UNDERSTANDING THE NEW
"I'm just popping to the shops"
FROM SIMPLE TO SPLINTERED TO SEAMLESS
In the beginning, there were shops. Places we visited to have a look round, chat with an assistant, and buy stuff from the rows and racks of stock vying for our attention, we knew what we needed and a shop was the place to get it. This model worked pretty well for centuries, and was still the relevant scenario less than 20 years ago when everybody - retailers, manufacturers and shoppers - seemed to know where they fitted in. Life was SIMPLE.
THE INTERNET IS BORN
Time moves fast and Y2K seems like yesterday - our computers didn't crash but the dotcom bubble did burst. In 1991, Tim Berners Lee made the first internet software available, by '95 Amazon and eBay were launched, BOO.com came and went in a matter of 18 months (along with $135m of investment) and by 2004, nine years after its humble beginning, Amazon made its first full year of profit. During this time we were finding that shopping was also a pastime practised while sitting at home with a PC, and popping to the shops was a mere click away.
For retailers and brands, the sands were clearly shifting as they worked out how to operate within this internet-enhanced world. When Amazon launched, less than 1% of the world was using the internet; 16 years later that has risen to 30% (1)
A MULTI-CHANNEL WORLD
So the world got a little less SIMPLE, but a whole lot more fun.
Now conventional wisdom suggests that these are competing forces - that the more we shop online, the less we'll buy in store. Not so, according to the statistics. While the global e-commerce market is predicted to grow by 19% this year to $680bn and to $930bn by 2013 (2)
, since the internet arrived, the total amount of retail sales space has increased over 200% from 40m2 (2002) to 130m2 today (3)
. Granted, the bulk of new retail real estate is in emerging markets whilst the fastest growth in internet sales is in developed markets, but there is sufficient overlap to suggest a contradiction. So is this a supreme act of defiance from the 'build it and they will come' developers, or are perhaps the internet and online channels more complementary than we've been led to believe? More on this later.
Now - more game changing still - shoppers can buy things while sitting on a bus. Mobile internet and the emergence of the 'always on' consumer means the way shoppers think about, validate and act on their purchasing decisions has become SPLINTERED.
Analysts estimate that by 2015 almost all mobile devices sold will be smart. Juniper Research estimates that by 2016 over 1-billion devices will be sold per year with the emergence of budget models like the Orange Monte Carlo and the Motorola Fire bringing Angry Birds to the emerging markets as well.
What was SIMPLE - "I'm just popping to the shops..." is now SPLINTERED - "... shopping is anywhere and everywhere."
SPOILT FOR CHOICE
Why has the shopping scenario become so SPLINTERED? I can now buy in a shop, on a website, via an app on a laptop or smart phone, through my games console. Alongside traditional and still powerful catalogues and direct mail, I can now get deals and promotions via QR codes and see an augmented world through my phone's camera, placing exciting products in my path or simply pointing out where the nearest bar selling Stella Artois in a strange city is. I am poked and prodded by friends on social network sites where I can also start buying virtual products with new internet-based currencies. Facebook Credits (F-Commerce) is a virtual currency you can use to buy virtual goods.
You can now even earn Facebook credits when shopping in the real world through multi retailer reward programme Shopkick. We are happy to take a recommendation to buy something from someone we have never met and who lives 5000 miles away. I can price check on the go via RedLaser and I can get location based deals from Foursquare by becoming a Mayor, or I can join a collective buying group to get discounts on just about anything (Groupon). Shops now pop up and pop off, convenience stores are more convenient as they become an event or viral installation, and if all this wasn't enough I can actually stream my products for a day as 21st century consumption may no longer be about ownership (Netflix) - phew!
To some this SPLINTERED shopping journey is exciting and liberating because the options available to the regular 'man on the street', or 'on the bus', or 'sitting at home' equate to variety, choice and value. Whereas to others these SPLINTERS are a sharp reminder that the retail world is moving on at pace.
It's too simplistic to say that the retail landscape is now divided into on-line and in-store purchases. The dynamics of the customer journey are more multifaceted than that, with shoppers confidently jumping between 'traditional' and 'new' paths to purchase.
So back to the competitive or complementary question: Smart brands and retailers are not grabbing all of these shards at once - trying to implement a 360 degree strategy in this SPLINTERED world could leave you badly cut. The options appropriate for a traditional bricks & mortar retailer may be quite different to that of a brand that has grown up in the manufacturing, wholesale or online world. The key is to understand that consumers do not see a on- and offline world; they respond to and are embracing In-Line experiences, which may mean brands and retailers choosing to do five things in- and out-of-store really well, (in-line) rather than 10 in a sporadic or siloed way.
So the idea that online and in-store channels are competing is more to do with internal structures and supply chain economics than any mass migration from bricks to clicks.
As the shopping experience moves from being SIMPLE to SPLINTERED, we should try to understand what affect the variety of shopping methods, choice and value has had on today's consumers. In doing so we can further understand how to respond and create a SEAMLESS customer journey that taps into emerging mind states and the growing acceptance and enjoyment of in-line experiences. The way we think about and select products is changing, whether we are a typical Generation Y, a Young Family or a thrusting Oldie who is experiencing a midlife release rather than a sports car-fuelled crisis.
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Download Understanding The New Customer Journey
(2) JP Morgan
(3) A.T. Kearney
(4) Google Adplanner