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[18 comments]

Is Impulse Shopping Bigger Offline or Online?

October 22, 2013

With anytime/anywhere shopping, one-click checkout and limitless selections, the web is flooded with articles warning about the dangers of impulse buys online. But a few recent studies have found that physical stores still do a better job inspiring customers to spend more money than planned.

According to a new study from A.T. Kearney, about 40 percent of survey respondents reported spending more money than planned in retail stores, while only 25 percent reporting doing so when shopping online.

"This is in part because stores are more likely destinations for what we call 'occasion trips,' or time spent browsing, window shopping, treasure hunting, or making impulse purchases," A.T. Kearney researchers wrote in the report. "Online shopping, in contrast, is more likely to involve 'mission trips' for those on a mission to find specific products or services at the lowest possible price."

The omnichannel study was based on a survey of more than 3,000 consumers in the U.S. and U.K.

A study from LivePerson released in January similarly found 77 percent of shoppers across five Western markets at least sometimes make impulse purchases in-store, compared to half who do so online. The study did find younger adults (aged 18-34) slightly more likely than the average respondent to make impulse purchases online.

Still, defining unplanned purchases appears easier when heading to a store with a shopping list. Other studies over the last decade have estimated that as much as 40 percent of the money spent on e-commerce sites represents impulse buys. Without the burden of driving to the mall, finding the product in aisles and checking out, online buys are said to avoid the "mid-purchase pause" that derails in-store impulse purchases.

Moreover, a survey from Rackspace Hosting, the open cloud company, last fall indicated that nearly half (48 percent) of U.K. adults who use smartphones or tablets to make purchases online admit to buying items on impulse more frequently now by using their mobile devices. A survey from Ryan Partnership, also released last fall, indicated 22 percent of those who follow retailers through social media report having been influenced to make an unplanned purchase.

Perhaps the clearest indicator that online impulses are rampant are the scores of web articles and blogs offering advice on how to avoid the temptation. Common advice includes not saving credit card information, unsubscribing from newsletters, disabling "one-click buy" options, clearing browsing history/ cookies, and doing more research.

Discussion Questions:

What are the drivers and inhibitors of spontaneous purchases online vs. in-store? Which channel do you think is more influenced by 'mission trips' versus discovery?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which channel is more influenced by 'mission trips' versus discovery?

Comments:

I don't think AT Kearney quite framed the problem/issue correctly. There are two kinds of impulse buys:

1) I decide I want to buy something, and without any hemming or hawing, I hop on to Amazon, eBay, or anywhere (except for healthcare.gov) and buy it. I don't consider that an impulse buy per se. I consider it instant gratification.

2) I've been shopping at a specialty store and am waiting on line to check out. I see a great pair of socks hanging on a peg hook next to where I'm standing. I pick them up and throw them in my cart. THAT's an impulse buy.

The reason that cross-channel shoppers are more profitable (and they are!) is that if they go to the store, they'll buy more than what they researched.

And I credit Greg Buzek of IHL for discovering that a down-side of self-checkout in grocery was a decrease in the amount of impulse buys at the checkout stand (candy, magazines, and other assorted tschotkes). These are typically high margin items.

I don't believe that "people who buy this also bought..." is quite the same, either financially or emotionally.

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Paula Rosenblum, Managing Partner, RSR Research

I think the takeaway is the rush to mobile checkout will significantly decrease add-ons and average check in-store. Careful what you wish for....

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Bob Phibbs, President/CEO, The Retail Doctor

I agree with everything Paula said, and I think there's an additional point in play.

A shopper who physically visits a store has made an investment of time and travel before setting foot in the store. That shopper wants to maximize the time investment while there, and will seek to buy as many things they think they'll need. That's one of the beauties of end caps - they can persuade a shopper who just ignored the cereal aisle that maybe, in fact, they would want a box of Life cereal.

