Retailers miss £12bn in sales by not engaging via digital channels, study shows

FacebooktwitterredditpinterestlinkedinmailFacebooktwitterredditpinterestlinkedinmail

UK retailers are missing out on £12bn in potential sales by failing to engage consumers through digital channels, according to new research from O2, conducted by expert retail analysts Conlumino.

It found retailers are struggling to harness technologies that enhance customer experiences inside and outside the store. Three quarters of consumers say they don’t get a seamless experience shopping through digital and traditional channels, such as mobile apps or social media to in-store purchases.

With Britain’s retail sector under pressure to get back on track after months of uncertainty and falling sales, digital technologies offer new opportunities for retailers to engage customers within and beyond the store. The study found while retailers are struggling to harness technology, over 50% of all purchases are now influenced by digital channels such as mobile apps and social media in addition to retailers own websites – highlighting the need for retailers to improve their digital know-how or risk missing out.

Consumers aren’t satisfied with the experience they currently receive, with 93% saying they find some aspect of the digital shopping experience frustrating. These frustrations are causing consumers to spend less, or take their business elsewhere – resulting in a huge missed opportunity for retailers worth up to a potential £12bn in lost sales.

The study highlights a disconnect between the digital experiences retailers think they deliver and reality, revealing:

  • Retailers are failing to embrace new technology – although 46% of retailers think they do a good job of joining up the digital customer experience, nearly three quarters of consumers disagree, complaining they don’t get a seamless experience when they engage with retailers through digital and traditional channels
  • Consumers expect a seamless on and offline experience – 56% say interacting digitally is more convenient, while only 15% of people don’t use digital at all to interact with shops and brands
  • Some retailers understand the benefits but are still struggling with the technology – just 40% of retailers recognise that digital engagement helps drive sales, a low figure considering the majority of consumers say they use digital channels for some aspect of shopping. In addition, over a fifth have trouble integrating new channels like social media and apps with existing technologies and less than a third (31%) use social media tools to engage and understand their customers

Ben Dowd, O2 business director, said: “Smartphone penetration is expected to reach 90% in the next three years and the advent of universal 4G later this year will herald an era of ubiquitous connectivity. Retailers that don’t act now risk missing out on huge sales potential. The findings reveal just how crucial digital engagement has become for retailers when it comes to stealing a march against the competition.”

Caroline Gorski, managing partner of O2’s Retail & Leisure Practice, said: “Digital technology offers retailers new opportunities when it comes to understanding more about consumers and engaging with them in new ways – but as this study reveals, not enough is currently being done to harness the benefits it can bring. 

“It is critical for retailers to engage digitally with consumers within and beyond the store to secure a place on the high street of the future. This can include exciting in-store experiences that extend into the digital world, contextual and location-aware promotional campaigns to reward loyalty and attract new customers, and a consistent shopping experience across all channels, boosting customer satisfaction and retailers’ bottom line.”

Neil Saunders, managing director, Conlumino, said: “Digital services have provided a huge opportunity for the retail sector but they have also thrown up huge challenges, not least for those retailers trying to integrate new digital offerings with legacy systems. The priority now, is to create a seamless experience for the ever more demanding consumer who expects consistency across all channels. Proper integration will also provide retailers with more insight about shopper behaviour which can be used to create a more tailored and personalised experience.”

In April 2013 O2 announced a new approach to help British businesses tailor services to better suit their customers’ digital needs – Joined Up Customer.

 The five key technology capabilities of Joined Up Customer are:

  • Customer engagement apps and services: messaging Services, priority moments, O2 Money, O2 Wi-fi, mobile apps
  • Data and connectivity: managed LAN, managed WAN, O2 Wifi
  • Enterprise mobility management: device and applications strategy, device provisioning, security, connectivity, in-life management and support
  • Voice and unified communications: fixed, mobile, contact centre, business video
  • Consultancy: customer engagement, technology transformation, mobility