Study: Smartphones Shoppers Not So Bad for Brick & Mortar

Discussion
Jul 02, 2012

Despite rampant showrooming concerns, a new study finds smartphones "contributing to — not taking away from — in-store sales," with smartphone shoppers 14 percent more likely to convert and make a purchase in the store than non-smartphone users.

According to the Mobile Influence Factor study from Deloitte Consulting, through activities such as product research, price comparison or other mobile application use, smartphones currently influence 5.1 percent of annual retail store sales, translating into $159 billion in forecasted sales for 2012. By 2016, Deloitte anticipates mobile’s influence, based on consumers’ smartphone use, will grow to represent 19 percent of total store sales, amounting to $689 billion in mobile-influenced sales. By comparison, direct mobile commerce sales will pass only the $30 billion mark by that time, according to industry estimates.

"That might go against conventional wisdom," Kasey Lobaugh, principal and director of multichannel marketing for Deloitte, told Marketing Daily. "[Retailers] need to provide the right information and functionality consumers are looking for. It’s really a great opportunity to aid in purchasing."

According the survey:

  • Nearly half (48 percent) of smartphone owners surveyed say their phones have influenced their decision to purchase an item in a store. Influence tends to be highest at or near the point of purchase;
  • More than six out of 10 (61 percent) smartphone owners who use their devices to shop have done so while shopping at the store;
  • More than half (52 percent) reach for their phones on the way to the store;
  • Nearly four out of 10 (37 percent) smartphone owners surveyed who used a smartphone on their last shopping trip utilized a third-party mobile shopping application, and more than one-third (34 percent) used a retailer’s mobile application.

Mobile shopping activity was also found to skew young. Nearly seven out of 10 smartphone owners (67 percent) between 14 and 34-years-old have used their devices to shop, and 55 percent indicate their smartphones have influenced their decision to make a purchase.

"Retailers need to understand how mobile shoppers are willing to interact with their specific store category, format and merchandise, both inside and outside the store, and customize their mobile strategy around the shopper’s needs and experience," said Mr. Lobaugh.

The online survey, conducted between March 20 and March 30, polled a national sample of 1,041 random consumers and then augmented this sample with additional smartphone owners to reach a sample of 1,557 smartphone owners.

Discussion Questions: Do you see smartphone-wielding shoppers driving more sales in-store than to online competitors? How should smartphones be used to maximize in-store sales?

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20 Comments on "Study: Smartphones Shoppers Not So Bad for Brick & Mortar"

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Bob Phibbs
BrainTrust

“Not so bad”? as in “Mrs. Lincoln other than that, how did you like the play?” Until there are reliable ways to track such consumer activity with qualified data rather than online polls, put on by the very people looking for validation, such surveys will be suspect.

Paula Rosenblum
BrainTrust

Boy, I’m glad to hear another voice in the wilderness, with actual data in hand. I have contended for some time that “showrooming” is mostly a handy excuse for a bad quarter, just like “that new system implementation” used to be.

In truth, consumers have always done some kind of reality check on big ticket purchases — Consumer Reports, actual “shopping,” any number of ways to validate price and quality. If they didn’t, they’d be pretty uninformed consumers. Smart phones just make it easier and faster. The whole decision-purchase cycle has been escalated.

So in answer to the question: if retailers can create a differentiated yet consistent in-store experience, consumers might use their mobile phones to a) get a friend’s opinion on a prospective purchase, b) do a “sniff test” on the relative price of an item or its reviews, and c) participate in some kind of loyalty program within the store.

Ad Age just published some information on a test IBM is doing with Augmented Reality in-store — help finish out a recipe, meet dietary needs — some very cool stuff right in a supermarket.

Dick Seesel
BrainTrust

I don’t want to suggest that the “showrooming” phenomenon is overblown (just ask the folks at Best Buy or Target for their opinion) but I’m not sure whether its negative impact on sales is well-documented. In any event, I’ve mentioned before that stores need to develop tactics that cater to smartphone users instead of losing their business. Using location-based text messaging to communicate targeted offers is an important first step.

David Biernbaum
BrainTrust

The showrooming concern is overblown, while the opportunity to capitalize on smart phones in the store is underestimated. Retailers need to change their mentality from whining and complaining to becoming more apt to seize the opportunity presented by new technology and changing consumer trends. The opportunity today is better than ever.

Joan Treistman
BrainTrust

They’re here, they’re there…they’re everywhere. They are consumers. I’d recommend retailers just “hang out” for a while. It’s as though no one wants to get too close to the buying decision and so we read about a survey that asks consumers to contemplate their behavior instead of observing and documenting purchase decisions. Step one: walk out of your comfort zone into the aisles. Step two: observe smart phone behavior as it occurs. Step three: develop one or two hypotheses based on the observations. Step four: Commission a research study that gets at the heart of how shoppers behave in the context of your retail environment. Step five: use the shopper insights to develop strategies and tactics that align with your corporate goals. Pondering OPR (other people’s research) is insulating and can be misleading.

