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Global report underscores need for seamless shopping across all channels

BY Allison Cerra

PARIS — It seems that shoppers worldwide expect a seamless integration across online, social media, mobile and physical stores, according to a new global report released by Capgemini.

"Digital Shopper Relevancy," which surveyed 16,000 digital shoppers across 16 developing and mature markets, found that 60% of respondents said they expect the convergence of retail channels by 2014, while more than half of those surveyed said most retailers currently are inconsistent in the way they present themselves across channels.

Capgemini found shoppers can be distinguished by six unique profiles: social digital shoppers, digital shopaholics, occasional online shoppers, rational online shoppers, value seekers and techno-shy shoppers:

  • Social digital shoppers (25% of respondents) seek opinions from social media and are users of mobile applications;

  • Digital shopaholics (18%), the heaviest buyers out of the six segments, demonstrate active use of smartphone apps and in-store technology;

  • Occasional online shoppers (16%) infrequently shop online but use digital channels primarily for choosing and comparing products and tracking deliveries;

  • Rational online shoppers (15%) are considered to be the second-most active online shopper segment and prefer to use the Internet during the shopping journey but not social media or mobile apps.

  • Value seekers are price-sensitive shoppers with little interest in digital shopping and new technologies but shop online primarily to find the best deals on products they know they want; and

  • Techno-shy shoppers aren’t confident in using digital channels and devices and do not see these as important during any phase of the shopping journey. Value seekers and techno-shy shoppers consist of 13% of respondents each, Capgemini said.

"In today’s complex marketplace, shoppers are in control and retailers need to remain relevant to the digital consumer across the all-channel journey," said Bernard Helders, Capgemini global consumer products and retail sector leader. "The industry should not only seek to understand the technology, they must separate hype from reality and, crucially, commit to cross-channel collaboration to stay profitable in today’s tough economic climate."

Additional key findings from the Capgemini report include:

  • Websites continues to be the main digital shopping channel for shoppers in both developing and mature countries: 80% of respondents in developing markets said the Internet was "important" or "very important," while 63% in mature markets noted that the Internet was "important" or "very important" to the shopping journey. This is closely followed by e-mail interaction. However, such channels as social media, mobile applications and in-store kiosks are growing in popularity as alternative retail channels;

  • The number of digital-savvy shoppers increases considerably in developing markets and they tend to "leapfrog" the traditional retail infrastructure adopted by mature markets: 72% of respondents from India and 69% from China state that they purchase more products in a single transaction online than in a physical store, compared with just 31% from the United States;

  • More than half of the respondents from both developing and mature markets said they expect physical stores for increasing numbers of categories will simply become showrooms to select and order products by 2020;

  • More than half of those surveyed (56%) are likely to spend more money at a physical store if they had used digital channels to research the product prior to purchase; however, 73% of respondents also expect online prices to be lower than those in physical stores;

  • There is no "one" digital shopper profile as varied behavioral patterns appear across a number of factors, including age, gender, product category, journey stage and market maturity. The study did highlight that 55% of women shoppers are more engaged when using digital channels, compared with 44% of men; and

  • (Somewhat) personalized experiences can deliver for retailers: 61% of respondents said they want online stores to remember their personal shopper history to speed up shopping, while only 41% would want to be identified through smartphones when entering a physical store.

"[It] is critical for retailers to identify who is really using these channels and essential in determining where to make digital investments and how to monetize them," Helders said. "The findings of the report are a call to action for retailers and consumer goods companies to adopt a new approach and harness the technology that’s now available."

Click here for the full report.

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Kerr Drug promotes Mark Gregory to SVP store operations

BY Alaric DeArment

RALEIGH, N.C. — Kerr Drug has promoted Mark Gregory to SVP store operations, effectively immediately, the regional retail pharmacy chain said Monday.

Gregory, who was previously VP pharmacy and government affairs, will report directly to president and CEO Anthony Civello. He also is the company’s privacy officer and chairman of its political action committee.

"Mark has extraordinary depth of intellect and experience in every facet of community pharmacy, from educational and legislative issues to operations and administrative policies," Civello said. "He has been a primary voice in the retail pharmacy landscape for decades and has made significant impact at the national level on a multitude of issues."

Gregory was a pharmacist for 11 years when he became manager of pharmacy systems and third-party programs at Pittsburgh-based Thrift Drug Co. He also served briefly in pharmacy operations at Eckerd following that company’s acquisition of Thrift Drug.

He also has served as president of the North Carolina Association of Pharmacists and as chairman of the National Association of Chain Drug Stores’ policy council and is currently chairman of the executive committee of the North Carolina Retail Merchants Association.

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WAG fires another salvo in bid to outflank ESI

BY Jim Frederick

Another quality regional drug chain is about to be a memory.

Walgreens scored another expansion coup last week with its announcement that it will absorb Pine Bluff, Ark.-based USA Drug, ranked No. 31 in sales on the DSN PoweRx list of the nation’s top 50 pharmacy retailers. The deal, valued at $438 million, includes all of the storied holdings owned by founder and pharmacist Stephen LaFrance, including 144 stores in Arkansas, Kansas, Mississippi, Missouri, New Jersey, Oklahoma and Tennessee; corporate offices; the company’s big and highly automated distribution center in Pine Bluff; and the wholesale and private-label business owned by Stephen L. LaFrance Holdings and members of the LaFrance family.

For Walgreens, the deal is the latest in a series of strategic moves in the wake of a costly dispute with pharmacy benefit management giant Express Scripts over the pharmacy benefit manager’s contract reimbursement rate. Since the service contract between the two entities expired in January, effectively shifting prescription and front-end business away from the chain’s 7,980 drug stores, Walgreens has seen a significant reduction in both sales and earnings.

Its most recent financial results, for the third quarter of fiscal 2012, underscore the impact. For the three-month period ended May 31, net earnings for Walgreens dropped 10.8% from the same period last year, to $537 million, with sales down 3.4%. Prescription sales slid 6.6% on a company-wide basis and a sobering 9.9% in stores open more than a year. Absent Express Scripts’ fulfillment contract, Walgreens filled 192 million scripts in the three-month period, a decrease of 8.4% from the prior-year third quarter.

Nevertheless, it looks like Walgreens is rising to the challenge. For one thing, it’s clear that the retail pharmacy giant is holding firm in its refusal to participate in unprofitable PBM fulfillment contracts, even at a real cost to its top and bottom lines [a decision which has won the company praise from small-scale pharmacy operators without the clout to stand up to PBM take-it-or-leave it terms]. For another, the company has repeatedly signaled its determination to move on with or without ESI.

How? In part by bypassing the PBM route and going directly to employers and other health plan sponsors with a growing menu of easily accessible health and pharmacy services, and in part by building up its pharmacy network through purchases like USA Drug that company strategists hope will make Walgreens almost impossible for any PBM to ignore when putting together local provider networks.

Drug Store News‘ Michael Johnson does a fine job of analyzing the ramifications of the buyout for Walgreens as it works to regain its equilibrium and growth momentum without the millions of Express Scripts members no longer filling their prescriptions at the chain. But are there enough other successful regional pharmacy players out there as potential takeover candidates in other markets to make that strategy viable on a national level?

And will all of Walgreens’ moves be enough to overcome the loss of ESI’s millions of patients?

Only time will tell. What do you think?

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