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Cathy Hotka, Principal, Cathy Hotka & Associates

The store environment (layout, color, lighting, etc.) is designed to encourage shopping and exposure to a wide variety of merchandise that may or may not be related to the item the customer was looking for. While some sites like Amazon do a great job of suggesting that people who bought 'X' and bought/looked at 'Y', I believe the opportunity for impulse sales is greater in the B&M world. I think the underlying factor is the difference between buying (online) and shopping (B&M).

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Steve Montgomery, President, b2b Solutions, LLC

Few industries or retailers make a sustainable livelihood off of impulse purchases. The gaming industry might be one, but even they promote the responsible approach.

Adults are adults. Businesses, whether online or offline, who act responsibly will be rewarded with repeat purchases. The "Wants" over "Needs" is an issue that consumers will forever face in a variety of categories of merchandise and services.

Based on the October, 2013 Prosper Insights & Analytics Monthly Consumer Survey of 6,415 Adults, 51.7% of adults are more focus on "Needs" vs. "Wants". That compares to 66.0% who focused on "Needs" in the January, 2009 Survey. Further, only 38.75 of adults say they have become "More Budget conscious" this October, compared to 53.4% in January, 2009. Perhaps that only substantiates that human beings have short memories in regards to painful uncertainty.

Perhaps impulse will rise ever higher in the coming months. No one ever said that we want see additional "bubbles."

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Roger Saunders, Managing Director, Prosper Business Development

I am one who will go online and purchase what I went there to buy. Nothing more, nothing less. However, when I am sent to a store with a specific list, you can be assured I am returning with more than the list calls for. The impulse is because of something I did not know I wanted until I saw, felt or tasted it.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Paula's got this one nailed!

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

Online merchants use customer profiles to build associations and promote "upsells" and "crosssells." But customers aren't always looking to buy "associated" products. Oftentimes they are also interested in things that are completely unrelated to the "primary" product they are buying. The interest may be driven by an actual need or simply by a "sound, scent, look or feel" that appeals to them.

By having the ability to "display their wares" and hence trigger such spontaneous interests, stores possess an inherent advantage over online to facilitate impulse buying. Contrast that to the limited real-estate available on websites and mobile-sites, there is only so much that can displayed even if one were to somehow map out the "spontaneous interests" in addition to "associations."

Arun Channakrishnaiah, Sr. Manager, Accenture

Online shopping requires a rational process of filtering millions of items so that a consumer can find the item(s) they are looking for. Consumers shop with their "head" online.

While shopping in store, consumers do need signage to find target products they are interested in. But if retailers do their job right, they engage consumers with immersive experiences. The best retailers create an in store experience that the consumer "feels." People buy more (especially accessories when they shop from the "heart."

Said another way ... online shopping is "product centric" focused on feature price comparisons of individual items. The best retail stores are "consumer centric" focused on solutions that are focused personalizing value for consumers.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Impulse sales are a priority in the brick and mortar retail quest for profit dollars. The pressure to keep staple commodities at a low price to draw shoppers into the store is still strong and a big part of weekly sale advertisements.

Today, e-commerce has only been able to expand and enforce the pressures of low pricing. Impulse and add on sales items strategically located are there "to make money" for the company. The single most dampening factor in a company's consideration to keep and or expand an e-commerce business is the low margin reality of the business. Attempts to add sales of profitable items in e-commerce have largely been seen an annoying distraction to shoppers and a large part of the abandoned e-cart problems. This is perhaps because of the B&M marketing procedure spill over into e-commerce sales.

The use of visual content for add-on sales is provided by slamming the customer with pop-up advertisements of all sizes with and without sound. This simply isn't working well and retailers from both sides know it. Nevertheless, for the simple reason that there are no better ideas being brought forth, they stay with the annoyance. The use of backdrops, advertising watermarks on invoice pages and receipts, live instant assistance for consumer support, and audio is scant and or outdated.

Simply put, site content is not being experimented with nearly enough to discover a means to improve messaging with the plan and purpose of increasing profit sales without consumer annoyance by most retailers. This is not to suggest that massive investment in our lackluster economy is needed, but that affordable progressive change is much overdue.

'gjarnoldjr'

The report does not indicate method of payment such as credit card vs debit card, which is a big factor in this discussion.

