12/28/06

WELL-STOCKED STORE, EASY RETURNS MOST IMPORTANT, KPMG SURVEY SAYS

Bill Briggs , Senior Editor

Price was secondary, according to 2006 Holiday Shopping Behavior Consumer Research

NEW YORK, Dec. 28 – A survey by the audit, tax and advisory firm KPMG LLP has found that 2006 holiday shoppers weren’t attracted by newspaper inserts or coupons, and even fewer reacted to e-mail solicitations. In fact, some 81 percent of consumers said they shopped at the store that had their desired item in stock, and 75 percent said a simple return policy helped them decide which retailers to patronize.

“The hustle and bustle of the holiday season wears thin on shoppers, who tell us that those retailers that provide immediate gratification get wallet share in this extremely competitive retail market. The survey further demonstrates that supply chain and operational execution is critical for any retailer or they risk being sidestepped by the consumer,” said John Rittenhouse, KPMG’s national service leader for Operations Risk Management. “Meanwhile, in case a finicky relative doesn’t like their gift, consumers say they want retailers to have an easy gift-return policy.”

Price, shoppers said, was secondary, cited by just 19 percent of respondents as influential in choosing a retailer, KPMG found in its annual National Shopping Behavior survey. By contrast, respondents last year said price, selection and convenience were most important.

“This year, it was important to have a good selection of items and to have adequate supplies. Importantly, younger, more affluent shoppers – the most sought-after retail customer – said they are most likely to go where they are certain to have their needs met, not necessarily because an item is on sale,” said Rittenhouse.

“For instance, some 39 percent of consumers this holiday shopping season reported shifting retailers based on which one best met their needs, underscoring the importance of having the right amount of the desired merchandise in stock at the right time,” said Rittenhouse, noting that almost half of those consumers made the decision to switch retailers based on which one has the best selection of merchandise.

The KPMG survey found that just 50 percent of holiday shoppers said they patronized a specific retailer based on a newspaper insert advertisement, and only half of those surveyed said they were influenced by having a coupon.

Other findings of KPMG’s study include:

• Shoppers didn’t wait until the last minute to shop in the hopes that they’d get a better deal, and early promotion also had little effect on when people shopped. • Market share by channel (store vs. Internet) has stabilized. Only 5 percent of shoppers said they switched a larger share of their holiday budget to Internet shopping this year, compared with 6 percent last year. • Low prices were considered most important when buying electronics, by just 41 percent of those consumers. • Sixty-four percent of respondents said they’d prefer to shop at a strip mall or free-standing store, because they were less crowded, contained more stores and restaurants, better parking, and were easier to get in to and out of compared to enclosed malls. “Shoppers want their experience to be easy,” said Rittenhouse. • Overall selection of items has increased in importance as to why shoppers shifted their spending from one store to another, from 35 percent of shoppers surveyed in 2000 to 45 percent in 2006. In that same timeframe, price has remained unchanged at 19 percent.

Mark Larson, KPMG’s global leader for the retail sector, noted that the KPMG survey pointed out how heavy retail promotions of sales may not be the most effective or successful method of attracting customers. “Retailers who focus on price to drive sustained profitable growth are unlikely to achieve their goals,” said Larson, noting that items being in-stock and selection – not price – were the dominant factors for the buying decisions made by the consumers surveyed by KPMG.

When it came to on-line shopping, 62 percent of all respondents said they used the Internet to research an item, and 54 percent actually made a purchase. By contrast, e-mail “push” promotions appeared ineffective, with just 20 percent of consumers saying they were influenced by an on-line coupon. Predominantly, on-line shoppers were aged 25 to 44, and had incomes above $50,000.

The KPMG survey, conducted by phone and at random with 1,200 consumers from Dec. 11-21, looked at “wallet share” – whether consumers are spending a larger or smaller portion of their holiday shopping budgets, where they are making purchases, and why. The survey was designed and managed by The Gordman Group.

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International. KPMG International’s member firms have 113,000 professionals, including more than 6,800 partners, in 148 countries.

Robert Wade Tel: 201-505-3884 Email: robertwade@kpmg.com

Topics:

Christmas and holiday season, Finance, Online shopping, Shoppers Drug Mart, Shopping

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