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It’s All About The Benjamin’s; Maybe

by Robert Hetu  |  May 2, 2014  |  4 Comments

I have been thinking a lot about sales transference, whether between channels within a retailer or more disturbingly between retail companies. Last year I published research entitled Price and availability drive retail consumer’s choice of purchase channel. I described how the most significant forces driving the mix of sales contributions by channel are cross channel product pricing and availability. I encouraged multichannel retailers to act now to avoid unwanted transference of sales between channels or to competitors.

This is an urgent matter that must be understood by all retail business and IT leaders. Gartner asked consumers the primary reason they purchased a prodcut in a given channel during a recent cross channel shopping event.  As the chart below shows 2 factors dominate the decision of where to purchase.

Gartner 2014

The dynamic between price and availability are clearly visible when viewed across product categories. Averaging 80% in store purchases, home improvement, groceries, drugs and pharmaceuticals are driven by availability. Consumer electronics, often the focal point of showrooming activity, reflected 60% in store purchases while sitting on the tipping point where price and availability meet. Clothing, footwear and books, as well as music and videos, are driving less store activity showing that a better price has greater influence than product availability for these consumers.

Gartner 2014

Gartner 2014

So knowing that price and availability drive consumer behavior, what can multichannel retailers do to compete? It’s not going to be the shiny new technology that is going to move the bar with consumers. Focus on the basics of retail by having the right product in the right place at the right time.

Some specific steps are described below:

  • Ensure you provide the business with technologies to extend store level pricing capabilities that support more frequent price changes for highly competitive product categories and evaluate in store technology and staffing models required to support frequent price changes in stores.
  • Ensure that the consumer electronics and clothing category business heads are aware of technologies for product pricing, descriptions, and availability to support consistency and accuracy across channels.
  • Provide business intelligence and analytics tools that will assist the business with segmenting the customer base for determining consumer’s methods of price research and the resulting strategic pricing strategy.

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Category: merchandising-process  pricing-policy  retail-analytics  retail-trends  

Tags: amazon  assortment  bi  competition  consumers  customer-analytics  digital  ecommerce  merchandising  multichannel  omni-channel  personalization  price-transparency  pricing  retail  revenue  satisfaction  showrooming  stores  trends  

Robert Hetu
VP, Analyst Retail
7 years at Gartner
29 years IT Industry

Bob Hetu is a Research Director with the Gartner Retail Industry Services team. His responsibilities involve tracking the technology markets and trends impacting the broad-based retail merchandising and planning areas. Mr. Hetu is an expert in the areas of brand, vendor and assortment management, merchandise planning, allocation, and replenishment. Read Full Bio

Thoughts on It’s All About The Benjamin’s; Maybe

  1. […] I have been thinking a lot about sales transference, whether between channels within a retailer or more disturbingly between retail companies.  […]

  2. David says:

    “2 factors dominate the decision of where to purchase ” this is true – and the supplier is the masterpiece in discount process- my opinion – discount it’s a part of “better price”

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