Welcome to the the Ivey HBA Retail Marketing Management blog. Retail marketing is an exciting, dynamic, important, and very visible aspect of the overall field of marketing. Throughout the year, students will be posting comments regarding contemporary retailing issues. Although this is intended to be used by Bus 4411 students, industry marketing professionals are also invited to join in if they like.

Saturday, February 7, 2009

Social Retailing. . . The Time is Now!

This week in class we discussed the science of shopping. We learned that people are more likely to purchase impulsively if they pay with a debit or credit card and that most of our purchases are unplanned. We learned that women are browsers and like to shop in groups, while men are impatient and want to “get in and out”. Both sexes are not a fan of lines. We also discussed how we could make the retail environment friendlier. Some suggestions were: to put things that guys like together, simplify the process, and to encourage women to shop with friends.

We also discussed how imperative it is to get consumers’ attention. While the average attention span of consumers continues to decrease (I know mine has at least!), I was surprised to learn that less than 40% of retailers have an online presence. In a world full of clutter, it would seem to me that retailers should have a good understanding of consumer trends — which includes buying behaviors both in-stores and online. Many retailers have mastered the science behind increasing in-store sales—through in-store promotions, product placement and lighting, to name a few. However, very few retailers have mastered the digital world.

Social media is increasingly changing the way that consumers think as well as the way that they make purchasing decisions [1]. Members of Gen Y (those born after 1978) are more immersed in online and mobile activities than any other generation, according to 2008 research from shopping comparison site PriceGrabber. Over 85% of Gen Y respondents claimed they participated in social networking, and 57% reported involvement with blogs [2]. To stay relevant, retailers must consider creating and implementing marketing strategies that involve social media. Retailers need to begin thinking about the online shopping experience and consumer buying behaviors with the same depth that they have given to in-store.

It would seem to me that retailers offering their products online would offer multiple benefits to consumers (such as: no lines, “butt space”, convenience, and not having to worry about the “wimp factor”) while also benefiting the retailer by generating increased revenues (consumers spend more when purchasing with credit cards). However, retailers may be reluctant to dive head first and make a significant investment in online infrastructure, as the current average conversion rate (converting a browser into a shopper) for e-commerce websites sits at around 2% [3]. Yet, this conversion rate is strikingly low because most online retailers are ignoring the social dimension of shopping—one which in-store retailers have been able to perfect. As discussed in class, at some stores, mirrors are placed purposefully outside the changing room to enable either a friend or a salesperson to come over and compliment a shopper on their outfit; where as, in the past online retailers have tailored their websites to the solo shopper. But, today’s shopper is dubbed a “social gatherer”—they are looking for more interaction with people when they shop online [4].In my opinion, the reason that online purchases, relative to in-store purchases is so low, is because we don’t have that reassurance that we need to buy the item. As social beings, we like opinions.

To address this issue, a very recent trend has emerged in the online retail industry: social shopping. Social networking is popular online. So is shopping. It makes perfect sense to combine the two. John P. Mello Jr., from E-Commerce Times says it best “online vendors of goods and services that ignore the social dimension of shopping are ignoring a potentially large revenue component and are leaving money on the table” [5]. I happen to agree with him. A retailer that is able to incorporate the social networking aspect into the fabric of an online retail store will surely be able to increase profits. Kaboodle (www.kaboodle.com), an online store, has led the way in social shopping. Not only does the website feature brand name products from leading retailers, it also incorporates a social networking environment. Shoppers are able to create a profile, and using the wisdom of crowds, users communicate and aggregate information about products, prices, and deals.

So, why would a retailer want to give a customer anything that could distract them from shopping? The answer is simple—shopping isn’t just shopping. The very nature of shopping is community-driven. Think about your last trip to the shopping mall. You don’t just go there to ring a cash register— they are places to go, to be seen and to see things. The online experience needs to be more social to reflect the changing needs of consumers—if it is; people are likely to spend more.

[1] http://www.emarketer.com/Article.aspx?id=1006593

[2] Ibid

[3] http://www.twistimage.com/blog/archives/social-media-and-the-reluctant-retailer/

[4] http://social-media-optimization.com/2007/06/social-retailing-the-future-of-retail-online/

[5] http://www.ecommercetimes.com/rsstory/57555.html

No comments: