2.5% Online Discount Jeopardizes Retailers

by Jack Loechner, Aug 30, 2012, 7:45 AM

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According to GroupM Next, examining showrooming trends, 45% of customers shopping in-store at brick and mortar locations will walk out and complete their purchase online for a discount as low as 2.5%. 60% of shoppers will leave and purchase a product online for a savings of 5%. And, discovering an online discount of 20%, only 13% of shoppers stay and complete their purchase in-store.

The rise of smartphone usage has fundamentally changed the way people behave, explains the report. A decade ago, consumers began to use the Internet as the initial step in a purchase path that often times ended up in a brick and mortar store. Now, nearly 50% of shoppers are using mobile devices in-store to inform a decision to walk out the door and complete their intended purchase online.

“Showrooming” is the modern trend in shopper behavior where customers go to a brick-and-mortar retail location, make a decision on what item to buy, and instead of heading to the check-out aisle, they use a mobile device to find a better price online, where they ultimately make their purchase.

This shift in consumer behavior, says the report, impacting the health of both brick and mortar stores and e-commerce retailers, is the new habit of consumers conducting price comparisons on a mobile device while in-store and leaving the store to complete their purchase online.

GroupM Next CEO Chris Copeland says “... consumers have shifted their paths to purchase to include the store as a step, but not necessarily the final step... ‘Showrooming’ is the label for a massive consumer behavior shift brought about by the ease of access to information on a mobile device... “

For this study, 1,000 shoppers in the United States were surveyed and presented with multiple hypothetical showrooming scenarios for 10 products at varying price points spanning multiple retail categories. Data highlights, as reported in the whitepaper on the research, include:

• 44% of consumers use a mobile device to influence their purchase decision when shopping in-store
• If the price difference in-store vs. online is more than $5.00, most customers will leave
• The average showroomer profile includes females who are younger in age and make online purchases frequently. Alternately, the profile of the shopper who can be most swayed to stay and complete a purchase in-store is older male, 55% of whom buy online 1x per month
• Customers who interact with an associate are 12.5% more likely to purchase in-store

The study identified customers who read reviews on a mobile device and those who compare in-store prices are more likely to showroom and leave the store. It shows that shoppers who are price shopping in a store are one step away from pulling out a mobile device and checking online prices.

The takeaway good news is that about 10% of purchasers surveyed chose to complete the purchase in-store, no matter the price discount offered. This is encouraging for physical retailers as there is a core customer base that appears unlikely to ever showroom. The key for marketers, says the report, is to identify the next 10%, the group of customers that is sensitive to price, but can be swayed to stay in-store. This group of “marginal showroomers” has the characteristics of being sensitive to pricing, but can be influenced.

The Marginal Showroomer That Brands Can Target To Stay In-Store
Group	Characteristic
90%+	Male
Average age	52 years old
Median income	$60,000/annually
98%	Some college or higher education
55%	Buy online once per month
21%	Once per week
11%	More than once per week
Source: GroupM Next; August, 2012

Understanding this profile may enable brands to target through existing loyalty programs, as well as through online media buys, says the report. Using a retargeting strategy that incorporates messaging designed to give these shoppers the reason they seek to stay in-store before they arrive may prove beneficial.

GroupM Next Director of Research, Patrick Monteleone, Ph.D, concludes that “... by employing strategies to reach this massive audience segment, brands can significantly bolster their sales at the register... or take advantage of their showrooming... (and) get the sale via a branded app or online property...”

To download the free study “Showrooming & The Price Of Keeping Buyers In-Store” in PDF format, please visit here.

 

 

 

 

 

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1 comment on "2.5% Online Discount Jeopardizes Retailers".

1. Durk Price from eAccountable
   

   commented on: August 30, 2012 at 1:20 p.m.
   Showrooming is gaining strength as the mobile experience gets better and the displayable screen size gets larger. Great post.

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