In-store shopping is far from dead – but the phygital world beckons retailers

The appeal of in-store shopping in a thriving e-commerce era is not diminishing – but it is evolving, according to new research commissioned by technology company Lightspeed and Inside Retail

“It is undeniable,” stresses Andrea Quinn, Apac senior director of sales at Lightspeed (pictured above). “Our survey reflected that consumers are drawn to physical stores for the tactile experience – with 56 per cent of consumers visiting stores to view products in real life and 46 per cent of consumers visiting stores to compare similar products within a tangible retail setting. 

“And this appeal will last. I can’t see online platforms competing in the tangibility sphere – not to satisfaction, at least,” Quinn adds. 

Lightspeed is a single platform for point-of-sale, payment processing, inventory management and reporting which also includes tools for e-commerce and marketing. The company is launching the Retail Insights & Shopper Sentiment for 2024 with Inside Retail this month – a deep dive into consumer behaviour and the evolution of in-store shopping. 

Quinn says that while the survey’s results spell good news for brick-and-mortar stores, there are two key areas that will continue to impact how in-store shopping is evolving – customer expectations and phygital retail – the bridge between physical stores and digital retail.

The report showed that customers expect both greater convenience and additional services from shopping in-store rather than online. High-level factors that consumers consider when deciding which brick-and-mortar retailer they shop with include:

  • 42 per cent of shoppers check online for stock availability before their in-store visits.
  • 39 per cent of shoppers favour stores with loyalty programs.
  • 21 per cent of shoppers are drawn to gift cards and various gift choices.
  • 15 per cent of shoppers feel it is important for a store to have layby and/or buy now, pay later options.

“Catering to these changing customer expectations, while having an understanding of which services to prioritise will contribute to the growth and success of retailers over the coming years,” said Quinn. 

“The importance of adopting an omnichannel approach cannot be overstated. It’s not a question of whether brands should adopt it, but rather which channels they should be prioritising, which should be informed by their target customer and product offering.”

Blending in-store shopping and online channels

Phygital retail is not a new phenomenon, but its blend of in-store and online shopping will continue to shape the role of brick-and-mortar stores over the next few years. 

“For example, brick-and-mortar stores function as the final step in the shopping process for 45 per cent of frequent consumers – where they research products online, and purchase in-store. For 17 per cent of consumers, it’s the inverse: brick-and-mortar stores are the first step in the shopping process, where they research in-store, and buy products online. 

“While this is a relatively basic example of the distinction between the functions of digital retail and physical stores, it will nonetheless influence the role of brick-and-mortar stores over the coming years,” explains Quinn, adding that retailers must ensure they provide customers with effortless transitions between in-store and online shopping. 

That extends to ensuring the availability of stock in a store is accurate because for those who research online and then go offline for the tactile experience and purchase, it’s a bitter experience to discover the product is out of stock. 

So, how can retailers tackle this pain point? “The answer lies in technology,” explains Quinn, emphasising the functionality that Lightspeed’s solution delivers. “More specifically, a unified platform that integrates e-commerce platforms with POS platforms. This allows for default inventory tracking and automated updates to inventory levels. This means that if there is a sale or inventory change either in-store or online, both platforms (POS and e-commerce) simultaneously adjust inventory levels to reflect that – informing the retailer through the POS system, and customers on the e-commerce platform.”

Liz Anderson, founder of the healthcare & beauty brand, White Earth, says Lightspeed’s inventory management feature saves her team time and stress in monitoring inventory. “I don’t even have to think about it, it automatically happens when you’re sleeping.”

“And that’s precisely how painless it should be,” adds Quinn. “Automated and in the background. The technology is there, these processes and the ability to offer these services to your customers don’t have to be manual, time-consuming or vexing.”

Each channel has a distinct role

Retailers also need to understand the distinct roles of each channel. For example, while online shopping is popular, it does not always result in a purchase, because consumers do a lot more than simply buy products online – they browse, they read reviews, and they price check. Thus, retailers need to set out the objective of each channel, she says – such as sales, engagement or awareness – and monitor activity on them to determine if each channel is underperforming or not.  

Technologies like mobile apps, QR codes, and interactive kiosks can help bridge the gap between online research and in-store purchases, says Quinn. 

“Mobile apps offer easy access to product information and personalised recommendations, QR codes provide instant details on scanned products, and interactive kiosks can enhance the experiential component.”

Marketplaces, meanwhile, play a pivotal role in the early stages of the customer journey, serving as platforms for browsing, comparing products, and evaluating prices. However, while these initial steps are crucial for raising product and brand awareness, they seldom culminate in immediate sales – fewer than one in five millennials and 7 per cent of Gen Z consumers purchase products from marketplaces. Despite that, those channels remain an important step in their shopping process and thus can be valuable in showcasing a product or brand. 

“Finally, consumers shop for different products, differently. It is clear from the report that consumers exhibit a higher preference for shopping in-store for pet foods and supplies (70 per cent) and healthcare and supplements (71 per cent) compared with books and toys (53 per cent), for example.” 

Determining how customers engage with specific product categories should shape resource allocation within online shopping platforms, she advises.

The loyalty factor

In the Lightspeed-Inside Retail survey, loyalty programs were an important factor in consumers’ decision to visit a brick-and-mortar store, chosen by 39 per cent of respondents. 

“While the traditional approach of accumulating loyalty points in exchange for discounts remains largely effective, retailers can – and should – consider more diverse and engaging approaches,” counsels Quinn. “This can include tiered rewards, early access to exclusive offerings, and personalised product recommendations. In fact, one in four of the consumers surveyed placed value on personalisation.”

That said, loyalty programs don’t always have to revolve around transactions – that is just one component of a good one. An often-overlooked feature – perhaps deemed less important by some retailers – is their use in nurturing customers. 

“Pace Athletic, another Lightspeed customer, is a prime example of building loyalty by going beyond pricing and discounts,” says Quinn. “The business had to tackle a challenge encountered by many independent retailers: How to compete in a market dominated by corporate giants with cheaper offerings? 

Pace Athletic turned to nurturing its existing communities with a range of tools and tactics – a loyalty program, referral incentives, a curated range of products, and of course better service. When we asked them about their customers and loyalty, they said: “Community truly is the backbone of Pace Athletic… Our main business goal right now is to nurture the existing communities that we have because it is those communities that we survive on.” 

Quinn says she cannot stress enough the importance of deploying the same loyalty programs both online and in stores. 

“Pace Athletic turned to Lightspeed Advanced Marketing for that. The company felt restricted by other marketing and loyalty solutions with many of them requiring a split in their database: e-commerce customer or in-store customer. This prevented them from understanding their community holistically. With Lightspeed, they were able to build the community and nurture their customers with one strategic voice. They told us: “It makes the whole engagement strategy work a lot more seamlessly”. 

Quinn concludes that omnichannel retail will continue to fundamentally transform the way retailers engage with their customers and operate their businesses. 

“We see seamless transitions between physical stores, websites, mobile apps, and social media as critical to catering to the growing consumer appetite for convenience and personalised experiences when shopping.” 

Download Retail Insights & Shopper Sentiment for 2024. This comprehensive report, a proud collaboration between Lightspeed and Inside Retail, is a deep dive into consumer behaviour and the evolution of in-store shopping.