KPMG in the UK’s retail survey report analyses key trends and consumer behaviour from across 283 brands and retailers. Key trends include Black Friday, mobile natives, delivery & returns, changing role of the store, automation and the outlook for 2017.
Black Friday continues to reshape the UK retail trading pattern – 44% of Black Friday purchases were made on the Friday itself, with the remaining purchases spread over a four week period. Savvy consumers are wising up to Black Friday discounts, with 74% of those who bought a discounted product stating they would not be willing to buy the same item at full price.
The ‘mobile natives’ are here
Millennials and Generation Z (generally those born in the mid-1990s - early 2000s) use their mobiles to purchase and browse early and late in the day. But, they are also willing to shop around and value the store – more of the younger generations interacted with a store during their path to purchase than Generation X (usually those born in the late 1970s - early 1980s). We also saw up to five times higher rate of use of social media by under 35’s vs over 35’s.
The evolution of delivery and returns
‘Track my customer’ will become just as important as ‘track my parcel’ – delivery tracking is now an expectation of consumers who prefer free and convenient fulfilment. Free returns are critical for consumers, but a crucial decision for business profitability. About 61% of respondents said free postage was the most important factor for returning purchases, but some categories saw over 30% intentional returns – where multiple items were bought to compare sizes or specification. In response we are seeing increasing innovation and competition in last mile fulfilment.
The store isn’t dead!
Around 40% of shoppers used the store at some point in their path to purchase. Stores are still essential in supporting online sales growth, 21% of online purchases use Click & Collect methods - of which two thirds picked up their purchases in store and the remainder used other options such as local collection points. Overall 35% of online purchases were later returned in store.
Retailers will start to direct technology investment to automation and robotics to drive down costs. We see an opportunity for smaller retailers in the creation of one engine, with multiple brands. Consumers are increasingly using the tools available, with over 70% checking stock as part of their purchase and almost 90% receiving delivery notifications.
2017 is shaping up to be the perfect storm, with currency hedging, declining margins and property concerns – but it could also be the perfect opportunity. For example, brands could cut out the retailer and increasingly sell directly to consumers or intelligent pricing could establish growth.