With Christmas a hazy memory and most of us bursting at the seams with new year resolutions (and with our over-indulgence), retailers are starting to release their Christmas sales figures. So far, the results are mixed. John Lewis is celebrating a 5.1% increase compared to the 2014 Christmas period; Marc Bolland is stepping down as the CEO of Marks & Spencer due to a challenging quarter with sales down 5.8% compared to 2014; and Next is blaming poor Christmas sales on warm weather. Supermarkets seem to be suffering similarly.
If we take a moment to look back at a few predictions made in the run-up to Christmas, Experian forecast that online retailers in the UK would see online sales grow by 12.6%, with spend increasing by 9.6% compared to 2014. If we look at the figures at face value, we spent £1.1bn, up 35% on last year. Shoppers were bombarded with Black Friday, Cyber Monday and countless other offers in the run-up to Christmas. Asda made the brave decision not to participate.
What the figures don’t tell you is how many online sales are returned or how much retailers waste on failed delivery. Speaking from personal experience with one of the aforementioned retailers, a pair of trainers for my partner has failed to get to our house four times so far. The retailer now thinks they might “be lost”. 64% of us are looking for more convenient delivery options, yet retailers wasted an estimated £600m a year on failed first-time delivery, not to mention further attempts.
Which leads us onto the issue of customer expectation versus experience. The success of retailers such as Amazon has shifted expectations; if it can deliver something on the same day, why wait three days for another retailer to do the same? Shopping cart abandonment is on the increase, with 46% abandoned due to poor delivery options.
Now let’s look at customer experience. Going back to the Christmas sales figures, we don’t know how many potential sales were lost over the Christmas period due to poor customer experience.
But what we do know is that 85% of customers desire an omni-channel experience, yet only 29% of retailers are truly delivering it. Retailers have an incredibly tough job given 70% of them don’t yet have truly mobile-enabled sites. It’s a big investment with significant marketing and technology spend attached over multiple years, usually requiring either a re-platform or significant system upgrade. Consider how much time and money M&S invested in its 2014 website re-launch.
Many retailers fudge this issue by bolting on technology, but customers see through it and are disappointed by inconsistent experiences, with 76.5% of shoppers abandoning their basket during their online journey.
The final area to consider is the physical versus virtual shopping experience.
I recently took part in an online panel debate, hosted by the Guardian, on retail and brand marketing at Christmas. The whole panel pretty much agreed that retailers were missing a trick in terms of the physical store experience. Those winning seemed to be luxury brands, but they have a much smaller footprint. With 52% of customers preferring the shopping experience in-store, it should be a destination. Yet only 23% of UK retailers see the store as the number one channel in 2020. Retailers need to assess the role of each channel, targeting customers with more relevant messages, technology and offers.
Brands, agencies and technology partners must work together to transform the customer journey and overcome disconnected expectations v reality. Getting it right will result in higher sales, improved customer loyalty and higher share prices. A brave (yet wise) resolution for us to aim for.
Mette Davis is director of digital and regional innovation at the Marketing Agencies Association
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