​Negative retail experiences costing the economy billions

A 2019 Report found negative shopping experiences are costing the Australian economy a massive $71 billion a year

Local retailers are not keeping up with consumer expectations, costing the Australian economy billions in abandoned sales. 

That's the bottom line from The 2019 Australian Retail Report undertaken by Adyen and 451 Research. The report found negative shopping experiences are costing the Australian economy a massive $71 billion a year. 

It also reported 83 per cent of Aussie shoppers have chosen to leave a store and not make a purchase in the past six months due to an item they wanted being out of stock, at a cost of $14 billion a year. Two-thirds of shoppers have also left a store and abandoned a purchase due to a long line, costing the economy $13 billion in lost sales. 

The research surveyed both Australian consumers and retailers to understand the positive and negative opportunities of retail, focusing on customer preferences and the role of emerging technologies in meeting them. What it uncovered was Australia falling massively behind global counterparts in almost all categories, and these negative experiences in-store and online seeing Aussie shoppers abandon purchases in droves. 

According to the report authors, this is partly due to a lack of digital transformation. Just 22 per cent of retailers currently have a formal strategy in place. It is also due to 44 per cent of shoppers unable to use their preferred payment method with a retailer in-store, prompting them to abandon their purchase entirely.

Another factor is the savvy consumer, who wants a seamless and personalised experience from local retailers – something they claim they are not getting. Connected customers expect to be rewarded for their loyalty with an experience that transcends the shopping journey; in fact, 81 per cent of retailers have seen a rise in consumer expectations. 

More than two in five shoppers report they have abandoned a purchase over the past six months due to a lack of cross-channel buying options. On the other hand, more than half (51 per cent) of consumers report having made a purchase they didn’t initially intend to make as a direct result of a retailer offering a cross-channel buying option. 

According to the report, consumers want to browse and buy when, where and how they choose on the device they want, they expect to be treated as individuals and are seeking out experiences tailored to them. 

A/NZ country manager of global payments giant Adyen, Michel van Aalten, told CMO this is a clear warning to the Australian retailer they have fallen massively behind their UK and US counterparts due to negative experiences in store and online. 

“It’s a very fast and complex retail landscape today, and requires new competencies to respond to consumer needs. We are living in an age of a highly digitally literate consumer who expects retailers to keep up with their demands. They expect to be treated across multiple channels exactly the same way, seamlessly,” van Aalten told CMO

Amid the bad news is an opportunity, however, around physical stores. Half of all Australian consumers prefer to shop in-store, versus 27 per cent who strongly prefer online shopping, the highest proportion of all consumers surveyed in the wider global research. It's a sign retailers with good bricks-and-mortar experiences have the opportunity to get ahead. 

Personalised shopping experiences also exert a positive influence over customer purchasing behaviour, with 52 per cent of shoppers claiming to have made at least one additional purchase as a result of a personalised offer they received in the past six months. 

Therefore, to remain competitive, forward-thinking retailers must focus on streamlining the path to purchase by building retail experiences that put the customer at the centre of each interaction. 

“There are a few clear points of improvement: out of stock, long lines, and preferred payment methods,” van Aalten said. “Given Australian shoppers prefer to shop in-store, that presents an amazing opportunity to leverage this to create unified experiences. Traditional stores are changing to new shopping environments and offering a new unified experiences. IKEA opened up a trial design store to help consumers create a design plan for their homes - that’s the future of retail. 

“This needs to start with retailers mapping out their customer journeys and understanding expectations of consumers, and then addressing pain/friction points."

Retailers committed to unified commerce must also commit to digital transformation, to fully embrace a unified commerce strategy, which the report analysis shows is a $92 billion opportunity for Australia.

“Get onto digital. There’s still too many retailers that live in a siloed organisations, with separate teams for online and offline. But they need to unite because digital is key to creating new experiences,”  van Aalten advised.

Thirty-nine per cent of consumers claim the ability to order and pay for out-of-stock items and have them shipped to their home would encourage them to shop more in-store, and 39 per cent say the ability to check whether an item is available online before going to a retailer would increase their loyalty.

“Develop a unified commerce strategy, ask: what are the shopper experiences consumers are expecting? Nike was one of the first to change the retail environment to address the changing expectations of consumers to experiences, which has had so many advantages for them,” he said. 

451 Research surveyed 404 consumers aged 18 and above in Australia in 2019 as part of a broader globally survey of 5950 consumers. The survey was designed to better understand their shopping experiences, preferences and behaviours, as well as to learn about their expectations of retailers and their shopping desires.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.  

 

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