It is common knowledge consumers are more likely to impulse buy on credit cards than debit cards.

I see a scenario where credit card buyers online are more likely to buy on impulse than debit card buyers offline.

Ed Dunn, Founder, (Stealth Operation)

The payoff of a spontaneous purchase is the instant gratification, a feeling few online purchases can provide. It's also easier to merchandise a brick and mortar location to trigger desires and spontaneous purchases.

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Carlos Arámbula, Managing Partner, MarcasUSA LLC

Touch and feel! We just did a study comping the 'un-beatables' of online shopping vs those of physical shopping and "Touch & Feel" ranked higher than any online attribute by more than 20%. It's one of those right-under-your nose benefits that stores need to take more advantage of by encouraging trial or by simply placing goods in shoppers hands.

We already know that online shopping is viewed by consumers as "functional" and physical shopping as more "emotional" so, makes sense that you'd get more discovery out of the bricks. I'm a sucker for the chocolate mountains at Whole Foods; they're nailing me every time with that one!

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Lee Peterson, EVP Creative Services, WD Partners

Our eyes are trained to avoid things on the website that are not the actual content that we wish to view. So ads, banners, "suggested related items," etc., are most often overlooked...for now. In physical stores, our eyes are trained to wander and therefore we tend to see most everything in our path which lends to impulse buy opportunities. I do see more "discovery" websites popping up, however.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Paula has some great points. Impulse buys online and offline can be defined a bit differently. Merchandising techniques to generate in-store impulse buys have been around for ages, and ecommerce retailers try to find ways to emulate ways to create the same type of compulsion to buy online. I'm not sure if I would call online purchases like this impulse buys, but I think generally the online shopper wants the experience to be quick and easy (instant gratification as Paula called it) and there are ways to help that along.

One of the great things about online retail is the amount of data available on your customer and the ability to automate. Some of the drivers of "impulse buys" online were mentioned above but I think we can all agree that it's highly data driven: cross-selling and up-selling based on previous purchases or products viewed, getting and distributing info through social media, remarketing though PPC advertising based on products viewed, etc.

Arie Shpanya, CEO, WisePricer

When you go online, you know what you are looking for and I think most are problem solving that particular need. Perhaps there will be some axillary items that may be purchased, but in a brick and mortar store the customer has driven or traveled there and invested the time of going out, as opposed to being in front of the computer in their PJs. Also, think about the extra find(s) that become the impulse buy(s).

At home you can turn the computer on 5 minutes after turning it off. In the store it might go something like the following: "Wow - I like that. But I'm not here for that...but it is only $x.xx and it would be useful. I hate to decide I want that once I get home! What if they don't have it once I return?" So I believe that brick and mortar rules with impulse buys, and I also believe that b&m allows for more discovery, even though the net is limitless, and maybe also because the internet IS limitless.

William Passodelis, associate, ML Co.

The drivers of impulse purchases are fundamentally the same for online and in-store transactions - discovery, or rediscovery of a product that stimulates interest and excitement, and what is perceived to be a reasonable price.

While this study suggests that impulse purchases in-store are higher than online, I believe that further research will show the opposite. The main reason is that the time between selection of an impulse product and completing the transaction online is so much less than the time between selecting a product in store and completing the transaction. As a result, consumers have more time to read, think and impulse purchase in-store than they do online, which should lead some to put that impulse product back instead of actually purchasing it.

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Mark Price, Managing Partner, M Squared Group, Inc.

I would have to agree that online is more influenced by mission trips as opposed to occasion/buying trips, but I do believe that this is changing as online commerce grows, particularly in categories such as apparel and accessories. I think in-store impulse purchases are often driven by discovery/impulse ("I really want a chocolate bar or some gum now that I see it" or "that's something I haven't seen before") whereas online impulse purchases are probably more likely to be driven by some sort of deal (i.e. I could pay $7 for shipping or I could add this $4 item to my purchase and qualify for free shipping).

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Alexander Rink, CEO, 360pi

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