2. Digitally Empowered Shoppers: The Consumer is King

A Changing Landscape, Where Digital is King

As the world’s consumers become increasingly digitized and connected, industries are racing to engage with the new digital era. Over 274 million Americans have access to the internet, with 117 million using smartphones. Of these 117 million smartphone wielding consumers, 80% are using their smartphones to find stores, make shopping lists, price-check items, research products, share content, and purchase product.  With double-digit growth rates in eCommerce, US online CPG sales are expected to increase at a rate of 25% per year.  This digitally empowered shopping experience will continue to gain momentum, as more than 200 million US customers are expected to shop online by 2015.¹

Shopping Savvy – There’s an App for That!

Internet usage in the US is on the rise. According to a Google study, 89 percent of US residents use their smartphones throughout the entire day.² Smartphone internet usage has grown 389% over the past three years, while desktop has only grown 17%. Over the next five years, 1.2 billion smartphones will enter the market.³

eCommerce and price comparison apps are turning some retailers into showrooms. Consumers armed with price comparison apps, such asRedLaser and Price-Check by Amazon, are creating an increasingly transparent marketplace. Retailers are taking drastic steps to combat showrooming; Walmart recently removed all Kindle Fire tablets from its shelves after reports of showrooming occurring using the display devices. However, comScore recently found that nearly half of consumers using a retailer’s mobile app are less likely to comparison shop when using an app versus a browser.⁴ This finding underscores the importance of retailers developing engaging and dynamic mobile apps to combat showrooming and reinventing the modern storefront.⁵

Gomez Research Associates found in 2011 that 71% of mobile phone users expect websites to load as quickly on their phones as on their desktops, up from 58% in 2009.⁶  An Amazon study revealed that every 100ms increase in load time of Amazon.com decreased sales by 1%.⁷  Giving into the new realities, retailers are beginning to integrate Wi-Fi networks into their stores free of charge to increase capacity.⁸

Digital engagement by consumers is pulling all nodes of the supply chain closer to demand, as the digitally empowered customer demands to be served.⁹ In order to maintain industry excellence, and to drive more revenue through existing assets via emerging digital channels,¹⁰ distribution centers have evolved from only servicing retail stores to efficiently reaching customers via eCommerce fulfillment. Engaging these new channels is crucial in order to be well positioned in the newly integrated landscape.

Increased Mobility

With increased access to information comes increased visibility as digitally empowered customers engage with the marketplace. Furthermore, with information now being collected past the point-of-sale, both consumers and retailers are gaining visibility into behavior and trends.

Digital interfaces linked to loyalty programs, such as Stop & Shop’s Scan it!, provide insight into consumer buying trends; data on an individual point-of-sale can be aggregated to tailor retail strategy, and more effectively manage inventory and guide procurement practices.¹¹ Information gained through loyalty card systems allow personalized offers based on the user’s purchase history, as well as real-time offers by utilizing their location within the store.¹² Target recently rolled out their mobile application Cartwheel, a coupon program tailored to individuals based on purchase history,¹³ with location-based capabilities set to roll out in 2014.¹⁴ Most consumers say they’re willing to allow their phone to share their mobile location in exchange for perks, such as mobile coupons or free use of apps. One-tenth of American cellphone owners use mobile location services at least weekly.¹⁵

Consumers’ redemption of coupons and payment are increasingly converting to digital, as smartphone shoppers are more likely to use their devices for mobile coupons (34%) and for payments (23%).¹⁶  Forrester predicts a 600% increase of mobile payments between 2012 and 2017 using technologies such as payment barcodes on iPhones and NFC chips on Android equipped devices.¹⁷ With giants like Starbucks and MacDonald’s already integrating mobile wallets into their transaction capabilities, widespread industry adoption of alternative payment methods is expected to accelerate.¹⁸

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