In-store experience must adapt to combat rise of online shopping

Physical shops will continue to be the single most important retail channel regardless of digital disruption, but less than half of customers are satisfied by their in-store experience. That’s according to a wide-ranging Irish Retail and Consumer report from PwC.

High profile retail struggles, including the recent insolvency of ToysRUs in the UK, have focused attention on the potential risk to traditional shopping districts and to so-called big-box out-of-town outlets as more consumers shop online. The PwC research suggests the physical retail model remains resilient, although vulnerable.

Nearly half (46pc) of Irish consumers said that they shop in-store at least weekly. The survey shows that consumers like to shop in stores and will continue to do so – by providing the right combination of experience, value, conveniences, service and integrated physical and online services.

The data does show that, to remain relevant, traditional stores need to adopt to changing consumer technology – for example almost a third (31pc) of Irish consumers say mobile is their preferred method of payment in-store, rising to 66pc for those aged under 34.

It suggests that shops that can’t cope with changing payment processes are likely to be left behind.

Worryingly, for physical retailers who need to retain an edge over often cheaper online competitors, the PwC survey shows customers are becoming less satisfied with their in-store experience. Lack of expertise among staff is a big and growing problem, it shows. Almost half (49pc) of respondents are not happy with sales associates’ knowledge of their own product range, up from 37pc last year.

Two-thirds of customers are not happy with in-store wifi or personalised offers.

Even when shops have been quick to adopt technology, they can get it wrong. Shoppers are generally happy for retailers to hold personal data, and growing numbers use artificial intelligence to help them automatically update online grocery orders; but at the same time the research shows people are uncomfortable when tracking technology is used to push offers based on where they are at a given time.

John Dillon, a partner in PwC Ireland Retail & Consumer Practice, said the research highlights the complexity of customer engagement. “The survey paints a picture of consumers who are complex, conflicted, and highly segmented by age, bringing consumer markets to a turning point,” he said. “The convergence of new technology and emerging patterns of social interaction are reshaping consumer habits in ways that will heavily influence which brands people buy and which consumer products and retail companies succeed,” he said.

The survey found that 25pc of Irish consumers shop online at least weekly – compared to double that (51pc) in the UK and 68pc in China. The good news for all retailers is that most people in Ireland are upbeat about the economy and about their own finances – meaning they’re more inclined to spend. More than eight out of ten (82pc) Irish consumers foresee the economy performing better or the same in 2018 compared to last year.

Three-quarters expect to spend more or the same in the year ahead, regardless of Brexit, inflation and other cost pressures such as fuel prices and rents.

The survey also found big support for shopping locally – which 59pc of Irish online consumers feel it is important to support their local economy, and for quality and product traceability reasons.