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Impact Of Online Vs Offline
DotActiv TeamAug 6, 2015 1:05:00 PM4 min read

Online vs Offline's Impact on Category Management and Merchandising

1979. The year the “YMCA" by Village People peaks at #2 on the pop singles chart and Margaret Thatcher becomes new British prime minister. What many people don’t know is that this is also the year that the United States birthed the concept of online shopping – formerly known as “teleshopping” – and this revolutionized the way business’s function to this day.

Online vs In-store: How will this impact Category Management and Merchandising?

Even though the concept of ordering your products online has been around for 19 years in South Africa, I only made my first purchase from Zando around February 2015! For a young professional, supposedly “in-the-know” about all the new trends and ways to make our busy lives more convenient, you would think I would have taken the plunge years ago and gotten with the program. I, along with millions of other South Africans still like to kick-it old school and experience everything physical stores have to offer.

I started to wonder if I was the only one in SA putting online shopping on the back-burner. The answer is yes and no. According to an article posted in the BusinessTech online journal, online shopping is on the rise:

  • The article noted that online shopping in South Africa came into being in 1996, but that e-commerce was only forecast to reach 1% of total local retail sales in 2016.
  • Arthur Goldstuck, managing director of research company World Wide Worx, said that local e-commerce sales are set to top R9 billion in 2016.
  • This is expected to be 1.03% of total retail sales in the country in that year, a milestone for SA’s e-commerce space.

Although the numbers look promising for a future increase in online shopping transactions – Goldstuck also noted that “online retail is still in baby’s shoes”.

In a survey released by Accenture in July 2014 – it appears that the majority of local shoppers still lean towards purchasing their products in-store rather than through the business’s online channel. Retailers ranging from Woolworths to CNA maintain a strong social media and digital presence, including online shopping. So then why do shoppers still prefer braving the traffic and going directly to the store? More importantly, why should businesses continue to invest in smart merchandising and space planning techniques?

The answer is this: as South Africans we are faced with delivery constraints, slow and expensive broadband and inconsistencies in the online vs in-store pricing. These factors prompt the customer to turn off their tablet or PC and do their shopping the good old fashioned way.

Delivering a seamless experience across all retail touch points remains a challenge, but also an exciting opportunity for South African retailers. Although online shopping is not the preferred way South African’s do their weekly grocery runs, on a Global scale it has resulted in tremendous growth and success – where a smaller percentage of shoppers prefer in-store purchasing.

So now that I have touched on the factual reasons why South African’s are hesitant when purchasing products online – I’m going to get to some of the softer reasons  why we, and many other consumers worldwide, still prefer to shop in-store.

Why we, and many other consumers worldwide, still prefer to shop in-store

 

1. Put simply, we like to touch stuff

Stores provide customers with a sensory experience that enables them to touch and feel products, immerse themselves in brand experiences, and engage with the store salesmen who offer tips and advice while making your purchase – and in doing so ease away the potential for buyer’s remorse.

2. Interestingly – there is a bridge in the generation gap

You would assume that the Baby Boomer generation (1946 – 1964) and Generation X (early 60’s to early 80’s) most likely to prefer physical stores when embarking on their shopping journey. And you would be right.

But what’s surprising is that today’s teens haven’t entirely been absorbed into the world’s technological frenzy. They to, still prefer the brick-and-mortar stores when shopping for their favourite items or discovering new brands and product innovations. The one group with the lowest preference for physical stores is Millennials (80’s and 2000’s). But even they would rather try, buy and return in a brick-and-mortar store.

3. There is no replacement for experience

No matter how far down the technological rabbit-hole we go, the process of going to a store and embarking on the journey of self/brand discovery will always hold more appeal and excitement than doing this while staring into your iPad, even for the modern consumer.

Conclusion

Innovative product ranges and buying strategies, strategic floor planning and clever merchandising will continue to be a key differentiator for retailers. It’s not enough to buy some shelves and stack some product. Customers expect more when they choose to make the effort to go to your store; and we need to be able to make their effort worthwhile.

Streamlining your store’s merchandise flow remains core to retailing in this day and age. That combined with a strong e-commerce and buying component is sure to be a recipe for successful retailing in the new millennium.

So the moral of my story, is that category management will remain a top priority for retailers for the foreseeable future.

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DotActiv Team

The DotActiv team comprises category management experts lending their retail experience and knowledge to create well-researched and in-depth articles.

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