Showrooming in Canada: The Price of Keeping Buyers In-Store
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GroupM Next teamed up with our colleagues at Catalyst Canada, the leading search marketing innovator, to expand our research efforts and gain a deeper understanding of consumer behavior in the Canadian marketplace. This study examined consumer behavior in Canada as it relates to showrooming and revealed that a significant number of shoppers – 37% -- will leave a brick-and-mortar store and make a purchase online when the online price is just 5% lower than the in-store price. When the discount increases to 20%, lower than what’s offered at retail, the number of shoppers who leave and complete the purchase online nearly doubles to 73%. Our whitepaper about this research details behaviors and factors that influence shoppers who price compare online while shopping in-store, and explores: -- The combination of variables that factor into a consumer’s decision to purchase online rather than in-store -- Demographic and behavioral traits that help identify shoppers who are likely to engage in showrooming – and how brands can capture this influential customer -- Differences in behavior between consumers in the United States and Canada
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Showrooming in Canada: The Price of Keeping Buyers In-Store
- 1. Showrooming in Canada: The Price of Keeping Buyers in Store Jeff Lancaster, CEO Catalyst Canada catalyst.ca @jefflancaster
- 2. Study: Showrooming in Canada Download white paper now at: catalyst.ca/showrooming +
- 3. 46%54%
- 4. We Asked 2,000 People About The Winter Boots 13% for 2.5, 23% for 5, 48% shoppers would leave for 10% discount
- 5. How Big is Showrooming?
- 7. Impact Online Discounts Have On In-Store Purchases (Canada) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 5% 10% 15% 20% %ShoppersStayingInStore % Discount Canada US Source: Retail Showrooming in Canada: Winning the Consumer and the Price of Keeping Buyers In-Store; Catalyst/GroupM Next, 2013
- 8. Immediacy
- 9. The Value of Discount Matters Too $15 discount: majority of Canadians will leave and buy online $5 discount: US consumers will leave and buy online
- 10. What Consumers Consider 1. Size of the Online Discount 2. Familiarity with the online retailer 3. Shipping
- 11. Shipping • When we looked at 2 week shipping option (vs. 1 week) - 5% more consumers would simply purchase in store
- 12. Other Factors 1. Different language markets 2. Whether consumers would be “in-market” for the product or not 3. Presence of Children 4. Use of Public Transportation
- 14. Responses to Showrooming 1. Pricing 2. Which Shoppers to target 3. Loyalty 4. Behaviours 5. In-store exclusives 6. Search 7. Mobile Apps 8. Geofencing 9. Control
- 15. Pricing In Canada staying within 10% of the price – gives you a fighting chance - Can your pricing become more dynamic to reflect market?
- 16. Price Matching
- 18. Who Are the 10% to Win Over? - Created statistical model to rank shoppers from likely to stay to unlikely to stay The 10% to win over are: - Slightly more likely to be female - Average age = 58 years old - Median income = $50,000 annually - Half have some college or higher education. Casual online buyers: - 38% buy only once per year - 53% buy online once per month - 5% once per week - 4% more than once per week
- 19. Loyalty programs
- 20. What In-Store Behaviors To Target? When a shopper… - Compares alternatives + - reads reviews on mobile phone = Less likely to stay in-store - Talking with an associate make them more likely to buy in-store (12.5% more likely)
- 22. Where are you on Mobile Search?
- 24. Own search shelf for key products • Reviews • Best price • Compare • Cheap
- 25. Mobile app
- 26. Geofencing
- 27. Can you control the showroom?
- 28. Next Steps for Retailers - Understand your customers - Develop a mechanism to understand the online marketplace - Extend the conversation beyond price - Loyalty, search, apps, behaviour, control
- 29. Thank You catalyst.ca @Catalyst_CA Download white paper today at: catalyst.ca/showrooming
Notes de l'éditeur
- We teamed up with GroupM next to take a deeper dive into the trend of showrooming and here is what we found.
- Suppose you were looking for a new pair of boots. You were in store and saw the pair of boots cost $98.You get out your mobile device, open the browser, search for the boots and quickly find them for $89.What would you do? Why would you choose online? Why would you not choose online?Was the $9 worth it?
- 13% would leave the store for just a 2.5% discount.23% would leave the store for a 5% discount.48% would leave the store for a 10% discount.
- This same study was initially conducted in the United States by GroupMnext.According to a third party source, 46% of Americans had researched a product in store before purchasing it online.GroupMnext wanted to expand the study so they conducted a survey to see what portion of consumers were using their smartphones in store. They found that a very similar percentage, 44%, of consumers use their mobile phone to shop while in store. In contrast, the Canadian Marketing Association did a study of this same concept in 2012 and found that 26% of Canadian were using smartphones to shop in-store. Almost a 20% difference between Canada and The United States.Our results corroborated those findings from the CMA; we found the exact same results, 26% of Canadian consumers claimed to use their smartphones while shopping.
- In our Canadian version of the study we picked a wide cross-section of products at different price points, sizes, levels of purchase consideration, etc, and also kept a few of the same products from the US study to conduct direct comparisons.We chose:BootsCouchesLaptopsWashing MachinesTelevisionsTiresBooksCamerasHeadphones
- Yellow line is the trade-off curve Shifted dramatically south – US consumers are a lot more sensitive to price, will leave in much shorter order.Here we can see the percentage of people that stayed in store at different discount rates for all of the different products. The major takeaway here is that even with up to a 20% discount, 20% of customers will remain in store. This indicates that Canadians are much less price sensitive than the American shoppers. Compared to the United States, where less than 10% of consumers would stay in store with a 20% discount. It appears that American shoppers are much less forgiving to the in store price. Almost All American consumers would leave the store and purchase online for a 20% discount.If Canadian are going out into the cold, and go far, they want to come home with something. Density? Is it specific to Canada or are Americans further down the path than Canadians? Another thing to consider with regard to this difference in sensitivity is potential population density factors between Canada and the United States. Use of public transportation was Can you guess what the item on the top line is?Headphones. Hypothesize that headphones are maybe more time sensitive than the other items. Lose your headphones, need to go pick up a new pair immediately so as to not have to go without them for a period of time. Should note that there were cheaper items in the study, like the book, however just short of 50% of consumers said they would stay in store to buy headphones at a 20% discount.Marked difference in implied urgency for headphones.Not the cheapest, not the most expensive – can’t typically wait for headphones. Lost, traveling, etc. Same situation with the headphones. The book was cheaper.Other considerations: pop density, travel distances, weather? .
- $15 discount: majority of Canadians will leave and buy online$5 discount: US consumers will leave and buy onlineSimilar findings based on dollar value. Remarkable findings – US 10% of consumers will stay in the store regardless if discount level, In Canada, 20%.
- Experimental design – buying from store at fixed price vs buying online with different characteristics. Why measuring other things such as discount size, familiarity.We gave respondents a number of different questions that included different variations in discount size, familiarity with the online retailer and shipping times. We were testing to weigh the importance of each individual element in the purchase. What we found was that size of the discount typically represented half of the decision. So when weighing the decision of whether to purchase online or not, 50% of the decision was based on the size of the discount being offered.Additionally, 25% of the decision was based on shipping times (we tested 1, 2 and 3 week shipping times.) and the other 25% of the decision was based on familiarity with the retailer. 10% of US consumers stay in the store despite discount20% of Canadian consumers stay in the store despite discountShortening shipping from 2-week to 1-week 5% more staying in-store when offered 2-week Typically the threshold here is about 8.8 days. After that, almost everyone is staying in store.These things were not measured in the US study.
- We also tested a number of variables including language markets: French/EnglishWhether consumers would be “in-market” for the product in the coming monthsWe also tested for the presence of childrenand use of public transportation None of these concepts played roles in showrooming behavior
- Based on the research study, we can conclude that staying within 10% of online price will keep consumers in your store, in the US this number is tighter,5%.In keeping with that idea, are you able to implement a system to monitor, collect, process and reflect these things in store.Being able to react more quickly online is a major advantage of multi channel retailing. For example – in the flash memory market prices wentup significantly after tsunami because two the major Japanese manufacturers were shut down. After the two companies came back online, online retailers changed their prices quite quickly in order to compete better, while brick and mortar retailers couldn’t respond as quickly. In just 6-weeks there was an average price decrease of around 15% that left brick and mortar retailers unable to respond with new pricing strategies, while online retailers were able to adjust pricing and stay competitive.
- - 20% of Canadian consumers that showroom will stay in store no matter what.The statistical model identified that the 10% to win over is the next 10% after the 20% who are going to stay regardless.Give these customers a compelling reason to stay. This is a group that can be persuaded or won over in-store.You can craft a product mix that meets the needs of those who needs to be swayed, or even use the information to support decisions on where to place brick and mortar locations.
- Shoppers, RCSS mine with credit cards extensively. Deepen relationship, cross sell upsell, feed your loyalty and intelligence programs.Shoppers Drug Mart Corp:Piloting customized offers to its Optimum loyalty card holders, based on feedback from its customer purchasing habits. For example, if a customer has bought a lipstick in the past, she could be e-mailed an offer of bonus points for a new lip gloss and mascara along with reminders of weekly cosmetics specials.“Optimum as a database and an ability to tailor offers to customers – and an ability to be very specific and more productive with our offers – is really the largest value of Optimum,” Domenic Pilla, chief executive officer at Shoppers, told analysts this year. “It’s very early days … We have a long ways to go to be much more targeted.”The initiative is important to Shoppers because Optimum cardholders are its most valuable customers, spending almost twice as much as non-cardholders, the company says.Real Canadian Superstore:Using President's Choice MasterCard reinforces our mission of offering our customers innovative products at great prices. It is a no fee card with a tremendous loyalty program which provides our customers with "PC points" which can be redeemed for free groceries and other rewards.
- Engage them while in store or give them something to do with the store: QR code – show them where to go.Give them a device like Ford does – Ipad in dealership.Have an associate talk to them when they are using their mobile device.This interaction fills the void – it provides the necessary information to the consumer, as well as disrupting the interaction with the device. You really block the consumers ability to showroom by having an associate talk to them. Reviews and best price – OWN these words. We want to own the conversation around these types of things.
- Google is changing the game – here’s how we can use all these changes to improve your businessMoments that matter – context is the new thingAllows for more advanced targeting based on geo/time/deviceChange the way we think about account creation/structureDevices converging, more about context than devicePeople are searching for similar things regardless of device, depending on their context
- Understand your customers – this study hadn’t been done publicly before. A retailer isn’t going to do this and share it, it’s the secret sauce, the retaler doesn’t want to share this information. We wanted it to be public. Simple experiment to test consumer sensitivity to discounts and use of the mobile device. Don’t implement directly. Different price sensitivity in different areas. For instance the sofa – public transportation played no role in the purchase of a sofa. This may NOT be the case in a different category. Mechanism – stay price competitive. About 10%. Stay in the hunt. Extend beyond price – make the conversation about more than just price.