July 22/29, 2013; Volume 27/Number 7
81% research online before visiting store
Patience and the pursuit of information pay off, according to GE Capital Retail Bank’s (GECRB) second annual Major Purchase Shopper Study. Empowered by technology, flooring and other contributing factors, large-ticket shoppers extensively research and compare prices and financing offers before they make any major purchases.
More than 84% of flooring shoppers start their search process online from home and spend an average of 137 days gathering information before making major purchases. While consumers carefully consider before they buy, 41% of those in the market to make a flooring purchase said they were more open to making a large purchase now than they were a year ago.
The survey and interviews, conducted by Rothstein Tauber, a marketing research company, explored the shopping habits of 3,220 consumers nationwide (150+ responded in the flooring category) who had recently made purchases of $500 or more and were in the market for major items in 12 segments, including flooring. More than 2,200 of the participating consumers were GECRB account holders and one-third of respondents were random shoppers.
“We took a deeper look at how consumers use digital tools to approach a major purchase, including the role of mobile devices and preferred search engines, keywords and sites,” said Toni White, chief marketing officer of GE Capital’s Retail Finance business. “While online research plays a bigger role throughout the major purchase process, 60% of consumers start by visiting a search engine, then go to the retailer’s website. Ultimately, 88% made their final purchase in-store, with 90% of flooring shoppers purchasing in store.”
The availability of financing options continues to be a key factor in the shopper’s choice of retailer, with nearly half of all shoppers researching payment options online before visiting a store. Financing influenced the decision to buy from a specific retailer for 77% of GECRB cardholders surveyed, and nearly half would not have made the purchase or would have gone to another merchant if financing was not available, indicating that merchant marketing, awareness and loyalty programs can impact sales. This is especially true for flooring cardholders, where 83% said financing drove retailer choice.
Depending on the category, between 40 and 137 days (flooring shoppers spend the most time researching of any category evaluated) was spent researching the purchase, 79 days on average across all categories. While the study data represents the average major purchase experience, it is inclusive of shoppers who had a short decision cycle based on a critical need to replace an item.*
The findings also revealed the following:
•For one out of four major purchase shoppers, the purchase was part of a larger project.
•Replacement and upgrades are the two most prevalent triggers to purchase.
•The length of the purchase cycle and price are highly correlated.
•Consumers believe digital tools empower them to compare prices and find the best value.
•Shoppers search for the following when they visit the retailer’s website (in order of importance): warranty information (66%); pricing (52%); specs/model information (51%); payment/financing information (47%); sales/discounts; availability, and shipping information.
•On average, consumers visited five unique retailers, at least three online merchants, and two brick-and-mortar stores before making their purchases.
“These insights can help guide merchants in building better businesses by developing holistic marketing plans and effective sales training and digital strategies,” White said. “The propensity for using the credit program again was also high, with 79% of cardholders stating they are likely to use their cards again, so cultivating loyalty and high customer satisfaction can lead to reuse, referrals and favorable reviews.”
Key conclusions
While respondents were positive about making a major purchase, they actively pursue the best value and conduct extensive online and off-line research on price, product and payment options.
Technology has empowered shoppers in their research, and nearly 80% on average (84% for flooring) believe digital tools give them access to information to compare prices and find the best value, including the role of online reviews and product assurance such as warranties and product protection.
The research process for a major purchase is comprehensive:
•Shoppers spend 79 days on average gathering information about their major purchases. Flooring involves a longer research cycle of 137 days (35 days longer than 2012 survey in that category). The data represents the average major purchase experience.
•More than 80% start their research online at home using a search engine and entering specific keywords, up from 61% in 2012, before visiting the merchant’s website. Ultimately, 88% purchase in-store (90% of flooring shoppers purchase in-store).
•Major purchase shoppers consistently search for product information (specs/models), style, availability and consumer reviews.
•On average, major purchase shoppers visit five unique retailers, at least three merchants online and two brick-and-mortar stores, before making their purchases.
Role of financing
Financing is a significant factor in the major purchase process as indicated by the following:
•Payment choice (cash, credit, layaway, etc.) is determined by well over half of respondents before they enter the store to make a purchase. More than 68% of random shoppers surveyed who used cash or debit payment methods indicate saving for 5.25 months on average to pay for the purchase. Flooring shoppers spend nearly eight months if paying with cash or debit.
•For shoppers interested in using financing, it is a determining factor in selecting a retailer and an important consideration for merchants as part of their marketing programs. Specifically, 77% of GECRB account holders said the availability of financing options drove their choice of retailer. This is especially true for flooring cardholders, where 83% said financing drove retailer choice.
•Nearly five out of 10 GECRB account holders said they wouldn’t have made their recent purchases or would have gone to a competitive retailer if financing had not been available.
*The 2013 GE Capital Retail Finance Annual Major Purchase Shopper Study represents the average major purchase experience. The data reflects recent purchases valued at $500 or more that were categorized by consumers as both an immediate need and a more considered want. Worth noting, there were some product category differences (i.e., eyewear and appliance shoppers take less time to research the product).