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Retail Showrooming In Canada: Winning The Consumer & The Price Of Keeping Buyers In-Store
Authors: J. Patrick Monteleone, Ph.D., Director, Research Jesse Wolfersberger, Director, Consumer Insights
March 2013
Five of nine products featured were changed, with four retained for comparison. Three additional products were added to test and increase our understanding of consumer
choice dynamics.
Additional testing was incorporated to better understand the roles that product shipping time,
being in-market for a product, presence of children and public transportation use all play in consumer choice. Key insights from the research, including differentiations between Canadian and American consumers, are:
Twenty percent of Canadian consumers prefer to remain in-store and purchase, compared to
10% of Americans.
A majority of Canadians will leave a store and buy online if offered a $15 discount. The same
percentage of Americans will leave a store if offered a $5 discount.
Retail Showrooming In Canada: Winning The Consumer & The Price Of Keeping Buyers In-Store March 2013
Among Canadian consumers, factors in a consumers purchase decision when faced with
showrooming, in the order of importance from highest to lowest, are: discount, shipping time and familiarity with the retailer.
When two-week shipping is the only option available, 5% more consumers will buy in-store,
compared to one-week shipping.
Among Canadian consumers, being in-market, the presence of children and the use of public
transportation play no role in consumers likelihood of remaining in-store to buy.
Survey results
GroupM Next surveyed 2,000 Canadian shoppers, asking about 12 products across multiple retail categories and at different price points. Respondents were given a hypothetical showrooming scenario in which they could purchase a given product and own it immediately, or they could take a discounted price, leave the store and have the product shipped. The results show that, while customers would rather have the product immediately,
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% 5% 10% 15% 20% Discount Offered Online (%)
Source: Retail Showrooming in Canada: Winning The Consumer & The Price Of Keeping Buyers In-Store; Catalyst/GroupM Next, 2013
a small price difference is enough to entice them to leave the store and buy online. When the online price is just 2.5% lower than the instore price, 74% of Canadian shoppers say they would stay and buy in-store. When the discount increases to 5% off, 63% of customers say they would stay in-store. At a 20%
discount level, only a small number of shoppers (27%) will stay in-store. It is interesting to note that Figure B throughout the study, when it comes to showrooming, there proves to be no meaningful difference in preference or behaviour between English-Impact Online Cost Savings Have On or French-speaking consumers.
100% Of the products featured in the survey, Canadian consumers considered purchasing headphones
differently than the other products (the topmost point at each discount level in Figure A). While 80%
70% 60% 50% 40% 30% 20% 10% 0%
90%
Retail Showrooming In Canada: Winning The Consumer & The Price Of Keeping Buyers In-Store March 2013
2
$0 $50 $100 $150 $200 $250
60% 50% 40% 30% there was nothing present in the language of the question asked to suggest it, respondents showed 20% an implied urgency with headphones. It took a larger discount for shoppers to leave the store 10% 0% when buying headphones than any other product. Interestingly, U.S. consumers revealed similar 0% 5% 10% 15% % Purchasing I
20%
behaviour as determined in our research of the U.S. marketplace. Among Canadian consumers, the
Discount Offered Online (%)
research reveals the second most likely product to have implied urgency is a set of tires. The least
Source: Retail Showrooming likely product to have a sense of urgency is a laptop computer. in Canada: Winning The Consumer & The Price Of Keeping Buyers In-Store; Catalyst/GroupM Next, 2013
A similar story emerges when looking at the data by dollar amount. If the price difference between in-store and online is close, shoppers prefer not difference is more than $15, a majority of customers say they would leave. In comparison, our research showed that $5 is the tipping point among U.S. consumers. When consumers are not make choices, made to wait for delivery. However, if the
$0
$50
$100
$150
$200
$250
decisions
usually
based on a single factor. In this study, consumers were asked to choose between buying in-store and online.
The questions featured varying combinations which included factors such as discounts, three shipping options and familiarity/unfamiliarity with the online retailer. When deciding to purchase, a discount factors for nearly 50% of the decision, while 25% is based on shipping, and 25% is based on familiarity with the retailer. With shipping in particular, when two-week shipping is offered (across all the products), brick-and-mortar retailers gain 5% more consumers willing to stay instore and purchase. We do note that the nature of this survey potentially inflates the price sensitivity of shoppers, as respondents were asked about products for which they may not necessarily be in the market. Therefore, responders may report more price sensitivity than in a real-world situation. Additionally, this was an online study, so in order to participate, all respondents must have some level of Internet acumen. Therefore, there likely exists a percentage of offline-only shoppers who were not included and, logically, that group is unlikely to showroom.
Retail Showrooming In Canada: Winning The Consumer & The Price Of Keeping Buyers In-Store March 2013
Retail Showrooming In Canada: Winning The Consumer & The Price Of Keeping Buyers In-Store March 2013
Slightly more likely to be female Average age of 58 Median income of $50,000 annually 50% have some college education or higher 53% make online purchases once per month
Marketers looking to respond to showrooming could target this profile in order to attract shoppers who are more likely to stay and buy in the store. Finally, showroomers exhibit behavioural cues. The model identified customers who compare prices in-store are more likely to showroom and leave. It shows that shoppers who are price shopping in the store are one step away from pulling out a mobile device and checking online prices. Using this information, retailers can train associates to watch for this behaviour and intervene at key decisionmaking moments. Additionally, the model revealed that sales associates can be influential. Canadian customers who interact with an associate are more likely to stay and purchase in-store. Conversely, customers who price-check using their mobile device are less likely to stay. These two behaviours cancel each other out. By engaging the shopper, the associate disrupts the mobile behaviour and increases the chance of the customer staying in-store and buying a product. Several retailers have taken action to turn showrooming into opportunity. Future Shop, Canadas largest consumer electronics retailer, provides easy access to locations, reviews and prices on its mobile application, encouraging showrooming in a controlled way. Future Shop also has a robust price-matching policy that beats competitors prices by 10%. Loblaws, Real Canadian Superstore and Home Depot all price match competitors flyers and promotional discounts. Retailer Target offers exclusive in-store items, and, as it enters Canada in 2013, may extend its aggressive pricematching policy beyond the holiday season. With the right pricing, in-store strategy, digital presence and engagement with the consumer at the touch points where they shop, brick-and-mortar retailers can compete in the smartphone era.
Methodology
GroupM Next and Catalyst, in conjunction with Global Market Insight (GMI), surveyed 2,000 Canadian shoppers, asking about 12 products in multiple retail categories at varying price points, with different shipping times. Shoppers surveyed were given hypothetical purchase decision scenarios in which they could purchase a given product and own it immediately, or they could take a discounted price, leave the store and have the product shipped with varying shipping times.
Retail Showrooming In Canada: Winning The Consumer & The Price Of Keeping Buyers In-Store March 2013
GroupM Next is the forward-looking, innovation unit of GroupM, the worlds largest global media investment management group that is the parent company to WPP media service agencies Maxus, MEC, MediaCom and Mindshare, as well as Catalyst and Xaxis. Together with GroupM agencies, GroupM Next focuses on the curation and application of insight-focused solutions across online, social, mobile and addressable channels. Through thought leadership, technology, research and education, GroupM Next delivers data-driven, actionable insights and a clear path to action to help GroupM agencies and their clients harness the right opportunities made possible in the digital technology and new media industry environments with speed and relevance. Access our work and discover our perspective at www.groupmnext.com. Contact us with questions or comments: cindy.spellman@groupm.com
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