What’s new December 2012

The Nature of Browsing; Thinking Outside the Shop

Browsing is a form of searching. The browser explores a retailer’s merchandise to gather product information or for recreational purposes, without necessarily planning to buy.

The nature of browsing has clearly changed with multi-channel shopping, and is no longer restricted by location or time.

The in-centre browser conducting price-comparisons, trying out products, and gathering information now has a wider range of purchasing platforms to choose from than ever before. The sale is harder to make because the competition is stiffer and online retailers can leverage the benefits provided in the physical store.

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Even recreational browsing is no longer confined to bricks and mortar. Online browsing can provide many of the benefits and pleasures the recreational browser seeks. Early descriptions of ‘surfing the web’ are a reminder that browsing is fundamental to internet usage.

None-the-less, people still browse shopping centres for information about products they may well buy in centre. And they also browse for recreational purposes. Market research since the early-1970s has recognised that consumers enjoy shopping because it provides sensory stimulation, diversion from every day life and social contact.

There is a media narrative that increasingly invokes these motivations as the future salvation of the shopping centre industry and brick and mortar retailers.

At Directional Insights, we don’t explore the nuances of shoppers’ motivations for browsing because such research would not have material benefits for our clients.

But we have profiled the ways in which consumers who self-identify as browsers behave and spend in centre, because it has implications for revenue and marketing strategies.

So what can we say about browsers in Australian shopping centres?

Browsers are not the panacea for Bricks and Mortar retailers. They have lower average household incomes than our Benchmark average and are less likely to have household incomes above $130,000 (8% vs. 15%). This is at least partly because they tend to be younger and in earlier life phases, without children, than the average.

But it is more than this – there are fewer older and retired/ superannuated browsers than the Benchmark average, and they too have the time for casual shopping.

Browsing is a shopping activity weighted towards youth!

While browsers shop in larger groups, they are less frequent shoppers. Again this is an indication of the higher percentage of youth conducting this type of visit to shopping centres. They have less need to shop for the daily necessities of family life, and so make fewer visits that are less targeted and more social, involving a friend, relative or larger group.

Browsers spend less, on average, per shopping trip ($51 vs. $72) and less per minute of time in centre ($0.49 vs. $0.76). They have a lower propensity to spend generally (78% vs. 91%), but a higher propensity to spend on Food Catering (40% vs. 27%) and Apparel (33% vs. 22%).

In fact, browsers spend less, on average, on all commodity groups except for Food Catering and General/ Leisure. So while browsers make a welcome contribution to the shopping centre environment, those for whom browsing is the main reason for visiting are relatively unproductive shoppers.

Getting people into the shops to look around is a precursor to purchase, but the type of person attracted makes a big difference as to what is purchased and how much is spent. At the moment, people coming primarily to browse are low spenders. Partly this has to do with time availability and lifestage, but making browsing appealing to older, more established consumers would be one way to convert this relatively low spending shopper type into a more productive recreational shopper.  Back To Top

Is it Christmas at Kmart this Year?

Annual Christmas research from Directional Insights shows that around 75% of shoppers will visit a Discount Department Store when looking for Christmas presents for friends and loved ones. But which store will which customers visit?

Directional Insights’ Spotlight Report on DDS Customers reveals clear segmentation between Kmart, Big W and Target customers. Of course there is considerable cross visitation between stores, but by collating averages over thousands of surveys, distinct patterns emerge.

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Firstly, the common ground: DDS customers are more likely to conduct leisure shopping trips than the Benchmark average. They spend longer in centre and have healthy average spends per visit. They have similar visitation frequencies, which are slightly below the Benchmark average for all customers.

Young Families, Older Couples and Older Singles are the largest lifestage groups for all three DDSs, with Target attracting a higher percentage of Young Families and a lower percentage of Older Singles than Kmart and Big W.

Although the average age of customers is very similar across all three DDS brands, the highest percentage of Kmart’s customers are in the 20-29 year age bracket; Target’s, the 30-39 bracket; and Big W’s, the 40-49 bracket.

All three DDS brands attract a high percentage of female shoppers, topped by Target, where women account for 84% of customers. This can be explained by Target’s strong positioning on fashion and clothing, with 51% of customers purchasing Apparel, compared with 43% of Kmart and 37% of Big W customers.

