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Jan 1, 2007
by Alfred Branch, Jr.
"Retailers continue to devote substantial resources to traditional marketing vehicles, despite new communication mediums, demographic shifts, and a lack of proven return on investment. By looking at what converts a shopper into a buyer, and conversely, what keeps a shopper from buying, retailers can direct their efforts in a more positive manner," he contends.
More than 4,400 consumers were asked about their shopping behavior through an online survey commissioned by Deloitte and conducted by an independent research firm. "By talking to consumers who did buy, as well as those who did not, our study found that the most direct way to turn shoppers into buyers and increase share of wallet is not through traditional marketing, but by enhancing store navigation, improving customer service and ensuring a seamless multi-channel experience," Conroy continues.
"Our findings make clear that every retailer has significant opportunities to improve conversion by delivering a better customer experience." The study found that traditional marketing does not drive purchases.
Eight out of 10 of those surveyed said that their most recent store visit was not prompted by advertising or marketing, including television, radio and online ads, direct mail, coupons, and displays and signs. In fact, these marketing vehicles had relatively low penetration and did not increase the probability that shoppers would make a purchase once they went to the store.
"In this age of information overload, marketing messages aren't getting through. Brand recognition, past in-store experiences, and consistent fulfillment of the brand promise are driving many more store visits and driving the conversion of shoppers to buyers," says Scott Bearse, leader of Deloitte's retail stores practice. "Consistently managing a successful series of customer purchase experiences is what creates a strong retail brand and ultimately increases shareholder value."
Service and store navigation are the key to conversion, because customers can't buy what they can't find. Consumers who went to a store intending to buy an item, but did not purchase it, said that the number one reason was that they could not find the item.
This was true of 16 percent of survey respondents, who indicated that they could not locate the item, or it was out of stock, or help was not available to find it. In fact, of the 31 percent of consumers who said they received service in the store, the majority (55 percent) did so to get help locating an item.
"The message is clear: Stores need to be easier to navigate and more intuitively organized," Bearse says. As an example, he describes a store that is designed like a valley, with a lower center and higher sides, as one that makes it easy for customers to see what they want and, therefore, makes the store easier to shop.
"In addition," he says, "putting service where and when it is needed is mission critical. Retailers who direct resources to screening, training and compensating helpful and knowledgeable sales associates will reap the rewards with increased conversion, as well as opportunities to cross sell and up sell."
A multi-channel strategy is essential to success, according to the study. Of those polled, 91 percent said they pre shop online. Online shopping is acquiring customers at a far greater rate than store shopping.
It is also losing fewer customers than in the past. According to Deloitte, there is a 15 percent net acquisition rate for online versus a two percent net acquisition rate for stores. In addition, the online shoppers surveyed were more frequently satisfied with their shopping experience than the in-store shoppers. More than half of online shoppers said their experience was better than store shopping. This compares with 25 percent of store shoppers who said that their experience was better than online shopping.
The study also indicated that, "pre shopping," is becoming far more pervasive, with 91 percent of the surveyed shoppers saying they research items and compare prices online before heading to a store. One in three said they do so frequently.
Pre shopping online was most popular for big ticket purchases. The average spent among those who engaged in pre shopping was boosted from $65 to $151. This suggests that certain categories and higher price points are benefiting from pre shopping activities. It also indicates that pre shopping raises spending during the subsequent store visit.
"Online shopping and pre shopping continue to improve and increase penetration," says Conroy. "This puts brick and mortar retailers with no online presence at risk," he concludes.
"Successful retailers are building diverse multi-channel positions that provide a positive customer experience that is seamless across different channels. They are also developing more consumer touch points and translating single transactions into broad and deep relationships, through brick and mortar stores, websites, warranties, financing, loyalty clubs and other programs." The survey of shoppers polled a nationally representative sample of 2,337 online consumers and 2,113 store consumers between the ages of 18 and 74.
Topic: Business Strategies
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