The Halo Effect: Can Online Experiences Make or Break Your In-Store Potential?
We are in the era of e-commerce: Everything you, as a consumer, could want or need is available to you at the click of the button through your computer or mobile device. The domination of Amazon has led to a change in consumer expectations that everything should be available at your fingertips, which has ultimately resulted in a burst of digital-first businesses and a decline in traditional brick and mortar retailers.
However, in the last year or so, there’s been a boost of online-first brands, like Burrow and Away, opening physical storefronts. These online-based, e-commerce-only brands have survived and thrived off creating incredible digital experiences and providing the highest level of customer service possible. So how has that translated to the in-store experience? Have we officially entered the era where the online experience will now indicate the success of a brand’s physical store?
Online-first brands revive brick and mortar
Many retailers are used to prioritizing the in-store experience over online. Traditionally, it was a no-brainer: the human-to-human customer experience didn’t hold a candle to anything a brand could deliver digitally. But as the e-commerce boom took place, the reverse occurred. Retail experts declared the physical store was dead, and brands put all of their effort into developing a web experience, so much so that entrepreneurs even began to develop online-only businesses. Looking at these two trends individually, one could draw the initial conclusion that the retail industry is black and white: either you find success online or off. No compromise, no in-between.
However, the transformation of online-first retailers opening physical shops squashes this idea of no crossover. This trend is supported by a recent study from ICSC. The report, called the Halo Effect, notes that web traffic and store traffic are not mutually exclusive – in fact, after a new store opens, a brand’s web traffic increases by an average of 27%. They also saw that the inverse was true – closing a store caused a drop in web traffic, something that retailers cannot afford to take a hit on.
How it’s all tied together
Today’s retail landscape can be compared to the chicken and the egg. Does the online experience impact the in-store experience? Or is it the other way around? Or perhaps it’s not that simple.
The Halo Effect indicates that that when a shopper makes a $100 purchase online, they are more likely to spend more (on average, an additional $131) at that retailer’s brick & mortar within 15 days – and vice versa. This means that a stellar online experience will likely not only translate to a digital sale, but a subsequent sale in store, making it absolutely essential for retailers to capture their customers online with a fantastic experience that works in tandem with what they receive in-store. Flawlessness on both of these fronts creates the ultimate loyal shopper.
Allbirds, the uber trendy sneaker startup, is a great example of a company that has successfully converted an online following into several physical experience stores, allowing customers to feel like they are more a part of the brand and thus they become even more loyal.
As the industry rapidly develops, brands must pay attention to these success stories and key patterns in consumer behavior, and adjust their strategy accordingly. With an incredible amount of technology available, it’s even simpler than ever before to do so – but it’s critical that retailers choose the right partners to help them get there. If retailers can deliver this innovation and excellence on digital, they are a step ahead in the fight to earn customer dollars in store.
-Mario Ciabarra, CEO, Quantum Metric