There are other distinguishing features for customers of each of the major DDS brands. There are clear increments, for example, in average household income, from Kmart ($69,800), to BigW ($72,200), to Target customers ($77,600). There are similar increments for Households with children (47% to 51% to 54%); those in paid employment (52% to 54% to 55%); those in Professional/ Managerial Roles (23% to 24% to 27%); and average spend in centre ($83 to $90 to $93).

To make a broad generalisation: as consumers climb the socio economic ladder, they move from Kmart to Big W to Target.

The reality is a little more complicated, and is reflected in the reasons DDS customers come to the shopping centre and the goods and services they purchase there. These in turn are a reflection of the market positioning of each brand.

Figure 1 shows the reasons customers visited the shopping centre on the day on which we interviewed them.

Figure 2 shows the percentage of customers purchasing in particular categories (click to enlarge) . They show Target’s strong positioning on clothes, shoes and accessories, as well as for gift purchases. We also see a higher percentage of browsers amongst Target customers.

These shopping patterns, as well as its customer demographic, reflects Target’s market proposition that quality, style and the shopping experience, not just price, define value for its customers.

Kmart at the other end of the DDS spectrum has succeeded in differentiating itself through ‘everyday low prices’; or on a slightly different angle: with ‘the lowest prices on everyday items’. This positioning explains the demographic profile of Kmart customers and the lower average spend across the shopping centre on most product categories.

Big W attracts a lower percentage of shoppers who come to the shopping centre to purchase apparel or homewares, but a higher percentage of those who come to purchase food.

In terms of expenditure by product categories they sit, in most cases, between Kmart and Target. So while the three DDS brands make broad appeals to the mass middle market, there are differences in both the customers and shopping behaviours they attract.

These are largely to do with positioning on price, merchandise and subtle conceptions of value amongst consumers across income levels and life stages. Directional Insights Pty Ltd Back To Top

The Gift of Giving

Gifts are the perfect non-verbal way of saying the things we find hard to put into words. Whether those words are “I love you,” “congratulations” or even “I’m sorry,” gifts and gift giving make everyone involved feel that little bit more special.

Gift shopping is also part of the economic life-blood of retail. As Christmas approaches Australian retailers are nervously hoping that consumers are dusting off their wallets and loosening the purse strings.

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We know that consumers looking for gifts come to shopping centres because of the wide variety of products on offer.

But what do we know about these particular customers and their shopping patterns?

Directional Insights’ Spotlight Report on Gift Shoppers reveals a number of clues to help you market to gift-focused shoppers.

The report is based on 920 surveys with customers whose main reason for visiting the shopping centre on the day of interviewing was to purchase a gift. To develop a distinct profile of these shoppers we have compared their behaviour with the industry averages documented in Directional Insights’ 2012 Benchmarks for Australian Shopping Centres.

We found that Gift shoppers have higher average household incomes. This doesn’t mean that all gift shoppers were wealthier, but that there is a correlation between income and the propensity to conduct gift focused shopping trips. At $83,700, the average household income of Gift shoppers was more than $8,000 above the Benchmark average.

Their higher incomes and purchasing patterns make Gift shoppers valuable customers. They are almost twice as likely to make a purchase on Apparel, Homewares and General/ Leisure products, and also spend more on these categories when they do purchase.

Gift shoppers are also very productive spending a hefty 93 cents per minute in centre compared to the Benchmark average of 76 cents. This is particularly valuable when you consider that their shopping trips are, on average, 13 minutes longer than the Benchmark of 61 minutes.

But while they spend longer shopping, they are not more leisurely in their behaviour with Mission/ Leisure patterns aligning almost exactly with Benchmark averages. That 72% of Gift shoppers identifying as Mission oriented, suggests that many come to the shops with a strong idea of what they plan to purchase.

Gift shoppers are also willing to travel a little further to visit a shopping centre that has what they are looking for. Fewer Gift shoppers (44%) come from the Primary Trade Area than the Benchmark (54%). Gifts, though, are not unique enough, nor competition diverse enough, to encourage consumers to travel too far to buy a present.

The smaller percentage of Gift shoppers from the Primary Trade Area, was almost balanced by a larger percentage than Benchmark from the Secondary trade area (31% compared with 25%).

