Retailers are increasingly concerned about shoppers who are ‘just looking’. The electronics chain Best Buy, in the US, has been described as a ‘showroom for Amazon’ because of the number of people who visit to look at goods and then buy online. But is this just hype, or is it a genuine threat to bricks and mortar retail? This report from Columbia Business School sheds some light.
The authors of the study used an online survey, which was completed by 1000 people in each of Canada, the US and the UK. Respondents were over 18, own a smartphone or tablet, and had used it in the previous 12 months to help them when shopping in store for a product. The findings were perhaps not quite what you’d expect. First of all, 21% of all shoppers are mobile shoppers: that is, they use their mobile devices while shopping to help them make purchase decisions. And 74% of all mobile shoppers are over 29. Mobile shoppers are a diverse group, without an obvious demographic profile.
So how do mobile shoppers use their devices?
- 6.1% are what the authors of the report term ‘Exploiters’. They are committed to finding the lowest prices and use their mobile as a price comparison tool.
- 30.2%, the second largest single group, are ‘Traditionalists’. They are committed to buying in store, but use their mobiles to check product reviews or friends’ opinions.
- The other groups identified are ‘Savvys’, who are calculating but open to persuasion (12.6%), ‘Price Sensitives’, who don’t plan but are looking for the best price (19.4%), and ‘Experience-Seekers’, who value the experience and not just the price (31.7%).
- Over half of mobile shoppers (52%) are checking prices, but nearly as many, 50%, are searching for product information or reviews.
- 39% are getting information from families or friends. About one third have hunted for an online coupon, and the same proportion use QR or UPC codes to get product information.
- Shoppers are nearly as likely to use the store’s own website as another to gather information (70% and 75% respectively), with 42% using the retailer’s app.
What drives information seeking?
The most obvious reasons are price and product type. As price rises, so does information-seeking, until it levels off at a price point of $250, where just over 60% search for information. People are also more likely to search for information about electronics products than any others, with ‘books and music’ and ‘sporting goods, hobbies and toys’ coming in second and third. This may be to do with the complexity of the products, and hence the need for more information or reviews before purchase.
‘Showrooming’
The behaviour of most concern to retailers is ‘showrooming’, buying goods online after viewing them in store. 70% of respondents reported having done this at least once in the last year. The most usual reasons for this were lower prices from an online retailer (69%) and free shipping (47%). But 21% bought online because what they wanted was out of stock in store. And only 25% had always planned to buy online, so this is not a calculated behaviour for most mobile shoppers. Interestingly, 22% of mobile shoppers attracted by online discounts are actually buying from the store’s own website, so it may represent an opportunity to the retailer, rather than a threat, especially since customers value home delivery for large items anyway. The key drivers against showrooming are convenience and urgency. Shoppers want the product straight away. Issues of trust, customer service and loyalty were cited more often here: they clearly influence people to buy in store, but are not drivers towards online retailers.
Implications beyond retail
Instead of hand-wringing, there is much that retailers can do to retain customers, whether in store, or with the store’s own website or app. Offering discounts for goods bought online from the store’s website can be very effective, as can providing opportunities to rate the experience and provide product reviews. Online loyalty programmes can also help, as can extended warranties, sweepstakes and free samples in store. The key message here is that the best way to keep customers is to offer a variety of rewards and incentives.
It is also clear from this survey that showrooming is not necessarily the biggest threat, as it can be overcome by the in-store experience or reward programmes for most consumers. Instead, a bigger threat may be browsing at home, where the retailer has little or no control over the environment.
Beyond retail, the impact of a more empowered buyer should not be taken lightly. Pre-sales and post-sales activities need to be re-assessed in light of this trend by customers in both B2C as well as B2B environments. Omnichannel approaches are the way forward.