Experiences Key to Luring Consumers Back to Stores for Holidays: SAP
Without COVID-19 front and center, it will be important for brands to reengage with customers this holiday season, Robin Wilson, SAP industry executive adviser, told the National Retail Federation’s virtual Retail Converge conference last week. Retailers and brands should tell stories and send email triggers to customers, she said, citing industry figures saying 45% of customers who respond to win-back campaigns will open future emails. A blend of digital and physical shopping will be important in Q4, Wilson said, referencing campaigns to get shoppers into stores early in the season for important gifts and to schedule events around gift shopping to get consumers engaged.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
After shopping habits shifted largely to digital at the beginning of the pandemic, “a lot of people are forgetting about the store,” said Kara Reed, SAP solution manager-retail industry business, “but the store remains the linchpin in retail.” Half of retailers' digital orders are fulfilled in the brick-and-mortar store, she said, citing Gartner figures. Reed noted Target fulfilled 75% of digital orders from physical stores in Q2 2020.
Largely shut in for over a year, consumers have a pent-up urge to shop, Reed said, and retailers can use stores within stores, events and technology to draw in customers. Some companies are turning to technology to create compelling interactive shopping experiences, said Reed. She highlighted golf club maker Callaway’s augmented reality experience for the launch of its Maverick club line. Callaway doesn’t have its own stores, so it used large sporting goods chains, superstores and local country clubs for the interactive AR experience that consumers could initiate with a smartphone. They aimed their phone at points on the club the company wanted to highlight and text “exploded” explaining the features' benefits, she said.
Retailers can use technology to personalize the shopping experience online, said Reed, suggesting video chats with store associates who can give shoppers tips, invite them into a store for a demonstration and establish a relationship before the customer sets foot in a store. Returns decrease when shoppers have human contact, she said. “Consumers are ready to have those human connections,” and store associates are the brands’ faces that can help bring customers back to physical retail, she said.
Stores’ roles have expanded to fulfillment operations for delivery to local customers, and they’re also hubs for returns, said Reed. Customers who order online are returning to the store more, she said, saying 30%-50% of digital orders that are returned are handled through stores: “While stores may not be being used exactly as they have in the past, they’re still very much a part of the shopping experience.”
Return policies are becoming more important for consumers, said Matt Laukaitis, SAP global general manager-consumer industries. Ninety percent of consumers expect a free and simple returns process, but only 70% of retailers offer that, he said. Returns are a logistics problem for retailers because just 50% of returned products are resold, he said. That's an opportunity for brands to tie in sustainability to their brand, a growing concern especially among younger shoppers, said Laukaitis. Last year, some $700 billion of products were returned across digital and in-store, and that’s expected to grow by $100 billion by 2025. Younger consumers return products more than previous generations, he said.
Returns costs have dramatic consequences on margins and operating efficiency, said Laukaitis. Traditional returns strategies have focused on “after the fact” metrics, he said. SAP believes there’s a way to inject intelligence into the process so the returns process becomes part of a customer’s loyalty to a retailer. That includes having insights into factors that drive returns, he said.
The path to purchase this holiday season “isn’t going to be linear anymore,” said Reed, describing different touch points where shoppers begin in one channel, pay in another and maybe fulfill in another. Regardless of how consumers engage with a retailer, the experience “has to be seamless,” she said.