Tech turns holiday shopping on its head

More shoppers are avoiding bricks-and-mortar stores in favour of online shopping during the holidays. Here’s what store-based merchants can do to adjust to the changing landscape.

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If you believe the classic holiday song, it’s the most wonderful time of the year right now.

When Andy Williams first crooned that tune in 1963, the run-up to Dec. 25 was the best time of the year for retailers. Shoppers poured into stores to buy gifts all month long, making the holidays, as Andy sang, “the happ-happiest season of all” for merchants.

Now technology is turning holiday retailing on its head, according to a new Salesforce survey of 4,000 consumers in Canada, Britain and the U.S. The most startling number, for me, is that 77 per cent — three-quarters of all the people polled — actually avoid going to physical stores during the holidays.

How come? Stores are too crowded (say 58 per cent), traffic sucks (33 per cent) and online shopping is way more convenient (29 per cent).

I thought about those 29 per cent (the ones who’d rather browse and buy online, thank you very much) while listening to a panel discussion on retail disruption at the Canadian Innovation Exchange (CIX) conference in Toronto recently.

Jamie Shea is co-CEO of Chef’s Plate, a Toronto startup that provides subscribers with recipes and delivers the fresh ingredients right to their door. Marie Chevrier founded, another Toronto startup that uses SaaS, big data and social media to help companies target their product samples to consumers. Lylan Masterman is a principal at White Star Capital, which invested in Dollar Shave Club, the online razor retailer acquired by Unilever last year for $1 billion.

While’s technology helps traditional consumer packaged goods (CPG) companies target their marketing, Chef’s Plate and Dollar Shave Club completely subvert traditional retailing; they replace the old model of marketing, purchasing and distribution by moving that online.

Based on the survey, these online subscription models are gaining traction, especially with millennials. Within the past year, 15 per cent of millennials have subscribed to an online meal or grocery service versus just seven per cent of Gen Xers and two per cent of boomers.

How are traditional retailers reacting to this kind of digital disruption? Shea said many are looking to acquire startups or partner with them somehow. “Our customers are now ordering from us instead of going to Loblaws. So (traditional grocers) are definitely looking at us.”

Chevrier gave props to global giants like Kraft and Unilever for trying to work with startups directly or setting up their own innovation labs. Overall, however, the panelists concluded there’s not much fresh innovation going on at large retailers.

Shea said many retailers are just throwing more money into digital and “shouting their message a lot louder.” Masterman noted some startups are frustrated by the lack of resources they get from big retail collaborators. Chevrier said physical retailers “are starting to realize that working with startups is very different than working with their typical supplier.”

Okay, so the retailer/startup relationship is hitting a few rough patches. Rather than doing that ‘it’s not you, it’s me’ thing, let’s consider what store-based merchants can do to adjust to the changing landscape. The Salesforce data suggest some key areas they can focus on.

Social/mobile: Nearly half of millennials and about one-third of Gen Xers research products on social media and mobile apps before making online purchases.

Personal: Shoppers want the digital retail experience to be personalized; 79 per cent like receiving offers or promotions based on their past purchasing history.

Consistency: Almost half of all surveyed shoppers feel “annoyed” when prices in a retailer’s store are different than those listed online.

To summarize, three-quarters of shoppers don’t want to set foot in a store this holiday season. Nearly half the ones who do enter a store will be put off by inconsistent pricing. And many consumers will turn to their mobile devices before even browsing at a retailer’s website or physical store.

Judging by those signs, it looks like retailers still clinging to a predominantly bricks-and-mortar model will ultimately have to change their tune.

Image: Free Digital Photos

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