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This article was published on November 28, 2013

Cyber Mundane: Why online shopping is overhyped, and what brands should focus on instead

Cyber Mundane: Why online shopping is overhyped, and what brands should focus on instead
Blair Swedeen
Story by

Blair Swedeen

Blair Swedeen is the SVP of Strategy & Business Development, Placecast. Blair Swedeen is the SVP of Strategy & Business Development, Placecast.

Blair Swedeen is the SVP of Strategy & Business Development, Placecast.

Every year around this time, we hear about some new survey that says Americans plan to do more online shopping for the holidays than ever before. While these surveys may be accurate, we must remember that there is a difference between wanting to do something and actually doing it.

I may want to do all my shopping online to avoid lines – but the fact is, I’m not going to. Why?

While e-commerce has improved dramatically over the last 19 years since Amazon was founded, the fact remains that over 90 percent of all commerce is still being done in the brick-and-mortar world according to Forrester Research. The firm predicts online retail will rise to reach $231 billion this year – but that’s still just 8 percent of the total retail pie!

As Mike Ghaffary at Yelp excellently articulated earlier this year, while some categories like electronics and media will be subsumed by e-commerce players, the vast majority of spend and categories will remain offline for the foreseeable future.

In my own experience, no matter how detailed the description of an article of clothing may be online, I still want to try it on, see how it fits, and feel how comfortable it is before I buy it. And of course, if I want to take my family out for a holiday dinner, I’m not going to whisk them away to the Internet and feed them virtual mashed potatoes and pumpkin pie. There are some areas of retail that will simply never move online, such as clothing, shoes, restaurants, venue entertainment, beauty and fitness, and groceries.

Clothes shoppingWhile online sales may increase over time, consumers will always crave the features of physical stores. There is something to be said about the interaction of the senses and shopping – smelling a new cologne, tasting the new holiday chai flavor, and feeling the cashmere sweater for your wife in your hand. There is also something to be said for the thrill of instant gratification, of walking out the door of a store with bags in hand, knowing you are set for your holiday gifts.

And finally, there is that physical rush we get when we save money – especially during the holidays, as we have many gifts to buy and a limited budget. There’s a reason why people line up at dawn (or earlier!) outside the doors on Black Friday – not just to get the newest Xbox, but also to get the best deals, and the rush of excitement from saving money.

So this holiday season, brands should be looking to connect with consumers in the real world – not online. Here are three ways they can do that:

Rewards programs

“Rewards are the No. 1 reason why customers select the card, and there’s almost a battle to provide the highest rewards.” – Jim Miller, senior director of banking services at J.D. Power & Associates

“What we’ve learned over time is, our best customers value rewards. – Edward Gilligan, president of American Express (source: Bloomberg)

Credit card companies understand the power of rewards programs to encourage consumers to spend more in stores, and have set up highly-competitive programs to sway people to use their cards. Bank of America’s rewards program features 2 percent cash back on grocery purchases, and 3 percent cash back on gas, while the Blue Cash Preferred Card by American Express card gives its users 3 percent back on purchases made at most department stores and gas stations. The 1-2-3 REWARDS® Visa Card gives card-carriers unlimited rewards at major retailers worldwide.

Brands that want to reach consumers in the real world should partner with credit card companies, and consider how their own rewards programs can be maximized. My Starbucks Rewards is a great example of a loyalty program that delivers incentives primarily through its mobile app. Starbucks makes the app experience fun to use and providing incentives to visit their stores often – for every Starbucks purchase (in their stores or at grocery stores), people can earn Stars to receive benefits like free drinks, free food, or free refills.

Local mobile marketing

It’s well understood that solid offers will pull customers into a given retail location. A Banana Republic mobile campaign lured shoppers in by offering 10 percent off a purchase while providing a map that shows all local store locations as well as a link to the brand’s catalog.

More and more shoppers are carrying smartphones while they shop: Google estimates it’s as many as 8 out of 10 shoppers. For savvy smartphone shoppers, discovering a great deal at a new location is a fun and exciting opportunity to save. One study found that more than a third of shoppers who received offers ended up going to a retailer they had never been to before.

location-basedObviously, location-based offers have only just begun to break the ice in tempting shoppers to try out new locations. Even wireless carriers have jumped into the location-based mobile marketing foray recognizing that they can leverage their trusted relationship with subscribers to deliver local offers. AT&T has partnered with my company, Placecast, to launch AT&T Alerts, which has featured offers from brands like the Gap, Staples, Duracell, and Motorola.

Location-based mobile marketing is a great way to turn window shoppers into actual shoppers this holiday season – taking a cue from the online world, where offers pop-up while browsing. Investigate ways to offer local deals for your brand via companies like Groupon, Foursquare, Facebook Places, and Google Offers.

It’s also important to pay attention to those mobile ads while you are out shopping – this season, businesses like Quiznos are delivering more special deals on-the-fly that will only show up in apps if you are near a participating store, and can only be fulfilled at that store. Brands can now turn on these campaigns in as little as a few hours depending on foot traffic and available inventory.

Prove you’re better than online

If you can’t beat ‘em…try harder. We all know that it’s hard to match the prices of online stores, because they don’t have to pay the bills associated with running a physical store. But there are ways to battle the online giants.

Annkur Agarwal, CEO of PriceBaba, advised retailers: “Integrating with price search services like milo.com, eBay Now and Google Shopping is a good way to get online visibility and take traffic away from Amazon.”

Many physical stores will match competitors’ online prices. Savvy store owners know the competitive landscape well, and will be able to match online deals during this holiday season. And if matching the prices isn’t an option, then make your store visit memorable by hosting an event, investing more in displays, or hiring local talent to sing holiday songs inside your store. Make an in-store visit a memorable experience for your customers – rich with sounds, smells and sights that you just can’t replicate on the Internet.

Also be sure to post your sales and special offers to sites like RetailMeNot, the popular crowd-sourced coupon and offer portal. In 2012, nearly 9 million consumers turned to RetailMeNot to find offers for their holiday shopping; I expect that number to near 10 million this year.

My final take: The malls and stores of America are certainly evolving, but they’re not in danger of dying. While Web traffic on ‘Cyber Mundane’ may be growing, there will always be a need for consumers to visit physical stores – the question is, what are the best ways to bring them in to your store and enhance the experience while they are there?

How much of your shopping will be done in stores this year? What do you like about the holiday shopping scene?

Photo by Michael Nagle/Getty Images

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