Study: 81% research online before making big purchases
STAMFORD, Conn. — GE Capital Retail Bank’s second annual Major Purchase Shopper Study has found that a growing number of consumers extensively research and compare prices and financing offers before making major purchases.
According to the study, 81% of consumers go online before heading out to the store, up 20% from last year, and spend an average of 79 days gathering information before making a major purchase. While consumers carefully consider before they buy, 41% of random major purchase shoppers say they are more open to making a large purchase than they were a year ago.
The survey and interviews, conducted by Rothstein Tauber, a marketing research company based in Stamford, Conn., explored the shopping habits of 3,220 consumers nationwide who had recently made purchases of $500 or more and were in the market for major items in 12 segments, including appliances, electronics, flooring, home furnishings and bedding, home improvements, jewelry, eyewear, power sports products and lawn and garden equipment. More than 2,200 of the participating consumers were GE Capital Retail Bank account holders and one third of respondents were random shoppers.
“We took a deeper look at how consumers use digital tools to approach a major purchase, including the role of mobile devices and preferred search engines, keywords and sites,” said Toni White, CMO of GE Capital’s retail finance business. “While online research plays a bigger role throughout the major purchase process, 60% of consumers start by visiting a search engine, then go to the retailer’s website, and ultimately, 88% made their final purchase in store.”
The availability of financing options continues to be a key factor in a shopper’s choice of retailer, with nearly half of all shoppers researching payment options online before visiting a store. Financing influenced the decision to buy from a specific retailer for 77% of GECRB cardholders surveyed, and nearly half would not have made the purchase or would have gone to another merchant if financing was not available, indicating that merchant marketing, awareness and loyalty programs can impact sales.
Depending on the category, between 40 and 137 days were spent researching the purchase. While the study data represents the average major purchase experience, it is inclusive of shoppers who had a short decision cycle based on a critical need to replace an item. The GE Capital Retail Finance Annual Major Purchase Shopper Study represents the average major purchase experience. The data reflects recent purchases valued at $500 or more that were categorized by consumers as both need and want. Note some product category differences (i.e., eyewear and appliance shoppers may have a shorter consideration cycle).
The findings also revealed the following:
• For one out of four major purchase shoppers, the purchase was part of a larger project.
• Replacement and upgrades are the two most prevalent triggers to purchase.
• The length of the purchase cycle and price are highly correlated.
• Consumers say digital tools empower them to compare prices and find the best value.
• Shoppers search for the following when they visit the retailer’s website (in order of importance): warranty information (66%), pricing (52%), specs/model information (51%), payment/financing information (47%), sales/discounts, availability and shipping information.
• On average, consumers visited five unique retailers — at least three online merchants and two brick-and-mortar stores — before making their purchase.
“These insights can help guide merchants in building better businesses by developing holistic marketing plans and effective sales training and digital strategies,” adds White. “The propensity for using the credit program again was also high, with 79% of cardholders stating they are likely to use their card again, so cultivating loyalty and high customer satisfaction can lead to reuse, referrals and favorable reviews.”
RadioShack says its balance sheet remains strong
Fort Worth, Texas — RadioShack Corp. on Friday released a statement in which it said that its balance sheet continues to be strong, with total liquidity of $820 million at the end of the first quarter. The chain released the statement the day after a report said the retailer was considering hiring a financial adviser.
“Like many companies, we have discussions with investment banks from time to time to help us evaluate ways to further strengthen our balance sheet and manage it efficiently,” RadioShack stated. “That has been the sole focus of these discussions. As we noted on our last earnings call, we are focused on executing our turnaround and serving our customers.”
In April, the retailer reported a wider first-quarter loss, its fifth consecutive quarterly loss, on weaker sales. New CEO Joseph Magnacca is working to turnaround the ailing company and update its image, that includes a new, more tech-oriented store concept.
IBM study: Big Data boosts retailer, CPG performance
Armonk, N.Y. — Retailers and CPG companies with leading stock prices are more likely than their lagging competitors to use Big Data analytics to understand and adjust to customer needs. According to a study of 325 senior retail merchandising executives conducted by IBM Center for Applied Insights in conjunction with Planet Retail, 65% of leading retail merchandisers feel Big Data analytics is critical to their business compared to just 38% of other retail companies.
In addition, 63% of top retail merchandisers have the data they need to conduct meaningful analytics while 33% of other retailers do not and 83% of leading retail merchandisers are focusing more on the consumer compared to 47% of lower-performing retailers.
Similarly, according to the new IBM/Kantar Retail Global CPG Study of more than 350 top CPG executives, 74% of leading CPGs use data analytics to improve decision making in sales compared to just 37% of lower-performing CPGs. And 37% of leading CPG companies make decisions predominately on data and sophisticated analytics compared to 9% of lower-performing CPG companies.
“These studies show that no matter where you sit in the retail ecosystem, big data can have tremendous impact on your success,” said Jay Henderson, strategy program director, IBM Smarter Commerce. “Leading retailers and consumer packaged goods suppliers are increasingly looking to the consumer to inform better business strategies. By using data analytics, these top performers are more in tune with retail trends that turn market opportunity into market leadership.”