Sydney, 20 January 2014 – The majority of retailers will increase store openings and seek to create larger experiential stores to drive footfall in 2014 as a direct result of their multichannel strategies, according to a new study by global property advisor CBRE.CBRE carried out a survey among 50 leading international retailers to identify their current strategies for multichannel retail and how they saw this developing in future. The survey identified:
· The level of retailer engagement with digital technology (social media, smart phone apps);
· The effect of retailers’ digital strategy on footfall, turnover and the design/size of stores;
· Retailers’ future demand for physical stores;
· Where retailers derive the greatest value from their digital strategies.
The research found that as a direct result of their digital strategies nearly all retailers (87%) feel they will see an increase in the overall revenue of their business, with the majority (80%) expecting an increase in foot traffic in stores. A significant amount of retailers (40%) anticipate a need for more stores in the future and expect to increase store openings.
Digital technology is an integral part of a retailer’s armoury. Nearly all of the retailers surveyed (85%) now have a dedicated resource to run their digital strategies and the vast majority (87%) operate a transactional website. Digital technology is also being used by retailers to drive customers to their stores via social media and the use of smart phone apps and geo-localisation, which gives retailers the ability to price differentially depending on the customer’s location and map a customer’s journey to, and in, a store. Although this is a relatively new technology, it is already being used by a growing number of retailers.
The survey also highlighted that most retailers were seeking to create larger experiential stores featuring digital tools such as iPads for ordering online and digital screens to show the full range of goods.
Stephen McNabb, Head of Research for Australia, said there were some key outtakes from the survey which would have implications for the Australian market. These included the fact that while retailers were looking at larger, experiential stores, digital technology could lead some retailers to focus on smaller stores that would operate more as showrooms.
This in turn would have an impact on the logistics market, with the survey highlighting that some 40% of retailers anticipated having a heightened demand for warehouse space.
CBRE’s National Director, Retail Services, Australia, Alistair Palmer said Australian retailers had been relatively slow to adopt online/multichannel retailing but were slowly catching up as a result of increased competition from international retailers from both a bricks & mortar and online perspective.
“Offshore retailers have been more sophisticated and much more advanced with their online platforms. For example, Zara's multichannel strategy is extremely well thought out as can been seen by their Facebook page, which Facebook page, which has 19.5million followers worldwide, allowing Zara to communicate regularly with their customers,” Mr Palmer said.
He added; “In the digital age, it is more important than ever for Australian retailers to understand their brand and the way it engages with consumers. Advances in technology provide an increasing range of tools to do this, and consequently those retailers that do embrace digital technology will have the best chance of success. This is true throughout the retail spectrum, from food to fashion and from luxury to value.
“Successful digital strategies clearly require investment; not only the cost of technology, but also for hiring and training staff to implement this, and the reorganisation of the business model in line with this. This in-store investment in new technologies is essential in order to ‘stay ahead’ of the competition,” Mr Palmer said.
Key Findings
Digital Tools:
· 85% of retailers now have a dedicated resource to run their digital strategy.
· Almost all retailers (87%) now operate a transactional website.
· The majority of retailers (88%) now use social media tools such as Facebook or Twitter to interact with customers.
· More than half of retailers (55%) have a smart phone app, while 35% operate in-store kiosks for browsing and transacting goods.
In-Store:·
Two thirds of retailers have already modified their stores as a result of their digital strategy. This includes: the installation of i Pads for ordering online, providing digital screens to show the full range of goods and creating larger experiential stores.wo thirds of retailers have already modified their stores as a result of their digital strategy. This includes: the installation of i Pads for ordering online, providing digital screens to show the full range of goods and creating larger experiential stores.
· Modifying store design is an ongoing process with 58% of retailers planning to make further changes.
· Only 18% said that digital technology had not affected their store design and would not do so in future.
Future Demand For Physical Stores:
· 40% of retailers will increase store openings as a result of their digital strategy. Only 20% of retailers predicted that they would reduce the number of stores in their portfolio. The remaining 40% said it would make no difference.
· When entering new markets, retailers are using a range of strategies. While 40% would typically open a physical store and an online platform together, just under one third (30%) said that they would first test a market with an online platform before committing to a physical store.
· Some 76% of retailers intend to increase the geographical coverage of their transactional websites in future.
Value of Multichannel to Overall Business:
· The majority of retailers (80%) felt that their digital strategies would result in higher levels of foot traffic in their stores.
· 87% felt that it would increase the overall revenue of their business.
· Most retailers (66%) felt that increasing the overall sales turnover of the business by attracting more customers (both online and offline) was the main goal of their digital strategy.
· Only 13% said it was primarily about generating income through their transactional site and another 13% felt the greatest value was as a marketing strategy to drive footfall to their stores.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.au.
