Multi-channel shoppers may spend big, but they’re not very loyal

Multi-channel shoppers are valuable to merchants in a very literal sense: They spend more money and do so more frequently than shoppers who confine their buying to one sales channel. In 2005 they generated about $125 billion in offline sales, according to Forrester Research Inc. These shoppers spend up to 50% more than single-channel shoppers and usually buy bigger ticket items like electronics, appliances and computers; offline sales of these items to multi-channel shoppers, for example, hit $44.5 million in 2005, Forrester Research says.

However, despite spending more and purchasing with greater frequency, multi-channel shoppers tend to be less loyal than their single-channel counterparts, according to research firm Gartner Inc. The two primary reasons are that multi-channel shoppers are more price sensitive because they use the online sales channel to conduct more price comparisons, and they have higher expectations for customer service. In customer service, for example, any perceived shortcoming in the shopping experience is apt to send a multi-channel shopper elsewhere, Gartner says.

“Retailers need to be aware of these characteristics in multi-channel shoppers because they open the door to decreased loyalty,” cautions Hung LeHong, research vice president for retail at Gartner.

Retailers remain eager to capture more sales and loyalty from multi-channel shoppers. Merchants such as Circuit City, Best Buy and Sears Roebuck and Co. have launched programs enabling shoppers to buy online and pick up in store. The tactic serves not only as a way to bring online shoppers into the store where they might continue shopping but also to encourage shoppers that frequent the store but often lack the time to spend browsing to experience the convenience of shopping online. So strong is this drive to encourage multi-channel shopping that Sears specifically promoted the ability to order online and pick up in store through a television ad campaign during the holiday shopping season.

These programs have proven so successful that other retailers are moving down the same path. Radio Shack, for instance, joined the club in November. The electronics retailer is piloting a ship-to-store program in 1,300 of its company owned-stores and plans to roll out the program to its remaining 3,400 later this year.

“Multi-channel shopping strategies are about driving consumer behavior to encourage cross-selling,” says Jimmy Mansker, vice president of RadioShack.com. “The aim is to get consumers that shop online into a store where they can interface with a sales representative that can introduce them to accessories for the purchase, and get store shoppers onto the web site where they can access a much larger catalog.”