New Deloitte survey research on consumers and small and medium-sized businesses (SMBs) finds that the competitive state of retail is benefiting consumers with more choice, competitive pricing, and constant innovation. Retailers of all sizes are innovating to offer consumers both in-store and digital shopping options and seeing rewards. Consumers are shopping “omnichannel,” meaning both offline and online retail options are available for consumers to find the products they want, at the best price, with a fulfillment method most convenient to them. Here are the key takeaways:

— Consumers are switching seamlessly between online and offline channels and more often using both even within a single shopping journey.

— Brick and mortar retail will continue to be an important part of the retail experience, exemplified by trends such as buy online, pick up in store (BOPIS), and curbside pickup.

— Small businesses are leading the way with omnichannel offerings, typically use multiple third-party providers of digital tools and sales methods, and are seeing rewards.

Consumers are switching seamlessly between online and offline channels and more often using both even within a single shopping journey.

A Deloitte study of consumers shows omnichannel shopping, whereby consumers use a mix of digital and physical retail options throughout the shopping journey, is widespread. “Multi-channel and multi-retailer shopping journeys are not new, but they are increasingly the norm for consumers. The omnichannel shopping experience is typical for consumers, wherein consumers mix and match online and offline components within or across each step of their shopping journey.”

Fifty-five percent of shoppers who begin their journey online end up purchasing products in-store, the study shows. “Omnichannel shopping behavior by consumers is already widespread. Our 2021 survey of consumers found that 55% of shoppers who started their most recent shopping journey online, e.g., with online product research and price comparisons, made their purchase instore. Moreover, companion research on small businesses titled, ‘Retail Today’ found 27% of online purchases are fulfilled at the physical store.”

The same study finds that as consumers return to physical stores, they value convenience more than ever and want digitally enhanced shopping options and increased flexibility when obtaining their purchase. “As consumers return to physical stores, they also want digital options to stay, with nearly 90% of consumers looking for a digitally enhanced shopping journey, whether engaging at home, via mobile, or inside a physical location. About four-fifths of consumers value convenience even more now than before COVID-19, and more than four-fifths of consumers expect flexible shipping and fulfillment options like BOPIS from retailers…46% of consumers reported being willing to pay a premium to buy a product in-store today rather than wait for two-day delivery.”

Overall, the research found that consumers are not segmented into distinct online and in-store customer categories; binary or single-channel approaches do not suit consumers. “The focus is less on binary channels. Consumers are looking for seamless options to shop whenever, wherever, and however they want. One approach, one channel no longer suits consumers, and in reality, it never has.”

Brick and mortar retail will continue to be an important part of the retail experience, exemplified by trends such as buy online, pick up in store, and curbside pickup.

The study finds that “consumers have no intention of replacing their in-store shopping experiences with online only.” “While digital tools add enormous value for consumers, such as facilitating easy product research and price comparisons, a predominantly online shopping experience lacks certain features of in-store shopping that many consumers value. Consumers often like seeing, feeling, and testing the product and possible alternatives in person before buying. Consumers also value that in-store shopping allows you to take the product home to use or wear that very same day. From what we can see, consumers have no intention of replacing their in-store shopping experiences with online only.”

The research also demonstrates that the so-called “retail apocalypse” narrative claiming digital growth is killing brick and mortar retail is a myth. “It’s an easy, provocative, seemingly obvious, frequently published, and in the end, false theme: ‘Digital is killing brick and mortar retail.’ Like most things, the truth is more complicated, layered, and involved. First it was big box stores, but now the general belief since e-commerce began evolving was that the big online retailers were sucking up business from traditional brick and mortar brands, both big and small. While there is some truth to the notion that both are competing for the same customers, transaction data show that even as we’ve seen more consumers shop online more frequently, they continue to enjoy shopping in-store. Average transaction values in-store were about 10% higher in July 2021 than in March 2019.”

More consumers are becoming omnichannel shoppers vs predominantly online shoppers, as many still prefer the in-store experience for some or all of their shopping, the study finds. “More consumers are becoming omnichannel shoppers than predominantly online shoppers. Consumers use digital channels to inform themselves; to compare prices and availability, to explore shipping, delivery, and pickup options; and to use their online engagement to augment their offline experiences. Despite the increase in online spend, many consumers still prefer physical retail for some or even all of their shopping. They value the experience: a personalized, engaging immersion with the brand. They visit to touch or try the product and feel confident in their purchase decision or to engage store associates for specific services. And they enjoy the convenience of the physical channel, which allows for the real-time, immediate purchase (or return) of a good.”

In response to the popularity of omnichannel fulfillment, retailers of all sizes are innovating to meet demand, explains Deloitte. “The popularity of omnichannel fulfillment options like BOPIS and curbside pickup with consumers has led retailers to expand these offerings significantly in recent years. In 2020, Deloitte found that 32% of retailers allowed customers to buy items online and pick them up in-store, while 75% enable in-store returns of online merchandise. Looking forward, those figures may continue to rise. A recent survey found 76% of retailers use store inventory to fill online orders, and 86% plan to implement ‘order online/pick up in-store’ within the next year.” 

Small businesses are leading the way with omnichannel offerings, typically use multiple third-party providers of digital tools and sales methods, and are seeing rewards.

Deloitte’s report on SMBs found that these businesses are leading the way in innovation and choice. “SMB retailers are constantly innovating to provide consumers with the convenience and choice they demand. This is best exemplified during the COVID-19 pandemic when retailers rapidly responded to quickly shifting consumer preferences as they looked for safer ways to shop. This led to the growing popularity of omnichannel fulfillment options by retailers of all sizes, comprising about a third of all digital sales.”

Half of surveyed SMBs report selling both in-store and online. “SMB retailers are actively embracing a universal approach to their customers; embracing them across all channels in developing those relationships and meeting the expectations consumers have of them. Among the SMBs we surveyed, about half report selling both online and in-store, two-thirds report selling in-store, and four-fifths report selling online. Among the omnichannel SMBs surveyed, digital sales accounts for about 50% of their sales. This is several times the 10–20% digital share of sales reported by large mass merchant retailers in their periodic financial reports.”

Of SMBs surveyed, 99% use at least one digital tool or marketplace to support their business. “Almost all, 99% of the SMBs surveyed, said they use at least one digital tool or marketplace. Most use a variety of tools to support their business activities including sales, marketing, fulfillment, advertising, and payment systems. Digital tools have lowered barriers to entry in retail, allowing SMBs to reach consumers far beyond their physical location or hometown. Digital tools help SMBs grow their business, run their business more efficiently and effectively, and engage and build a relationship with the consumer at their preferred time.”

SMBs have many options when selling online, and in fact, many SMBs use more than one service provider within each digital touchpoint to reach consumers, finds Deloitte. “Among the SMB retailers who are currently selling online, they’re using a variety of digital touchpoints; 70% are using more than one and 31% use three or more. Moreover, many use more than one service provider within each touchpoint. SMBs’ use of multiple online touchpoints and multiple service providers within each touchpoint demonstrates the intensiveness of online retail competition.”

SMBs are taking advantage of the omnichannel fulfillment trend and leveraging their physical stores for same-day curbside pickup. “Consumer usage of a mobile app or website to purchase a product and then pick it up at a physical store grew from 31% pre-pandemic to 51% since the pandemic began, a noteworthy 65% increase during the pandemic. SMBs are taking advantage of this opportunity and leveraging their physical stores: 61% offer buy online, pick up in-store, and 50% offer buy online, same-day curbside pickup.”

View the full consumer research report here and the companion SMB research report here.