, and Wal-Mart. However, a bulk of all sales is made in these stores. The main reason for the closing of most of the stores has been to serve customers at more centralizes locations; it has not significantly affected overall sales. Many customers are mobile, and can access stores a few miles away, this observation has led to the closing of some stores with the aim of cutting costs.
Current trends aim to merge these channels. There has been considerable effort to integrate internet technology in stores, as well as to put up physical stores by online-retailers. The most effective options would be to merge both options. Indeed, that is what is happening today. In an Interview with Vogue (Standen, 2014), Mark Lee responds that it is necessary to find a balance between in-store and online sales. Amazon is also setting up fulfilment centers in key areas. Many brick-and-mortar retailers such as Sears, and Amazon are now offering online-purchase options to clients. In both cases, the intent is to bridge the gap between the past, and the future.
In the near future, neither online nor in-store shopping will be more popular; but a merger of the two. It has increasingly become clear that brick-and-mortar stores are here to stay. They are likely to adapt to the changing trends, but is unlikely that they will disappear from the scene. The online platform offers customers numerous benefits such as convenience. This shopping channel is likely to receive further growth in the future; but will not dominate on its own. The hybrid-state that will result from the merger will resort, mainly, because many retailers can adapt to either options. It is almost unlikely that either will dominate, or that either will crumple.
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