Gartner: US Trails Europe in Combining Physical Stores, Web
American retailers are generally lagging behind European counterparts, and are potentially losing sales when it comes to meeting customer shopping expectations of a more integrated experience between physical stores with the Internet, an advisory firm said Tuesday.
The U.S. lags behind Western European markets, and particularly the United Kingdom which leads the U.S. considerably in percentage of e-commerce at around 9.3 percent of retailers’ revenue in 2011. The U.S. percentage is less than 5.3 percent of retailers’ revenue, according to Stamford, Conn.-based Gartner, which provides technology research and advisory services.
Those markets have benefited from generally high Internet penetration and usage, a higher online per capita expenditure, and a better multichannel fulfillment infrastructure, Gartner says.
The company says customers expect a smooth, contiguous and consistent cross-channel shopping experience, but American retailers are generally struggling to execute cross-channel consistency.
“The success of the e-commerce channel will be enhanced by a multichannel approach, where retailers leverage the store to make the e-commerce channel even more appealing to consumers,” Mim Burt, research director at Gartner said in a statement.
The research firm said that retailers are not taking full advantage of the Internet’s power to interconnect business processes, and will increasingly frustrate consumers who progressively expect information to be immediately available and comprehensive across all platforms.
Outlook for the market
Mobile commerce will account for a little less than two percent of revenue through 2015, but retailers should not underestimate the impact the mobile channel will have in driving sales to other channels, according to John Davison, managing vice president at Gartner in a statement.
The firm said that channels have become separate entities, and retail businesses “remain overwhelmingly product and channel-focused”, and rather than focusing too much on return on investment of multichannel initiatives retailers need to look at channels as an outlet that provides “guiding principles” for the consumer requirements.
“Focusing on ROI on multichannel is a misnomer,” said Davison. “Retailers should focus on identifying the impact of investments in one channel on the other channels.”
“Equally, an expected drop in store revenue does not mean reduced investment in their stores. In fact, the store will require more investment targeted at cross-channel shopper fulfillment as its importance as the hub of the retailer’s multichannel offer increases,” Davison added.
U.S. retailers can boost profits by leveraging in store assets to complement and enhance sales in both channels.
“Executing on cross-channel consistency will prove challenging, as retailers continue to grapple with siloed business process and a plethora of disparate applications,” according to Burt. “Most challenging are the product-centric organizational structures that are no longer suitable for today’s customer-centric approach, which should take full account of customers shopping across current and emerging touch points.”
“Multichannel retailers that offer the ability to order online and take possession in the store will be offering increased flexibility to customers, which should enhance revenue for them,” Burt concluded.