Executive Summary

Swiss retailers are struggling. Current challenges are large in scope and include a stagnating economy, increased foreign competition and competitive market consolidation. But not all disruptors we see are obstacles; some disruptors present retailers with new opportunities to grow and innovate. This publication highlights two of these – namely the increasing customer centricity of business and digitalisation. In five chapters PwC’s 2015 Total Retail report reviews consumer trends, the purchase journey, consumer engagement plus mobile shopping and payment, and it looks at a way forward.

Over the past year, Switzerland defied two well-accepted consumer clichés, yet upheld another. One broken assumption is that online ordering can only increase. Wrong! Swiss shoppers actually are making purchases less frequently than they were just a year ago. At the same time, they are spending more money per purchase than they used to. Another busted stereotype is that online buyers are only the young, the 18-24 year-old ‘Digital Natives’, who live, breathe and sleep on the Internet. Wrong again! The 55+ crowd – nicknamed the ‘Silver Surfers’ – have joined right in with e-shopping, and are shopping online with increasing frequency. Unlike their youthful counterparts, though, these senior shoppers have more money to spend.

But it wasn’t all about iconoclasm. Over the same time, Swiss consumers showed another truism to be valid: men and women shop differently. Gadget-loving males like shops with Wi-Fi, analytics and fast delivery. Discreet females prefer self-checkouts coupled with a generous policy on returns.

Alexandre Cherix
Alexandre Cherix R&C Industry Leader Switzerland PwC Switzerland
A common fallacy is to believe that one more consumer that shops online equates to one less consumer in-store. This is simply not true: the traditional store is not even close to dying. By leveraging e-commerce, retailers should be able to increase the overall amount spent by shoppers. This is simply because the incentives that drive consumers to online shopping differ from those that drive them to the store. Imagine needing to get drinks for your party. Would you not be more inclined to ordering more, if you knew that you could get everything delivered straight to your door?

Facebooked, pinterested, twittered, instagrammed – electronic engagement is so high today, it’s become part of the language. (If you need convincing, just google it.) Nonetheless, PwC’s research shows that Switzerland’s shoppers are less wired than their neighbours in France or Germany. Dialogue between brands and consumers is less frequent and less deep. So who is the party pooper? We argue that Swiss brands have failed to invest enough in two-way communications with the consumer. This is a lost opportunity, because conversations with consumers are a proven way to boost brand loyalty. And leaders in brand loyalty grow faster than their competitors. Things needn’t be this way. Numerous examples from America and other Europe countries show that two-way talk with customers pays off – not just in image, but in direct sales as well.

Only 1 of 10 consumers thinks that Swiss brands provide customer service via social media

Just as there are many roads to Rome, there are many journeys to a purchase. Consumers can shop in store and then buy online, or vice versa. They can do both entirely online. Or entirely in a shop. Of course their choice between these four options is influenced by their digital awareness: plugged-in consumers will tend to buy more online. But also important to their choice of journey is the type of product.

Mike Foley
Mike Foley Partner & Territory Leader: Retail & Consumer PwC Switzerland
Omni-channel retailing is more than duplicating a model that has been successful in traditional retail into new digital channels – because ultimately, consumer habits are changing and those changes will only accelerate in the future. Consumers continue to visit and shop in store, but their purchase journey and product research often starts and sometimes concludes when they are at their PC or on their mobile device. Additionally, they can choose to augment their in store experience by consulting product reviews, comparing pricing and seeking preferred colours, sizes or finishes via their mobile. Retailers will have to rethink their strategies towards both their digital presence and in store experience to respond to these new behaviours. Consumers are currently leaving a digital trail of rich data on their preferences. Winning retailers will tailor both their digital and in store experiences to what consumers want at all stages of a purchase journey, but also to what consumers specifically want from different shopping channels.

 

Non-standard, personal items are most popularly shopped for and bought in-store. Groceries, for example: most shoppers still want to squeeze their apples and smell their bread. A full 82% of Swiss people prefer to visit the supermarket rather than order groceries online, even more than the 76% who stated the preference last year. Similarly, health & beauty and home-repair items also are found and bought most-willingly by hand rather than by keyboard. Predictable products, by contrast, are readily located and acquired entirely via e-commerce. Books, films and some consumer electronics – things for which buyers really know what they are getting – are ever more scouted for and transacted online. Toys are ripe to follow their lead.

More expensive, occasional purchases – think furniture, appliances and some consumer electronics – are increasingly attained using both channels. Options are identified and narrowed down online, but the final choice is made and the deal is done at the shop. Sometimes the in-person visit sparks a change of heart, and the consumer ends up buying something different than originally planned. And what about choosing in the shop but buying online? This ‘store-to-web’ journey is very rare among Swiss consumers, and it is likely to become extinct. Retailers are getting better at competitive pricing, which will make this extra effort unnecessary.

It’s time for Swiss retailers to abandon their ‘snooze strategy’ of digital development. Because the question is not if a retail shift to digital will happen, but when. Switzerland has lagged in e-commerce, mostly because online category-killers such as Amazon and eBay have given second priority to its small, protected market. Thanks to the Swiss Franc’s revaluation, this is likely to change. Cross-border business, both online and brick-and-mortar, is booming. In the face of falling prices and squeezed margins, retailers have no choice but to go digital or to go out. Acting early will bring advantage: who will be first to answer the digital alarm clock? PwC sees this as doing three things: integrating, enhancing and engaging.

 

 

 

 


*Note on data collection: Data findings have been collected from PwC Switzerland’s third annual Total Retail Report. They are based on over 1000 online surveys conducted in Switzerland during July and August 2014. Respondents were chosen to reflect the national profiles in terms of age, gender, employment status and region.