Retail Pathway Increasingly, but Not Exclusively, Online
The relationship between consumer and retailer used to be linear. Stores promoted their products primarily through advertising. They interacted with consumers face-to-face. Brands were monolithic. Customer loyalty ran deep.
Things are different today. Stores still advertise and relationships are important, but consumer behavior and communication has changed significantly and continues to evolve. Modern retail success now depends on the three “I’s,” – the Internet, information, and interaction.
Every generation of consumer is now going online for product research. Once they’ve done their homework, they may purchase the product from an Internet-based seller and have it delivered directly to their home. Or, they may use their knowledge to engage retailers in detailed product discussions and even price negotiations. Even Baby Boomers have embraced Internet communications, joining younger generations and going deep into cyberspace as part of their shopping experience.
Today, customer relationships are not necessarily linear; they can be web-like. Nearly everyone has easy access to multiple product information sources. Opinions and sales momentum can shift daily based on new data or the latest blog post. E-commerce is a well-established sector of the retail electronics industry, and this trend will likely accelerate as we see the next generation of consumers emerge, a generation born after 1990 that has lived their entire lives with almost unlimited Internet access. The connected generation may make the phrase “early adapter” obsolete as nearly all of them have grown up with the Internet and a smartphone.
Trends Direct Strategy
Synchrony Financial’s recent “Fifth Annual Major Purchase Consumer Study – Electronics Industry” confirms these trends and provides some fascinating details that shed light on modern consumer behavior. The full 2016 study polled more than 258 electronics shoppers who had made major purchases ($500+) during the preceding six months. Some of the more important findings in the electronics industry included:
- 88% of major-purchase electronics buyers said they began their shopping journey online
- 70% told us they consulted with friends and family before buying
- 54% said they checked online reviews
- 53% did in-store research
- 41% said they researched financing options
- 69% told us they chose a payment option before buying
- 63% said they made their purchase in-store
The findings themselves are fascinating, but the data also reveals important strategic information that may shape electronics retailing in the future. For example, Step One on the path to a major purchase is product research. The percentage of shoppers who started their product research online (88%) is up five percentage points over last year. Step Two on the consumer journey is “social media and reviews.” This is a change from last year when Step Two was identified as a visit to the local store. Visiting a brick-and-mortar store is now Step Three on the path to a major purchase, perhaps reflecting a different shopping approach by consumers.
Increasingly, consumers are researching financing options as part of their shopping process. The 2016 survey found that 41% of electronics consumers were exploring financing options prior to purchase, up from 34% just one year ago. Also significant, a whopping 93% of Synchrony cardholders said promotional financing made their purchase more affordable. Furthermore, cardholders said they spent an average of $393 more per purchase than non-cardholders. From both a motivation and revenue standpoint, promotional financing is an important part of the modern retail strategy.
Embrace Online Tactics
The great fear for brick-and-mortar retailers is a growing consumer migration to online purchasing. This is obviously a clear and present danger for businesses that are not evolving to meet the needs of the 21st Century consumer. Sure, the retail landscape is changing, but it does not mean doom for retailers who embrace new strategies.
The 2016 survey indicated that fewer consumers are buying at brick-and-mortar consumer electronics stores; in-store purchases dropped by 12% points from the previous year. But brick-and-mortar stores can still be an important part of the shopping process, and claim their share of sales, by meeting the consumer where they are, and that is typically online.
Here are some things we know about the consumer path to a major purchase:
- Most begin searching online
- Many consult social media for reviews or advice
- More than half will check out products in a local store
- Financing is important in the decision process
- Nearly two-thirds will buy the item in a physical store
Armed with this information, retailers can shape marketing strategy and tactics that will encourage and perhaps channel customers to their store. A well-designed, frequently updated website that is mobile-device compatible is a good place to start. Consumers are using their smartphones, rather than their laptops, for product research, and you want their online experience to be easy and informative, not frustrating. It is also wise to utilize search engine optimization (SEO) techniques to ensure that your site is high on the list for key search-engine terms. For this, you may need expert consultation from a web-marketing professional.
It’s also important to promote business through social media such as Facebook, Twitter, Instagram and other channels. But again, it pays to get expert advice. Social media is not an advertising forum, it is meant for engagement, conversation, and information. Use it to make friends and raise awareness of your business by being socially conscious, involved or just fun. It’s good for your business reputation.
Always ask customers what brought them to your store. Often, they will refer to their online experience. This is valuable for gathering feedback about your digital footprint but also for shaping the sales conversation. A well-trained sales associate can inform the customer of the benefits of buying from a physical store – YOUR store – rather than online.
Your online presence, as well as your traditional advertising, should make clear reference to the financing options available at your store. As the Synchrony study indicated, 69% of major-purchase consumers selected their payment option before buying. Promotional financing can be the linchpin of the sales process. A promotional financing offer with monthly payments can be a deal closer. Plus, if they have a store card, you may just create a repeat customer.
Trust is Still Essential
Synchrony Financial’s Major Purchase Consumer survey indicates that consumer behavior has changed over the past five years and the trends we have seen may continue. Building a thriving retail electronics business requires a strong, frequently updated Internet presence, a smart social media effort, exciting promotional financing offers and a well-trained sales team.
Your customers are shopping online. Meet them there. Embrace every medium and strategy available to direct them to your store, then engage them personally. As always, selling is a matter of creating trust with your customers, but these days the relationships often start on online.
Fifth Annual Major Purchase Consumer Study, Electronics Category, 2016
S. Department of Commerce, Quarterly Retail E-Commerce Sales, 4th Quarter 2016)
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Synchrony (NYSE: SYF) is a premier consumer financial services company delivering customized financing programs across key industries including retail, health, auto, travel and home, along with award-winning consumer banking products. With more than $140 billion in sales financed and 80.3 million active accounts, Synchrony brings deep industry expertise, actionable data insights, innovative solutions and differentiated digital experiences to improve the success of every business we serve and the quality of each life we touch. Engage with Synchrony Financial.