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Fickle Frequent Buyers

Mar 1, 2007

While multichannel shoppers have proven to be big spenders, they're not as loyal as their single channel counterparts. Multichannel shoppers are valuable to merchants in a very literal sense: They spend more money and do so more frequently than shoppers who confine their buying to one sales channel. In 2005 they generated about $125 billion in offline sales, according to Forrester Research Inc.

These shoppers spend up to 50 percent more than single channel shoppers, Forrester says. And in general they also usually buy bigger ticket items, such as electronics, appliances and computers. Offline sales of these items to multichannel shoppers, for example, hit $44.5 million in 2005.

However, despite spending more and purchasing with greater frequency, multichannel shoppers tend to be less loyal than their single channel counterparts, according to research by Gartner Inc. The two primary reasons are that multichannel shoppers are more price sensitive because they use the online sales channel to conduct more price comparisons, and they have higher expectations for customer service.

In customer service, any perceived shortcoming in the shopping experience is apt to send a multichannel shopper elsewhere, according to Gartner. "Retailers need to be aware of these characteristics in multichannel shoppers because they open the door to decreased loyalty," cautions Hung LeHong, research vice president for retail at Gartner.

Retailers remain eager to capture more sales and loyalty from multichannel shoppers. Such merchants as Circuit City, Best Buy and Sears Roebuck and Co., have launched programs enabling shoppers to buy online and pick up in-store. The tactic serves not only to bring online shoppers into the store where they might continue shopping, but also to encourage shoppers who frequent the store (but often lack the time to spend browsing) to experience the convenience of shopping online.

So strong is this drive to encourage multichannel shopping that Sears specifically promoted the ability to order online and pick up in store through a television ad campaign during the past holiday shopping season. These programs have proven so successful that other retailers are moving down the same path. Radio Shack, for instance, has jumped on the bandwagon. The electronics retailer launched a pilot program offering ship to the store in 1,300 of its company owned stores in late November 2006. It says that it will announce plans to roll out the program to its remaining 3,400 units soon.

"Multichannel shopping strategies are about driving consumer behavior to encourage cross selling," says Jimmy Mansker, vice president of RadioShack.com. "The aim is to get consumers who shop online into a store where they can interface with a sales representative who can introduce them to accessories for the purchase, and get store shoppers onto the website where they can access a much larger catalog."

Information in this article was edited from a story on InternetRetailer.com.

Topic: Business Strategies

Related Articles: shoppers 

Article ID: 80

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