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Tracking Today's Shoppers

Citi Retail Services sheds light on consumer shopping behavior and payment preferences

Whether in store or onlineWhether in store or online, 40% of furniture shoppers still use credit, with the majority of buyers paying off credit card bills at the end of each month, according to Citi Retail Services’ survey.
The economy continues to take its toll on big-ticket home furnishing purchases and today's retailers must continue to be as competitive as possible in a hyper-competitive shopping environment.
     Maintaining or increasing sales requires that retailers truly understand how customers are interacting with brands and making purchasing decisions. Through its "always on" ShoppersConnection online focus group of more than 1,000 active retail credit consumers, Citi Retail Services sheds light on consumer shopping behavior, payment preferences and the role of smartphones in the purchasing decision-making process. Here are a few highlights from what we've recently learned:

CONSUMER BEHAVIORS MORE DELIBERATE
     Our panel clearly underscores the challenges and changes the recession has brought about in consumers' decision-making process regarding major purchases over $1,000, including casual furniture purchases. Buying decisions are deliberate, calculated and planned with fewer purchases happening by chance or impulse, according to our research, and retailers need to be more creative and enticing to win their business.
     Retailers can and should incorporate incentives to attract timid shoppers. Incentives can be in the form of markdowns, points and loyalty programs or other promotional offers that provide consumers with value beyond the brand or merchandise.
     Survey findings indicate no-interest financing appeals to many shoppers as a way to facilitate larger purchases, though they dislike the high APRs associated with nonpayment by the end of the promotional period. While we've seen layaway options emerge in the marketplace, their appeal is still very limited when stacked against financing options - with the majority of respondents having never used layaway in the past and only 10% of members planning to use layaway this year.

PAYMENT PREFERENCES CHANGING
     Furniture shoppers specifically, whether online or in store, typically make purchases every 18 months. The lion's share, 40%, still use credit with the majority of buyers paying their credit card bill in full at the end of each month. Twenty- two percent use debit and 18% pay with cash or check. We are seeing a shift in more purposeful and planned spending. When it comes to larger purchases, one-third of ShoppersConnection members indicated saving is now their preferred method for financing - representing a shift in consumer willingness to delay purchase gratification in favor of purchase discipline.
     Also, the distinction between online and in-store shopping does affect consumer payment preferences. Citi Retail Services data shows when shopping online, 60% of members prefer using a credit card. The next highest-ranked payment method was PayPal at 29%. This is likely to be a reflection of Web-based payment options as opposed to a shift in behavior or product bias.

IMPACT OF TECHNOLOGY
     Technology continues to transform shopping for many consumers with online stores, mobile apps, digital wallets, social media and so much more. Consumers are interacting with and being influenced by brands online, and are taking an active role to enhance their own shopping experiences across platforms. Consumers have unprecedented access to brand engagement via email, mobile device, online coupon offers, even Facebook updates, and they are researching potential buys across retailer and competitor online channels before purchasing.
     Shopping behaviors are clearly affected by emerging capabilities of smartphones and retailers' digital presence. Approximately one-third of Citi panel members use their mobile device or smartphone while they are shopping in store to compare prices, access coupons and get additional information. This type of "showrooming" challenges retailers to engage customers inside the store and distract them from potential competitive offers a customer may locate online through their mobile device. Of Citi ShoppersConnection members showrooming on their smartphones, 78 have yet to make a purchase from their device.
     Bill Johnson, CEO of Citi Retail Services, explains that showrooming is a growing trend getting stronger and more exhaustive as the capabilities and functionality of smartphones and tablets evolve. In less than a year, smartphone penetration in the United States has grown more than 10% with 44% of Americans now owning a smartphone, according to Google's 2012 Our Mobile Planet smartphone research.

ENGAGE CUSTOMERS ACROSS PLATFORMS
     Due to savvy customers and online shopping, brands are tasked with engaging consumers across all channels to enhance their purchase and decision-making experience. Johnson emphasizes the opportunity to leverage the continued preference for shoppers to use credit for purchasing to lock in new and repeat consumer purchases with card loyalty and rewards programs as well as robust financing options. Retailers that provide this value ease the process for loyal customers and gain new loyal shoppers instantaneously at the point of sale. With consumers' limited budgets and unlimited resources, retailers need to be proficient in not only engaging consumers in store, online and across all digital platforms, but also ensuring their payment offerings are fully integrated into the experience as well.

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