Gift giving, as a social exchange, is clearly influenced by the people around one, and it is no surprise that Gift shoppers are more likely to live in households with children and have larger average household sizes.

The surveys conducted by Directional Insights were taken year round, outside of major holiday periods and the lead up to Christmas, so the average Gift shopper over the next 4 weeks will diverge from this profile. However our research for a number of years now indicates that people are buying for Christmas all year round, so keeping Gift shoppers in mind through 2013 will remain important in marketing strategies.  Back To Top

The Buzz

Research revolution! Well, evolution. Directional Insights is introducing a number of new research services for our clients, starting in January 2013. These will involve the same methodological rigour on which our reputation has been built, and incorporate the survey techniques most appropriate for cost-effective and flexible shopping centre research solutions. One exciting outcome of these new products is the opportunity for some Neighbourhood centres to conduct consumer research cost effectively.

Sub-Regionals and Regionals can also benefit from these new services. Call Directional Insights NOW to ask about our new:

  • In-Centre Behaviour Survey
  • User/ Non-User  Surveys Back To Top

Putting the “us” in Trust

In today’s dynamic retail environment landlord/ tenant relations are more important than ever. It is a relationship that has always lain at the heart of the shopping centre model.

It is a symbiotic relationship with each party needing the other to survive, but each vigorously pursuing their own interest. Shopping centre retailers and landlords are joined by mutual needs.

Retailers offer the products, service and experience that consumers are seeking. The landlord offers a quality location that is strategically managed and promoted. Ideally however, as recent research from the Department of Marketing at Griffith University confirms, the bond should also be built on trust.

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The researchers argue that trust is an important underpinning for the business health of both retailers and landlords and explored trust in terms of five key influences: power of the centre manager, empowerment of the retailer, flexibility, responsiveness and the shopping centre brand.

The study found that “empowerment (of the retailer) was… the most critical determinant of trust across both Regional and Neighbourhood shopping centres.” They define empowerment as “a sense of relevance to decision making,” and note that it is influenced by the other factors they tested. Overt expressions of power by management had a negative impact on tenant trust. In contrast, tenants felt empowered when management were subtle in exerting their power, and were willing to listen and respond to issues.

Centre management responsiveness, including accessibility and problem solving was an important determinant of trust in Regional centres.

In Neighbourhood centres, management flexibility and the centre brand were more important in forming the trust perceptions of tenants. In this case, management’s ability to respond efficiently to issues and to promote and market the centre effectively gave retailers a sense that their wishes were being heard and acted upon. Significantly, the research found that Neighbourhood centres have been more successful than Regional centres in their ‘internal branding’ – that is in cultivating tenant relationships.

The study concludes by arguing that “introducing an internal branding strategy is a major opportunity for regional shopping centres.” While the study did not examine Sub-Regionals, we would suggest that the same opportunities for increasing retailer trust also exist there.

It has long been acknowledged that shopping centres must understand consumers, meeting their needs and matching their desires. This is a core component of our regular research schedule. But the profitability of shopping centres also clearly depends on understanding the needs of retail clients.

The study found, for example, that trust positively and significantly increases the likelihood of lease renewal in both Regional and Neighbourhood shopping centres.

There will always be contestation over rental levels – this is the market in play – but researching the relationships between retailers and centre management, and retailer perceptions of the centre itself, can help improve trust and build stronger business relationships to the benefit of all parties.

– The research cited in this article can be found in Jane Roberts, Bill Merrilees, Carmel Herington and Dale Miller, “Building retail tenant trust: neighbourhood versus regional shopping centres,” International Journal of Retail & Distribution Management, Vol. 38, No. 8, 2010, pp. 597-612.

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NOTE:This is general information only and does not constitute advice nor take into account any individual’s or company’s specific requirements, and should not be relied upon as such. Readers are advised to seek specific advice. Directional Insights makes no representation nor gives any warranty as to the accuracy of future forecasts. This information is not intended as investment advice or other advice and must not be relied upon as such. You should make your own inquiries and take independent advice tailored to your specific circumstances prior to making any investment or other decision. To the fullest extent permitted by law, any conditions, warranties or liabilities implied by law into these conditions are hereby excluded. All copyright resides with Directional Insights Pty Ltd.

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