Study Shows that Omnichannel Retail Really Does Boost the Bottom Line

NEW YORK—A positive relationship between online and physical sales for a retailer has long been suspected, but now a new study by the retail association group ICSC  not only shows that it is true but also quantifies it. In what it has dubbed the halo effect, ICSC finds that a single retail transaction⁠—whether it is online or in a store⁠—can lead to further sales in a different channel within a short period of time.

In other words, a consumer that buys something online from a retailer, tends to make a purchase in that retailer’s physical store within 15 to 30 days. And vice versa.

“What we found was that consumers take advantage of the channels available to them and it has a positive impact on total sales,” Tom McGee, president and CEO of ICSC, says in prepared remarks.

The research found that, following an online transaction, a consumer could make 2.1 transactions in-store with the same retailer within 15 days. Likewise, following an in-store transaction, the average consumer makes 1.3 online transactions with the same retailer within 15 days.

Purchases Mount Quickly

The dollar amounts of this trend add up quickly. ICSC found that a consumer will purchase additional $131 in the retailer’s store, following a $100 purchase it made online. Likewise, he will spend additional $167 online following a $100 in-store transaction. In both cases, the time frame is within 15 days.

Over a 30-day period, an initial $100 online purchase will result in an additional net online and in-store spending of $171. An in-store purchase of $100 purchase generates an additional $163 in spending over a 30-day period.

One Theory

ICSC posits one theory about this relationship: Omnichannel strategies perpetuate the positive consumer experience that initiated the sale in the first place. Physical stores are where brands meet their customers and offer them what they cannot get online: human interaction. In turn, the knowledge gained from the in-person interaction allows retailers to create an even more personalized experience for the customer. As a result, ICSC says, 67% of click-and-collect shoppers buy additional items at the store when they pick up their online purchase.

Methodology

The study analyzed $31 billion in consumer spending from more than 41 million unique credit and debit card records from 2016 through 2018. It covers retailers across multiple categories: home; large-format specialty retailers; discount department stores; apparel; cosmetics; traditional department stores; and emerging digitally native brands. The halo effect, or the influence on spending in one shopping channel starting with another, was calculated from the total net value of purchases starting in stores and ending in online transactions, and vice-versa, in five-day increments.