Max Goldberg
BrainTrust

Is any of this information surprising? Not really. Consumers use smartphones to gather information, compare prices and look for features. Those consumers tend to be younger, because they are digital natives, who want instant gratification. And the proliferation of smartphones will continue to grow. All of this leads to the growing influence of smartphones in shopping.

The challenge to retailers is to make the in-store experience so compelling that consumers return time and again. Otherwise, Amazon and other online merchants will continue to see their revenues grow, as they offer a broader selection, without out-of-stocks, and with better, easier customer service.

Ken Lonyai
BrainTrust

Since a good portion of my business includes developing solutions for retailers to utilize phones interactively in-store to benefit b&m sales, it would be nice to believe the study. I would like to see further data as to what stores benefited, types of merchandise, sales scenarios, etc. I believe that blanket statements and non-granular research paints inaccurate pictures.

The whole wake-up call for retailers to avoid showrooming and a price race to the bottom, is to develop apps that enhance the shopping experience and create a reason to visit and purchase from a physical location. So for stores that understand how to use mobile proactively for the benefit of shoppers, it clearly can drive in-store sales, but so many just don’t get it and will suffer from being the local showroom.

Ian Percy
BrainTrust

Maybe people are finally learning about ‘big picture’ economics. So if one finds they can save $7-$10 on a sweater online they no longer make that a decision point. As they stand there looking at the physical sweater they now weigh in 1) any shipping cost; 2) the uncertainty of color, quality and fit; 3) the delay in gratification — that is the joy of wearing it now versus a week from now; 4) ease of return; 5) the human connection of the checkout lady carefully folding their sweater while telling them how nice that color will look on them versus a warehouse guy who doesn’t give a second’s thought about who’s wearing it, etc. All that is well worth the seven bucks.

Most of us are slow learners. I shake my head at the in-laws driving across town because they can save 30 cents/lb on hamburger but have to admit to driving further to save 10 cents a gallon for gas or a whopping two bucks a tank.

Ryan Mathews
BrainTrust

Respectfully, this is the wrong question.

The Deloitte study, or more correctly, the Deloitte study as reported, seems to miss one salient point — this is all one big, complex, and evolving target.

I agree that, today, the case for “showrooming” is overstated. That said, the real question is margin elasticity over time. People may be willing to shop in physical stores but they are also likely to demand digital margins and price points.

I think we make a mistake with all these channel-specific discussions. Consumers live and, in the course of living, shop. Punta.

The mechanics of that are seamless to them and labyrinthine to us. As usual, we should pay more attention to real behavior and less time on abstract studies which attempt top describe it.

gordon arnold
Guest
The vast majority of retail visitor smart phone users are not shoppers at all. They are vendors or company merchandisers in to check price and planogram as well as competitors sent to gather price compare information. They are the easiest to spot and the most comical to observe. They always walk sideways caring the device about 9 to 10 inches in front of their chin with their heads shifting side to side like an old fashion dot matrix print head responding to any and all offers to assist them with “I’m alright…, I’m OK! Actual customers using a smartphone are for the most part looking to secure an immediate requirement. Others are interested in actually seeing a part of or all of something they are planning for. I am often amazed at how far people will travel to see something before buying it at a ridiculous price on the internet. I have learned from these customers that there is a lot of product being sold at prices much higher than in retail stores. This is because either it is very uncommon to find in the retail stores, or because shoppers have no idea where to shop for the item. There… Read more »
Lisa Bradner
Guest
Lisa Bradner
4 years 11 months ago

I agree with so much of what’s already been posted here I’ll just chime in and add, ‘think about mobile payment, mobile checkout, using mobile to find inventory in the system” and all the other ways retailers should be getting ahead of their shopper by offering the best mobile shopping experience. Lines, out-of-stocks, and onerous self-checkout can all cause someone to decide, while in the store, to switch to an online purchase. Making the store experience as satisfying, seamless and entertaining as possible will keep shoppers coming back. Shopping is still a social sport — retailers need to think creatively about how to keep it entertaining.

Ed Dennis
Guest
Ed Dennis
4 years 11 months ago

I don’t think “shoppers” will drive anything anywhere. Merchants will do the driving by communicating with the shopper. Some merchants are more vulnerable to online competition where pricing, shipping and tax could provide a large advantage for online sellers. You may be able to overcome this by educating shoppers. Many manufacturers won’t honor a warranty unless their merchandise is purchased from an authorized retailer and Amazon and eBay aren’t authorized retailers for many manufacturers. Retailers can combat online pricing but it will require more than opening the door and filling the store with minimum wage employees.

Ralph Jacobson
BrainTrust

This online survey may not hold the scientific/statistical credibility of other studies I have seen, however, it continues the discussion that is all the rage in so many articles on this site. Mobile users are still a minority of shoppers in brick stores. That is, of course most everyone has a mobile telephone, however, relatively few utilize the phone while in the store to get product information. We call them out and highlight their characteristics in all of our discussions, however, they do not significantly drive revenue one way or the other — even in electronics stores — for now, anyway. That will most likely change in the next 18 months, though.

I do want to thank Paula Rosenblum for highlighting some work IBM is doing. I do see some innovative projects around the globe to generate compelling reasons for people to shop brick stores.

Brian Numainville
BrainTrust

Yes, showrooming exists. Is it overblown? Likely. But can retailers capitalize on utilizing technology to their advantage? Absolutely! Granted, the type of product may influence whether showrooming might be more or less prevalent, but too many retailers seemingly fail to deal with the fundamental issue which is learning about and implementing new technology that can attract shoppers and grow sales!

Dan Frechtling
BrainTrust

As much as the archetype for showrooming has been Best Buy and Target, the more profound impact has been on locally-owned businesses.

According to this study, those in electronics, appliances, and general merchandise can expect 50% of their shoppers to be using smartphones, and those in footwear and apparel are catching up. Yet roughly 10% of small businesses have mobile optimized websites at all, and almost none have apps.

Local businesses can’t afford not to have a mobile website since over 60% of local searches are mobile and 50% of those result in a sale. That said, since most showrooming is near the shelf or checkout, it’s easy to spot. The head bobbing and squinting is actually a buying signal. The antidote to the tuned out shopper in your store is a friendly “how may I help you?” that gets them to tune back in.

Roger Saunders
BrainTrust

Smart retailers recognize that consumers are influenced by a suite of integrated media. Smartphones are just another tool in that arsenal. If consumers are making use of that tool within their stores, those retailers are just a step closer to a sale.

Looking for a bold move? Put a smartphone in the hands of select customers when they are walking the store — as an added service. Let them know that your product quality, convenience, ongoing service support, and commitment to their satisfaction is why you are offering them the added support.

Walk them through how to make use of the smartphone, if they are unfamiliar. Miracle on 34th Street depicted newspaper scrapbooks — why not take it to today’s position of access to a smartphone?

Doug Pruden
Guest
Doug Pruden
4 years 11 months ago

Interesting research. The article and the examples used in the discussion (ranging from grocery, to clothing, to consumer electronics) bring two thoughts to mind:
1) Does the impact on purchase of using a smartphone to check options in price, size, availability and features vary greatly depending on things like retail category and price point? Is there a totally different use of smartphones depending upon whether the consumer is buying a box of cereal, a sweater, or a big screen TV? And that while showrooming really is a huge problem in consumer electronics, it isn’t for retailers overall?
2) That perhaps these research findings are being impacted by differences in age/income/available disposable income between smartphone owners and non-smartphone owners?

Doug Garnett
BrainTrust

A lot of the discussion of showrooming and mobile influence consider shoppers to be one-dimensional — concerned ONLY with money.

In reality, shoppers are fully human and living busy lives. So I’ve felt for quite some time that a lot of this discussion is over-stated…often by the companies who stand to make a lot of money from retailers panicked about mobile impact.

This study suggests a more realistic and more human understanding of the shopper. Some WILL (without question) use mobile to grasp for every last discounted penny.

But most will rely on their phones as an aid — perhaps to locate a product at another store, or to sanity check the price in front of them.

And that price doesn’t have to be lowest…just reasonable. Except on the biggest ticket items that amount that can be saved is far off-set by the extraordinary hassles of leaving that store environment in order to buy it online or to find it elsewhere.

So what SHOULD we do with mobile phones? Simple things. Help people locate product at another one of your stores if it’s missing here. Give people fundamental comparisons. Help them track down manufacturers.

Martin Mehalchin
BrainTrust

Consumers are increasingly using mobile technology as they shop. Whether it drives an in-store sale or a “showrooming” diversion to an online competitor is largely up to the retailer itself: If they are in-stock on the item and offering the consumer fair value, then the information on the mobile device could easily help the consumer feel ready to purchase now. If out of stock, wildly overpriced etc., then the mobile device helps divert the consumer to another point of purchase.

Mark Price
BrainTrust

This trend is likely to be heavily category-dependent. There are many categories where waiting is just too long, such as groceries — consumers are shopping often for dinners they will make that evening. In that case, smartphones will influence sales but not tend to drive them online.

One other category where smartphones will drive in-store more than online is where the shipping costs heavily influence the total purchase price. The final category where smartphones will drive in-store is where sizing can be complex, such as in women’s fashion.

But where consumers are willing to wait for a product and shipping prices are not onerous, such as consumer electronics, smartphones are a risk to brick and mortar.

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