Digital is influencing retail at staggering rates. However, the vast majority of retail transactions still take place offline and within local businesses. While many retailers have concentrated on the e-commerce opportunity associated with digital, those that focus on leveraging digital’s influence in the discovery and research phases of the purchase cycle have a unique advantage in driving revenue growth.
Digital Is Influencing Retail at Staggering Rates
According to a recent study conducted by Deloitte, digital interactions are expected to influence 64 cents of every dollar spent in U.S. retail stores by the end of 2015, or $2.2 trillion. Deloitte defined influence by analyzing how a sample of consumers used digital and mobile devices before, during, and after retail visits.
That’s a massive amount of influence over an enormous market. And it’s growing. The level of influence last year was 49%, and Deloitte projects it to approach 90% by 2018. As with most things digital, mobile is a significant growth driver.
The study points to a few other interesting findings illustrating digital’s impact on retail. For example, there are certain categories where the influence skews even higher – considered purchases such as electronics, home furniture, and automotive. And digitally-influenced consumers buy more and spend more: consumers who use digital while they shop in-store convert at a 20 percent higher rate compared to those who do not.
But the Vast Majority of Retail Transactions Still Take Place Offline
What’s also interesting is that despite digital’s influence on purchases, the vast majority of actual transactions still happen offline. According to Census Bureau data republished by YCharts, e-commerce is still only 7% of total retail sales. It’s growing at a solid clip – 24% on an annualized basis – but still a small slice of the overall retail market today.
Most of those offline transactions take place in local businesses. An estimated 80% of consumer spending takes place within 15 miles of the home. Another data point suggesting that digital influence leads to local, offline purchases comes from Google: the search term “near me” rose 34% since 2011, and nearly doubled since last year. The majority came from mobile – about 80% in Q4 2014.
Retailers Leveraging Digital to Drive Awareness, Interest, and Store Visits Have an Advantage Over Those Concentrating on E-Commerce
Many retailers have concentrated on the e-commerce opportunity associated with digital. But in this perspective, that misses the bigger picture. The power of digital lies in understanding and leveraging how digital impacts the discovery and research phases of the path to purchase, not the checkout counter.
Ultimately, these data points really highlight how complex today’s modern buyer journey has become. Digital has become the de facto standard in terms of influencing, discovering, and researching purchases. But when consumers ultimately open their wallets, they still often prefer to set down their device and go to the store. Marketers that are capitalizing on this trend have a distinct advantage.