A study has confirmed what most retailers have assumed was common sense until now - that stores, catalogues and Web sites pass customers and sales to and from one another.
The news, which came in a study sponsored by The Microsoft Network's eShop, comes as retailers are already migrating toward "multichannel" retailing. Brick-and-mortar stores and cataloguers are busy adding Web sites and integrating them with the rest of their operations, while a few online pure plays, like E*Trade Group, are establishing physical stores.
Not all traditional retailers are equally advanced in migrating to the Internet, so the study may not be news to every retailer, but it does provide the first hard data about cross-channel connections since e-tailers rang up their first sales.
"It's a start," says David Seifert, vice president of e-commerce at Service Merchandise, a jewelry and general merchandise catalog retailer.
The study looked at customer behavior in the store, catalog and online operations within 17 retailers. As the first of what is intended to be an annual study, it found considerable cross-traffic among the channels.
By margins ranging from 23 percent to 51 percent, shoppers in one channel say they first saw purchases in another channel. At the low end, 23 percent of catalog shoppers previously saw their purchases online. At the high end, 51 percent of online shoppers saw their purchases earlier in a catalogue. For other connections between the channels, about one-third of the customers in one channel say they had seen their purchases in another channel.
Incremental gains
"They are building their relationship with that brand, crossing between channels," says James Okamura at JC Williams Group, which conducted the study with the US National Retail Federation and BizRate.com.
Store shoppers who also visit a retailer's Web site spend about 8 percent more and ring up 24 percent higher average bills than average shoppers at those stores. This can result in a 33 percent higher average annual expenditure in-store.
Participating retailers hope to seize upon this finding.
"The idea of the incremental spend is incredible," says Cathy David, a Target spokeswoman.
Shoppers who use a channel to learn about a product sometimes buy elsewhere, according to preferences for other channels. Three percent to 25 percent of shoppers say they obtained information from one channel, then bought on another.
But the strengths of each channel vary. Consumers surveyed say that Web sites provided the best product information and sometimes price. Catalogs were strong in product information and service. Stores were best at service and product selection. They also posted the highest customer satisfaction levels.
"The store is still the gold standard," Okamura says.
Consumers choose channels according to those strengths, going to the Web and catalogs for product information, and going to stores for service and selection, for example. "That certainly is the inference," Okamura says. "That is becoming the norm for certain types of shoppers."
Judging by catalogers' experience, retailers that lack Web sites could raise sales by adding and marketing those sites.
The study has its problems, though. The narrow sample of 17 retailers and its results over a single period mean the study presents a limited and possibly distorted picture of what's happening in e-commerce. For those reasons, the study doesn't extrapolate well beyond participants such as Home Depot, Service Merchandise and Target, except perhaps for some of the surface conclusions.
Over time, the study is intended to track trends. The participants, however, say they were already learning lessons about their customers, but hadn't had time to pry loose all the details.
"We thought our catalog shopper was like our Internet shopper and migrated to the Web," Service Merchandise's Seifert says. Extremely few had.
Target's own data would help the store conduct its own integration of stores and Web retailing, David says.
"We didn't have quantifiable numbers before," she adds.
According to the study, multichannel customers are the best customers for a retailer, because they buy more and provide retailers with incremental gains over their lifetime.
