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What's "In-Store" for the 21st century shopper?
IU/PMG study measures consumer acceptance of retail technology
May 24, 1999
ORLANDO, Fla. -- Online shopping may be exploding, but consumers are willing to embrace in-store technologies that will give them more product information and make shopping quicker and more convenient, according to a major Indiana University/KPMG retail study announced today (May 24) at the International Mass Retailers Association annual convention.
"While everyone is focusing on the Internet, in-store technologies and the integration of online and in-store activities may have an even greater impact on the future of retailing," said Professor Raymond Burke of the Kelley School of Business at IU. "Many of the benefits of online shopping can be delivered in the physical store. Our survey shows that consumers respond enthusiastically to these in-store technologies."
The survey of 2,413 consumers nationwide found that discount stores have significant strengths, but also a few important weaknesses that make them vulnerable to competition from online retailers. Consumers are generally satisfied with their shopping experiences in discount stores. Seventy-six percent said they were somewhat or very satisfied with the value they received, 72 percent liked the convenience, 71 percent the product selection, and 67 percent the product quality.
Where discounters fell short with customers is in the areas of service (52 percent satisfied), speed of shopping (57 percent satisfied), and amount of product information available (44 percent satisfied). Discount stores are vulnerable to losing these shoppers to on-line merchants.
To address current shortcomings, the IU/KPMG study found that more than 70 percent of consumers believed they would benefit from retailers' adoption of in-store technologies, such as touch-screen kiosks, self-scanning, electronic point-of-sale signage, hand-held shopping assistants, and even body scanning, which allows consumers to custom-fit clothing. Only 9 percent or less of the respondents believed that these new technologies would be a disadvantage.
In terms of Internet shopping, 74 percent of the respondents do not consider it safe to give out a credit card number over the computer, and 62 percent are not comfortable doing business with a place that only can be reached online.
"It's easy to say that conventional retailers need to respond to the competitive pressures of the online channel," said Mark Larson, national industry director for KPMG's retail practice. "The hard part is determining how precious resources should be invested. Our survey finds that in-store technologies can have tremendous impact on a retailer's ability to build customer relationships, maintain customer loyalty and bolster areas like service.
"Those players that set strategic plans in motion now will be well situated to secure market share in an industry that is undergoing rapid transformation," Larson added.
The survey tested 11 different technologies (three online, eight in-store) that directly impact how retailers interact with customers. "Everything we tested," said Burke, "features technology that is available today. Some are already in use in the marketplace, while others have not yet been implemented."
Consumers responded most positively to electronic point-of-sale signage -- liquid crystal displays (LCD) that show the names and prices of merchandise. They are attached to the store shelves or directly to the products, taking the place of price tags and printed shelf labels. Ninety-two percent of consumers said they would use the technology at least some of the time they shop, and 50 percent said it would be a big advantage when shopping. Thirty percent of respondents said they most liked the technology's ability to verify the sale price of an item. Sixty-four percent of consumers felt that a store that implements this technology provides better service.
Self-scanning, a hand-held bar code reader that enables shoppers to scan and tally purchases while shopping, was the next most favorably received of all the tested technologies. Eighty percent of those surveyed felt that it would provide advantage while shopping, and 48 percent felt that it provided a big advantage. Fifty-three percent of consumers responded that a store that provided this technology would be "fun to shop," the highest-scoring technology in this category.
In contrast, the online shopping site scored as the least "fun to shop" technology. Only 26 percent of consumers felt that an online shopping site was "fun to shop."
The product information kiosk, an easy-to-use computer and video display located in the retail store, also earned raves among consumers with 77 percent stating that it would be an advantage to have it in the store. In fact, 31 percent said they were much more likely to shop at a store that provided this technology.
Consumers also responded favorably to the hand-held shopping assistant, a lightweight, palm-size device that can be carried throughout the store. It is used to provide shoppers with additional information about products, such as specifications, usage suggestions and warranties. Seventy-seven percent of respondents said it provided value, and 61 percent said they were more likely to shop in a store that featured the technology. The highest perceived benefit was its ability to deliver detailed and current product information.
"The consumer is in the driver's seat," said Larson. "Overall, it was our intention to provide bricks-and-mortar retailers with a road map to help them make informed business decisions about how to enhance the in-store experience for today's increasingly sophisticated shopper."
IU and KPMG commissioned this survey in March 1999. The study is based on written interviews with 2,413 consumers who reflect the demographic and geographic profile of the U.S. population.
KPMG LLP is the U.S. member firm of KPMG International. In the United States, KPMG partners and professionals provide a wide range of accounting, tax and consulting services. As a provider of information-based services, KPMG delivers understandable business advice, helping clients analyze their businesses with true clarity, raise their level of performance, achieve growth and enhance shareholder value. KPMG International's member firms have more than 6,700 partners and 92,000 professionals in 157 countries. KPMG's Web site is http://www.us.kpmg.com
The Kelley School of Business at IU, among the premier schools of business, offers a wide variety of programs for undergraduate and graduate study. Located in Bloomington, the Kelley School is home to the Center for Education and Research in Retailing. The Center is a leader in the application of technology to retail education and research through the Sears Learning Lab. The Kelley School is also host to the Customer Interface Lab, a state-of-the-art facility for investigating how customers interact with new retailing technologies.
(Jessie Ristic/Tim Connolly (KPMG), 201-505-8885/ 201-505-8882, 888-688-3978 (pager); Theresa Williams (Kelley), 812-855-1289; George Vlahakis (OCM), 812-855-0846, gvlahaki@indiana.edu)