With total U.S. retail sales climbing to $3.6 trillionlast year and sales in physical stores accounting for roughly 85% of that, the competition for in-store customers is a multi-trillion dollar battleground. According to new data from ServiceChannel’s “The State of Brick and Mortar Retail Report,” retailers who have not proactively invested in their physical presence leave themselves prone to disappointing in-store experiences and bad business consequences. Unlike other recent studies, this new report analyzes what causes customers to not return to a retail location, and specifies the root causes for the 70% of shoppers who have endured a negative experience in the last six months. The study is being shared with ServiceChannel’s 500 retail customers and over 50,000 commercial contracting partners as a unique form of diagnostic for improving the retail experience.
The study found that while 86% of consumers continue to make the majority of their purchases at brick and mortar locations, a single negative experience such as a dirty bathroom, a broken shelf, or a parking lot issue will endanger brand loyalty and repeat purchases. Forty percent of shoppers say they will spend less money and time in a store if they’ve had such a negative experience, and 43% said they are more likely to shop at a competitor after a similar negative in-store experience. The report further found that consumers expect good brands to “handle the basics” well, and will spend more money when retailers deliver.
Respondents also expressed some frustration when retailers over-invested in new merchandising technology without fixing the basics of the retail location. While brands are increasingly investing in in-store technology to provide a more interactive experience, 67% of shoppers say retailers are too focused on making stores overly tech-forward and not focused enough on the basic customer experience. Only 20% say they have actually ever left a store because it lacked a specific technology while 64% have left a store because of its physical appearance or disorganization.
“Great retailers today understand that you need a great product, a great brand, and a great in-store experience. It’s AND, not OR,” said Tom Buiocchi, CEO of ServiceChannel. “Just think of the brands you visit over and over again – they get it – and growing retailers today understand that there are billions of dollars at stake and how valuable their physical locations and experiences are.”
Similar studies have found that 84% of shoppers said that the physical experience was an important feature when shopping. Additionally, research shows that nearly one out of fivepurchases in brick-and-mortar stores are unplanned, meaning there is potentially more than $558 billion up for grabs for retailers who prioritize the in-store experience.
Additional key findings from the report include:
Messy Stores Contribute Heavily to Negative Experiences. Issues such as dirty bathrooms, messy floors, cluttered shelves, and or even poor parking lots have an outsized effect, especially with female shoppers, a powerful cohort in retail.
One bad in-store experience is all it takes. Shoppers really care about consistent experiences, and when brands get it wrong just once, 69% of shoppers are less likely to return. For high-income shoppers (those earning more than $100,000 a year), expectations are even higher, with 76% citing they are less likely to return to a store after a single bad experience.
Stores should be shoppable before experiential. Basic amenities and the ability to touch, try-on and take home purchases immediately leads to repeat visits. Yet two out of five shoppers encountered empty shelves or struggled with disorganized inventory. And only 19% of consumers seek out retail stores primarily because “non-basic” experiences and perks like food or entertainment.
Retailers need to handle the basics BEFORE exposing consumers to too much “bleeding edge” technology. Four out of five shoppers would rather have a clean store than one that prioritizes tech, and two-thirds of shoppers think retailers are too focused on experimental tech vs. in-store basics. The most important tech for shoppers today are relatively simple capabilities like Wifi and mobile app integration.