Forrester: Technology Will Help Drive B-to-C Retail in 2012

Sucharita Mulpuru is a vice president, principal analyst at Forrester Research. Peter Sheldon is a senior analyst at Forrester Research. Both serve e-business and channel strategy professionals.

Q: How will tablets change the way consumers shop?

A: Although the iPad has seen unprecedented success in the market, new tablets like the Amazon Fire and Android devices are making tablets an affordable proposition for the masses. Forrester forecasts that in the U.S. alone, there will be over 80 million tablet users by 2015, with web browsing being the most commonly performed function. In a recent Forrester/Bizrate survey, 49% of tablet owners reported spending more time online since buying their tablet devices, as they use these devices not only in the home but also in other settings like the car, at work, in hotels and on airplanes. Retailers are reaping the benefits as consumers spend more time shopping on the web. In addition, some retailers have optimized their tablet shopping experience for touch interaction rather than the click, or have developed dedicated iPad applications. These retailers are reporting that this optimization of the shopping experience for tablets has resulted in higher conversion rates than on the PC-based web channel. Tablets are a catalyst in the shift of the consumer dollar from the offline to the online channel. In the first half of 2011, retailers surveyed by Forrester reported that, on average, 21% of their mobile traffic was coming from tablets, with several companies anecdotally reporting figures north of 50%.

Tablets are also changing instore shopping behavior. Major retailers including J.C. Penney, Nordstrom, Gucci and Restoration Hardware are rolling out tablets instore. The instore tablet is a versatile device that can play the role of interactive display, kiosk and point of sale. Retailers are providing tablet devices to their instore associates to enable them to connect and collaborate with shoppers in the store. The goal is an endless aisle, bringing the breadth and depth of the web catalog into the store for associates to help consumers pick the right product, reserve out-of-stock items from nearby stores that have inventory, and place web orders for items that are not stocked due to shelf space limitations.

Q: Will tablet commerce replace mobile commerce, or will the two devices complement each other?

A: In a recent Forrester/Bizrate survey, 65% of Gen Y and 72% of Gen X tablet owners reported a preference to shop using their tablets rather than their smartphones. The larger form factor and the availability of tablet-optimized shopping apps and websites make for a compelling, touch-enabled and fun shopping experience that surpasses that available on both the PC and smartphone. However, outside the home, the tablet has one major disadvantage: portability. Unlike the smartphone, which is a trusted companion 24 hours a day, seven days a week, most consumers take their tablets out of the home only when traveling on holiday or attending a work conference. Tablets will not replace mobile shopping, but in a scenario where consumers have the choice to use either, they will gravitate to the tablet. However, consumers will switch back and forth between devices during their shopping journey. Retailers must ensure that offers, pricing and product mix are consistent and the experience contextual through synchronized shopping carts, wish lists and user accounts.

Q: Are there any new technologies on the horizon that will change the way consumers shop?

A: Yes, HTML5. We can already credit this next-generation web technology for many of the rich mobile shopping experiences found on both mobile and tablet browsers. However, in 2012 online retailers will look to extend their use of HTML5 back into their traditional online stores. Apple, a big proponent of HTML5, has already updated its online store to use HTML5, and the results are certainly impressive. HTML5 is not a game changer, but just as retailers were able to improve the usability of their online stores with Ajax technologies back in 2007, web developers will look to the library of features and functions in HTML5 to drive incremental experience improvements as they look to stay ahead of the online competition.

Beyond the online and mobile channels, retailers are investing in new instore technologies — from interactive digital displays, to kiosks, to mobile point of sale and even self-service mobile checkout. The store experience is evolving and consumers demand a seamless, digitized experience as they crisscross back and forth between the web, mobile and instore.

Q: What about the economy? There’s always talk of a double-dip recession, but will consumers continue to shop?

A: If the U.S. and Europe head back into recession, there will be no magic bullet for online retailers; tough times will undoubtedly lie ahead. However, those retailers that have invested in bridging the gap between online and their brick-and-mortar stores through mobile, tablets and the introduction of cross-channel tools like buy online, pickup instore or channel-agnostic return policies, will have a strategic, competitive advantage over their competitors that are still operating in channel silos. During the 2008 recession, online retail maintained growth while instore sales faltered. In a recession, shoppers spend more time at home, which means more time spent online. Online retailers — especially those that have embraced tablet devices and are providing value-centric services like buy online or ship-to-store, where consumers can avoid costly shipping fees — are poised to capture a greater percentage of the consumer retail spend during a recession.

Q: How will social media influence shoppers? Is social commerce the answer?

A: Many retailers have invested in building a Facebook store. However, there is little evidence to support any shift in consumer buying behavior from the online store to Facebook. The idea that social commerce is all about buying on Facebook is a fad. Conversely, the opportunity for social networks to influence the buying decisions of online customers has certain potential. Retailers, including Sears and American Eagle, have integrated social identity into their online stores by adding “Login with Facebook” functionality. Account registration has always been a cause of high cart abandonment for retailers as new customers struggle through the process of entering personal information and creating yet another password. Login with Facebook is a welcome reprieve for retailers that can now provide a one-click account-creation process for new online customers. But, more important, in doing so they also get access to the customer’s social graph of friends, likes and preferences. This data enables rich personalization of the online experience with improved and more relevant product recommendations, search results, cross-sells, up-sells and promotional offers.