The retail sector is under pressure to innovate in the face of mobile and social, and now faces a new nemesis: smart speakers for voice-based ordering.
To the mortification of bricks-and-mortar retailers, tech-savvy shoppers are spending more and more online due to the convenience, and are increasingly open to ordering goods and services with their voice through smart speakers. But there is also a chance for traditional retailers to fight back.
The PwC 2019 Irish Retail and Consumer Report paints a picture of a retail sector swimming against the tide of change as more connected consumers’ shopping experiences are informed and shaped by technology.
‘The importance of smart devices will only grow in the next five years and Irish retailers need to continually seek out opportunities to further digitise their business’
– GRACE MCCULLEN
Similar to global levels, nearly a third (30pc) of Irish consumers buy products online every week or more often, up from 25pc last year. The majority of shoppers – a whopping 88pc – are happy to pay delivery charges.
All of this is putting pressure on traditional retailers – who relied on footfall, location, customer loyalty and word of mouth – to up their game, improve the in-store experience and employ tools such as social media to better effect.
53pc of Irish consumers are influenced by social media for their purchases, either as inspiration or by following positive reviews. 15pc have made a purchase directly from social media. Conversely, less than 20pc of consumers say they’re likely to buy a product because of a celebrity or so-called influencer.
According to the survey, attributes that would significantly improve the in-store shopping experience are: the ability to quickly and conveniently navigate the store (47pc), sales associates with deep product knowledge (34pc), quick and easy payment methods (34pc) and in-store Wi-Fi (25pc).
The battle to bring consumers back into the store
Irish retailers, facing a plethora of uncertainties such as Brexit, need to find clever ways to entice shoppers back into the store, especially at a time when only 33pc of Irish shoppers feel confident about their finances and expect to spend more in the next 12 months.
“While the store remains front of mind, it remains under pressure from online competition, along with more demanding consumer expectations,” explained John Dillon, leader of PwC Ireland’s retail and consumer practice. “Therefore, the need for stores to create a compelling proposition has never been greater.”
At the same time, Dillon said Irish shoppers expect seamless and frictionless shopping experiences.
“The easier and better the experience, the more consumers will positively engage with the brand and ultimately spend. Consumers are seeking a seamless purchasing journey – both retailers and brands can satisfy this need through the development of an integrated store and digital strategy.”
Popular product categories for online shopping are: books, music, movies, video games (26pc), clothing and footwear (18pc), and health and beauty (12pc).
The survey suggests that other categories such as consumer electronics, toys, DIY and sports equipment remain largely in the bricks-and-mortar domain.
Smart shoppers, smartphones and smart speakers
The frequency of purchasing via a smartphone has doubled as a growing number of consumers see the convenience of mobile payments.
20pc of respondents stated that they buy products via their mobile phone or smartphone at least weekly, up from 10pc last year. But this is still behind the UK and the US experience of 23pc and 25pc respectively.
Furthermore, when shopping in-store, more than a fifth (22pc) of Irish consumers paid for their purchases using their mobile device, up from 16pc last year. Again, Ireland lags behind the global trend, which sees 34pc of global consumers paying for their purchases using their mobile device when shopping in-store, up from 24pc last year.
In what could be a good opportunity for Irish retailers to counter the online tide, a growing number of consumers are also availing of advance ordering and paying using these devices, then collecting in-store later.
“The integration of the store and the online environment is a real business challenge that all retailers and brands are facing – seamless integration of both is key to future success and getting it right is imperative,” said Owen McFeely, director of PwC Ireland’s retail and consumer practice.
“Moving beyond the business operations, having a social media strategy aligned to the business strategy is also critical.”
The survey highlights that the Irish consumer is open to new technological innovations. For example, many Irish consumers either own or plan to purchase smart home entertainment devices (69pc) and smart home energy meters (50pc).
Based on PwC international research, it is likely that AI-powered voice assistants will have the potential to be the new mobile. For example, 26pc and 20pc of US and China consumers respectively currently own smart home voice assistant devices.
Despite year-on-year growth in Irish ownership of smart home voice assistants (13pc in 2019 from 8pc in 2018), nearly half of respondents (47pc) are currently not planning to purchase this technology at all. Only time will tell how this new and still emerging technology will develop into the future.
“The bar for brand leadership will continue to shift as organisations launch ever more friendly consumer technologies,” said Grace McCullen, senior manager at PwC Ireland’s retail and consumer practice.
“The importance of smart devices will only grow in the next five years and Irish retailers need to continually seek out opportunities to further digitise their business.”