Saturday, October 31, 2020

When the Going Gets Tough, the Tough Go (online) Shopping

ASK THE CFP® PRACTITIONER


 

 

“Remote shopping, while entirely feasible, will flop.” ~ Time Magazine, 1966

Question: How have online shopping and e-commerce activity changed consumer’s habits?

Answer: At one time shopping was only viewed as a necessity. Now shopping is not only a required task, it’s become an event and an experience. Where we shop has changed too. Before cars were commonplace, shopping occurred at central locations like general stores and then in urban settings, usually at department stores.

For example, the PBS television drama Mr. Selfridge set in London from 1908-1929 was based on the department store Selfridge & Co., the second largest shop, after Harrods. The uniqueness of Selfridge & Co. lies in the depiction of shopping as an activity solely for pleasure rather than necessity. Mr. Selfridge’s use of advertising and elegant window displays was a fresh and innovative way to lure customers into his store.

As cars became more popular and suburbs grew, retail shifted from downtown department stores to suburban malls with acres of parking lots. The first enclosed, temperature controlled mall, Southdale Center, was built in Edina, Minneapolis, just outside the Twin Cities.

Opening in 1956, this 1.3 million square foot mega-shopping mall has survived high vacancy rates and store closings, much of which is due to the growth of online shopping and e-commerce.

Growing up in the Twin Cities, Donaldson’s was our flagship department store. The 1970’s Mary Tyler Moore Show made this store famous, as it was the background for the show’s opening hat toss scene. Between Donaldson’s and Southdale, the nostalgic department store was our family’s preferred shopping choice, although it is now defunct, closing in 1987 as the mall’s popularity and convenience grew. There’s actually a department store museum in downtown Minneapolis.

According to the publication, Behavioral Psychology, psychologists cite three reasons for shopping; practical purposes, self-indulgent motives, and for the thrill or excitement of the experience. Technology has made the short-term gratification or thrill component much easier to achieve instantaneously. Absolunet, an e-commerce and digital marketing agency reports that 51% of Americans prefer online shopping. Online shopping is growing 23% year-overyear. Last year 40% of millennials used the voice command features of Echo’s Alexa to make purchases; this number is expected to grow to 50% by 2020. So, to answer your question, technology has an enormous and powerful impact on our economy.

Absolunet also reports that social networks and online pop-up advertising influence e-commerce purchasing decisions for 74% of consumers. A full 60% of retailers attributed new customer growth to social media networks. Shopify is an example of the ultimate convenience for customers. It hosts over 325,000 online shops with a platform that continues to evolve to meet the growing requirements of online stores with a built-in payment system. Other easy-to-use services are BigCommerce, Magneto, YoKart and Big Cartel. Pinterest and Snapchat are used to drive retail traffic and brand awareness.

ComScore, an analytics company, anticipates that from 2016 to 2020, e-commerce will grow by 12% and represent around 39% of retail sales. Non-store companies like Amazon represented approximately 58% of all e-commerce in 2016. In the United States, mobile commerce grew 47% in 2016. Meanwhile, 82% of smartphone users make purchasing decisions with their phones while inside a store. Searching a product or scanning a photo often provides better pricing and shipping options. Mobile commerce also helps entrepreneurs build their brands without the added costs of a brick-and-mortar location.

The U.S. Department of Commerce states that when compared to desktop use, mobile internet connections account for 71% of internet minutes used in the United States, 60% in Canada and the United Kingdom, and a high of 91% in Indonesia. Consumers browse on smartphones and tablets while on the go as opposed to stationary desktop use. Sellers make it easier with “apps” specifically designed for product display and ordering ease while using a smartphone or tablet. Merchandisers know that consumers will leave their sites if is anything is difficult or takes too long.

Showrooming and webrooming are new terms describing how consumers may remotely view showrooms and experience products like furniture or appliances prior to purchase. Wayfair’s strong brand is an example of this with home décor and furniture.

Whether shopping in a store or buying online, customer service is a significant contributor to consumer loyalty. By integrating practices that respond to how consumers want to shop, e-commerce companies continue to change the shopping experience. Mobility is the common denominator in the evolution of the shopping experience. In a relatively short period of time we’ve transitioned from general stores, to department stores, suburban malls, and now online ecommerce. In the next column we’ll focus on how these changes may transform the use of existing retail shopping space. Stay focused and plan accordingly.

Information in this article was obtained from outside sources and although believed to be correct, cannot be guaranteed. The opinions expressed are those of the writer, but not necessarily those of Raymond James and Associates, and subject to change at any time.

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER ™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.”

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc., Member New York Stock Exchange/SIPC, 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email darcie. guerin@raymondjames.com. Website: www.raymondjames.com/Darcie.

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