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Smartphone Shoppers Actually Increase In-Store Sales

Thu, 07/05/2012 - 10:42am

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They call it “showrooming,” and to hear the nation’s retailers and other experts fret about consumers using smartphones to buy online while shopping in stores, it’s the worst thing to happen to brick-and-mortar sales since Jeff Bezos started a website to sell books. Except it’s not. Turns out, consumers who use smartphones when out shopping are 14% more likely to make a purchase in the store than those without.

That’s according to a new study from Deloitte, an in-depth survey that might have drawn more attention when it was released if Supreme Court Chief Justice John Roberts hadn’t had an out-of-body experience when deciding the fate of Obamacare.

The consulting firm’s study, “The Mobile Influence Factor in Retail Sales,” is important for two reasons. First, it reframes the idea that consumers are increasingly going to stores, getting up close and personal with whatever items they’re shopping for, then turning to their smartphones to buy said items from competitors, online or otherwise.

This happens, to be sure, aided in part by a raft of third-party smartphone apps that make showrooming easier; nearly four in 10 (37%) of the folks surveyed by Deloitte who used a smartphone on their last shopping trip did so through a third-party app. But other things happen, too, many to the benefit of brick-and-mortar retailers. “Mobile devices’ influence on retail store sales has passed the rate at which consumers purchase through their devices today,” Deloitte’s Alison Paul commented in the firm’s press release. “Consumers’ store-related mobile activities are contributing to, not taking away from, in-store sales.” According to Deloitte, for example, roughly half (48%) of all smartphone users surveyed say their phones have influenced their decision to buy an item in a physical store. Overall, the consultant estimates, smartphones will influence 19% ($689 million) of U.S. retail sales by 2016.

That’s why, as my Time.com colleague Brad Tuttle has written, forward-thinking brick-and-mortar retailers have aggressively entered the shopping app game themselves rather than bemoaning the effects of third-party apps. And, clearly, that strategy is the right one: More than one third (34%) of smartphone owners surveyed who used  their device on their most recent shopping trip employed a retailer’s app to make the purchase. And this habit is only likely to increase as smartphone adoption becomes more widespread, because the longer people have smartphones, the more likely they are to use them when shopping: According to Deloitte, smartphone use for store-related shopping increases 40% after the first six months of ownership.

“Retailers that do not engage shoppers through specialized mobile applications or targeted smartphone-based promotions leave the door open for competitors to reach a customer who is standing in the retailer’s store and at the point of purchase,” Deloitte’s Kasey Lobaugh is quoted as saying. And, doubtless, Deloitte’s digital and retail consultants would be more than happy to help any and all retailers get up to speed in the shopping app game!

Which is fine; that’s why consultant firms commission these kinds of studies — to build their businesses. And it’s why all such reports, especially those based on surveys, should be read with caution. What people do vs. what they tell survey takers they do are often different. (See any survey about infidelity.) But the general tone and conclusions of the study pass the smell test, which leads us to the second reason why it’s important.

If it turns out that shopping apps actually enhance rather than diminish in-store sales, it will only be the latest example of a new technology helping an established business model despite the sky-is-falling forecasts of supposed experts in a field. From concerns that the telegraph would kill the newspaper business to worries that TVS and VCRs would ruin Hollywood, established competitors in a longstanding business are notoriously poor at understanding or predicting the effect of so-called disruptive technologies. More often than not, they benefit rather than damage an industry, and even more frequently they’re a boon for consumers.

As a wise philosopher once said, “Everyone is conservative about their own thing.” And that’s especially true about business leaders.

 

July 5, 2012

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