With the rapid rise in smartphone penetration, consumers can now browse a store’s aisles with the internet immediately available in their purse or pocket. To better understand how today’s smartphone-wielding consumers are actually using their devices while in a brick and mortar store, Aimia conducted research into this phenomenon, surveying a total of 3,000 consumers in the US, UK, and Canada, who were currently using their mobile computing devices as a part of their shopping experience in retail stores.
The research uncovered that not all mobile assisted shoppers are the same – in fact there are five customer segments, each with distinctly different behaviours, preferences, and motivations for their use of mobile devices as part of shopping in-store: the exploiters; the savvys; the price sensitives; the experience seekers; and the traditionalists.
These five segments pose different challenges to retail stores, and also pose some unique opportunities for retailers to engage with shoppers and begin to build loyalty and real relationships with them in order to win the continued business of shoppers in the mobile-assisted future.
The Exploiters – Premeditated About Lower Prices
The most intractable threat to retailers is posed by the segment identified as ‘Exploiters’. These mobile shoppers have “showroomed” in the last year (they planned to purchase the product online, and merely visited the store to preview it in-person) and did so in a premeditated fashion. Exploiters also reported that they never purchase a product in a retail store when they know they can buy it online for an equal or lower price.
Exploiters seem to be driven to showroom not just for price savings, but to gain the other benefits of online shopping. They are much more motivated to showroom because of free shipping, online loyalty rewards, and online return policies. In fact, they are no more likely to be showrooming for the sake of price savings than other mobile-assisted shoppers.
Key Implications for Retailers: It would be easy for retailers to write off the Exploiters as a lost cause. But the best opportunity for retailers to win their business may simply be to improve the store’s website. When Exploiters see a product on the shelf and pull out their mobile device, they are nearly as likely to search for it on the store’s own website as on a competitors (69% vs. 77%).
The Savvys – Calculating but Persuadable
The Saavys pose a mixed blessing for retailers. Like the Exploiters, the Savvys report having showroomed in the last year, and their showrooming was similarly planned in advance. One critical difference, however, opens the doors for retailers to persuade Savvys to give them their business. Savvys report that they will purchase a product in a retail store even though they know they can buy it for an equal or lower price online.
Savvys are the most digitally-attuned of all the five segments.
They are more likely to adopt every mobile-assisted shopping behaviour, even the more atypical ones like scanning bar codes, searching for a mobile coupon, or paying at checkout via mobile app. And they are much more likely to have a tablet with a data plan (27% vs. 19% of all mobile-assisted shoppers).
Savvys are more willing to interact digitally with the store while they are shopping, whether it is using the stores mobile app, or its website, sending a text message, or checking in on a social network.
Savvys are avid mobile phone users and request information. They are particularly likely to use their mobile devices in-store to compare prices, check for product details online, and seek out user reviews.
Finally, Savvys are strategic about how they make their purchase decisions, weighing a variety of factors in addition to price. They are more likely than other mobile shoppers to showroom for benefits like home delivery (32% vs. 25%), or savings on sales tax (23% vs. 16%).
Key Implications for Retailers: Savvys are the ripest target for retailers to try out new offers and experiences in the mobile space. They are simultaneously more digitally-savvy, more willing to sign up for loyalty programs, and more likely to be motivated by a range of retailer offers and rewards.
Savvys are an extremely important segment for retailers to understand. Although they currently represent only 13% of mobile-assisted shoppers, they may represent the coming trends of mobile in-store behaviour. As smartphone penetration increases, and shoppers become more familiar with e technology, and as younger “digital natives” enter the workforce, mobile-assisted interactions are likely to grow.
Price-Sensitives may put the biggest financial pressure on retailers. They all report having showroomed in the last year. They also exhibit high price-sensitivity, saying that they never purchase a product in a retail store when they know they can buy it for an equal or lower price online. Plus, they are a larger group than the exploiters, making up 19% of all mobile-assisted shoppers.
To retailers’ advantage, however, Price-Sensitives do not report having pre-planned to showroom before they enter a retail store. In other words, while they are highly motivated by deals, Price-Sensitives are not yet in the habit of using the internet to seek out lower prices before they go to a store, or while they are in-store.
Price-Sensitives also show flexibility in what they consider a good deal from a store. The right deal can take many forms. In addition to price matching and discounts, more than 50% of Price-Sensitives can be influenced to purchase in-store – rather than online – by offers of mobile coupons, of home delivery, of extended warranties, and by loyalty reward points. Leveraging these kinds of offers may allow retailers to retain the business of Price-Sensitives, without the need to match the lowest online price for every product they carry.
Key implications for Retailers: Price-Sensitives use their devices in store periodically, but not as consistently as the other segments, such as the Savvys. Often, the right in-store experience will be enough to earn the Price-Sensitives’ business. Their mobile devices may be with them, but still remain in their pockets and purses.
The Experience-Seekers prove that mobile-assisted shopping does not reduce the importance of a great in-store experience for many shoppers. Experience-Seekers have showroomed in the last year, but it was not something they planned in advance. They are willing to buy in the store, even when they find equal or lower prices online.
While price matters to Experience-Seekers, they exhibit less price-sensitivity. Experience-Seekers opt for an online offer only at higher discount rates than the average mobile shopper. When they do showroom, it is more likely because they found it inconvenient to buy in-store at that time (20% vs. 17%) compared to other mobile shoppers.
Experience-Seekers are particularly motivated by the retail experience, and by the chance to interact with the store brand on their mobile devices. They are more likely to be motivated by special in-store experiences such as exclusive sales events, pre-shopping nights, or celebrity appearances in-store (43% vs. 39%).
Key Implications for Retailers:
Experience-Seekers are the largest of all the segments, representing 32% of mobile-assisted shoppers. They point to the opportunity for retailers to engage customers on their mobile devices in non-financial ways such as opportunities to comment on their store experience or provide product ratings. And they demonstrate why retailers still need to invest in providing a unique and compelling in-store experience.
The last segment is the Traditionalists – shoppers who prefer the in-store shopping experience, even though they do make use of their mobile devices in their decision process.
Unlike all the other segments, Traditionalists report that they have not showroomed in the last 12 months. While they may use their mobile devices to aid them as they shop in-store, it has never led them to change course and buy the product online instead.
Mobile Shoppers and Retailers – The Future:
The research shows that all mobile shoppers are not the same. Their behaviours, preferences, likes, and dislikes vary immensely. Understanding each type of mobile shopper is important when creating the best possible retail environment to ensure business success in an omni-channel universe. So which ones are shopping where? To better understand this, retailers can use a loyalty program to gain insights through customer data analytics to segment customer groups which will allow them to understand each customer more specifically and focus on building those meaningful relationships integral to fostering further customer loyalty and return business.
Aimia, a global leader in loyalty management, has unique capabilities and proven expertise in delivering proprietary loyalty services, launching and managing coalition loyalty programs, creating value through loyalty analytics and driving innovation in the emerging digital and mobile spaces.For a full copy of Aimia’s research report, please visit www.aimia.com.