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CMO Insights and Analysis from Deloitte

Customer Expectations vs. Experiences: How Retailers Can Bridge the Divide

How can traditional retailers provide the experiences their customers have come to expect? By gaining a deeper understanding of the customer journey and providing digital interactions at critical moments along the way.

 Today’s traditional brick-and-mortar retailers know that digital has reshaped customer behavior and shopping forever. Many are committed to—and investing heavily in—creating the kinds of online interactions consumers want. Why, then, are they still falling short?

One reason may be that often traditional retailers are attempting to follow the lead of large e-commerce competitors rather than taking cues from customers themselves. Meanwhile, e-commerce players have grown so large that they now shape definitions of great customer experience, and often respond faster to consumers’ needs than typical brick-and-mortar retailers.

In addition, what customers want—and where they go to get it—continues to evolve. Today, consumers can open their internet browsers; search a broad, fragmented marketplace; and order exactly what they want far more quickly and easily than they can visit a mall. This dynamic has led to small and midlevel online players collectively stealing share from larger, more traditional retailers. As market share shifts, the single biggest challenge many retailers face is the cultural gravity of their own functional processes, talent practices, and business models. The pull of these traditional structures is so great that if retailers remain focused on their competitors’ practices, they are destined to remain 12 to 24 months behind in recognizing and meeting their customers’ changing needs.

Meeting Digital Demand

By contrast, traditional retailers that focus on better understanding the behaviors and desires of their customers are more likely to accelerate the journey to digital effectiveness. One important trend companies may encounter: The “millennial mindset” is spreading rapidly across generations, with other demographic groups starting to embrace some of the newer features and functions available.

Yet there are clear limits to how much some of these consumers will use digital services when making purchase decisions. Older customers, for example, increasingly locate products with their mobile devices, but they’re not fully adopting more advanced capabilities such as mobile payment systems. This gap may require retailers to introduce new functionality while maintaining an acceptable level of service for less digitally sophisticated customers.

To better identify what different customers want, companies can focus on understanding the customer journey and its critical moments—many of which can provide an opportunity for digital influence. Deloitte research suggests that customers are willing to engage in meaningful ways, but retailers are not always providing opportunities to do so. For example, 3 percent of shoppers used the “buy online, pick up in store” option on their last shopping trip, but 13 percent say this is their preferred choice. By leveraging digital touchpoints during the moments that matter for customers, retailers can propel them toward a purchase before they lose motivation.

Integrating Bricks and Clicks

Overall, we’ve never been more optimistic about the opportunities for traditional retailers in the digital marketplace. Among the almost infinite list of options are several common themes for successfully navigating the road ahead:

  • Don’t try to build everything internally. Consider engaging in partnerships with the platforms customers are already using rather than building such capabilities from the ground up. Through these partnerships, retailers can gain access to the detailed, real-time data they need to craft truly customized experiences.
  • Revamp the company’s financial, organizational, and operating structures as well as its ecosystems to support agility and responsiveness to customer needs. Planning and budgeting functions are a good place to start.
  • Embrace category differences and recognize that digital initiatives appeal differentially across customer segments and merchandise categories. Every investment, prioritization, and decision can be evaluated at both the customer and category levels.
  • Wherever possible, use digital to enable customers to lead their own journeys rather than making them step through store layout or merchandise hierarchy to find and buy products.
  • As the growth of digital slows, pursue market share more surgically. Retailers can focus on understanding the strategies that will produce share gains, specifically the experiences they can provide to win customers.
  • Most important, sales growth will require innovations in product offerings and customer experiences. The primary source of differentiation and competitive advantage in today’s environment likely will be the use of the store layout to help customers find, select, purchase, and receive products. For example, brick-and-mortar retailers have an opportunity to begin to drive in-store foot traffic to online sites through the low-tech mechanism of signage. (For retailers with physical locations, Deloitte research shows that in-store signage is a far more powerful influence than social media.)


Brick-and-mortar companies face formidable competition from e-commerce players, but traditional retailers need not give up the battle for growth. By seeking an in-depth understanding of their own customers and using their physical assets to their advantage, retailers can implement strategies that effectively engage customers in the digital age.

Kasey Lobaugh, chief retail innovation officer; Jeff Simpson, principal; and Lokesh Ohri, senior manager, Deloitte Consulting LLP

 This article is an edited excerpt of “The New Digital Divide.”

About Deloitte Insights
