Mobile influence puts stores on defense

Digital devices increasingly shape the way people buy groceries and other goods. Retailers need to raise their digital game.

December 7, 2012

In-store sales are fragile today with pricing and savings on shoppers’ minds, and with a world of competitive information a fingertip away on their mobile devices.

Just a 2.5% discount will prompt 45% of shoppers in-store to walk out and buy online. A 5% discount will cause 60% of shoppers to leave a store. A 20% discount leaves a mere 13% of shoppers completing their purchases in-store, according to GroupM Next data.

Shopper reliance on mobile has F3 anticipating a breakdown in the relationship between customer trips and sales. This seems inevitable unless retailers compel people to buy while in the store—despite potentially lower prices at online and brick-and-mortar competitors, which shoppers can readily see on their mobile devices.  With instant access to price/product information and consumer reviews, the certainty of in-store purchases declines.

More insights from the GroupM Next study, Showrooming & The Price of Keeping Shoppers In-Store:
1.    A mobile device influences purchase decisions for 44% of consumers shopping in-store.
2.    For a price difference of more than $5, most shoppers will leave a store to buy online.
3.    Customers who interact with a store associate are only 12.5% likelier to buy in-store. Older males 52+ are the most likely to be swayed to stay and buy in-store.

While the GroupM Next study included hard and soft goods, Nielsen research shows a significant influence of digital devices on grocery purchases. People who check digital devices (phone, tablet, PC) when they grocery shop focus on savings.  Their top online U.S. activities are reading online grocery circulars (62%), seeking coupons (55%) and browsing a manufacturer’s website (55%), according to the Nielsen Global Survey of Digital’s Influence on Grocery Shopping.   

On a monthly basis, Nielsen says, 43% look for deals and coupons, 37% check prices and consumer reviews. On a daily basis, 39% use digital shopping lists.  “Connected consumers and their devices provide CPG makers and retailers with options to differentiate their brands and stay relevant,” says Todd Hale, senior vp-consumer and shopper insights, Nielsen. The latest figures show rising food prices, health factors and higher transportation costs as matters of great concern to U.S. consumers.

Their propensity to ‘showroom’ helped lead to three straight recent weekdays of billion-dollar plus sales for e-commerce. On Black Friday 2012, $1.0 billion in e-sales were up 28% from the year earlier; on Cyber Monday, $1.5 billion posted was a 17% year-over-year gain; on the Tuesday that followed, $1.3 billion posted was up 17% from a year ago, according to Citi Research, which hosted a call with ComScore.

E-commerce volume is expected to reach $327 billion by 2016, 45% ahead of the $226 billion spent in 2012 and $202 billion spent in 2011, predicts Forrester Research. This will represent 9% of total retail sales, up from 7% currently.

Still, some ambivalence exists. When Nielsen asked U.S. consumers this summer if they prefer to buy online, mobile or in-store, 68% rated online as “easiest” and “most convenient,” and 59% said it is their “overall favorite.” Physical stores were “safest” (77%) and “most reliable” (69%), and mobile didn’t capture a top rating.

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