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.
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.
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.
View Free, Relevant Gartner Research
Gartner's research helps you cut through the complexity and deliver the knowledge you need to make the right decisions quickly, and with confidence.Read Free Gartner Research
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
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes, with attribution to Gartner. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.