A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
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He maintains a tight focus on research that sheds light on how developing technologies affect the consumer’s experience. For while online technologies may afford the opportunity for a host of interactive shopping tools and a gold mine of customer data for merchants, they wont’ be welcomed or even used by consumers unless they enhance the shopping experience. That said, there’s no shortage of technology vendors ready to put their ideas to the test. To that end, the lab brings in consumers and shows them the proposed applications. It looks for winners in such behavioral measures as the effect on consumer price sensitivity, loyalty and repeat purchase. It also looks at attitudinal measures such as customer satisfaction and intent to shop again using the technology.
The results effectively ax some proposed retail applications, sometimes pointing the developers toward other industries. Others, more promising in the retail environment, go back to the drawing board for refinements. Take 3-D shopping, for example. More than simply rotating a product image online for a 360-degree view, 3-D environments also can immerse online shoppers in a virtual mock-up of a store, letting them move through aisles and past shelves of product in the type of navigation already familiar to online and video gamers.
Burke’s laboratory has worked extensively on 3-D shopping applications. And while his lab doesn’t develop the technology, it does develop the applications and it has co-developed a 3-D application with Intel. That application gave users a virtual display of shelved grocery store products similar to what they’d see in a supermarket. The web, though, made a few extras possible. For example, shoppers could filter the shelf display based on their preferences-if they wanted to view only low-fat or low-salt products, for instance, the virtual shelf was stocked accordingly. The online depiction of products in shelf display, Burke found, provides visual context that helped shoppers accustomed to buying in a store find products and make decisions more quickly.
The recognition of familiar brands next to those of competitors on the same virtual shelf also encouraged shoppers to buy the product more than if they’d seen the product described in text or viewed in on the screen in isolation, Burke adds.
Overcoming price resistance
Tests also showed that consumers were more price sensitive when exposed to a 2-D text-based shopping interface than they were in a 3-D environment. That’s because when presented with the more limited information of a text message, consumers had less to base their choices on, making price stand out as a key driver. The richer environment of 3-D provided additional information on which shoppers could base their decisions, diluting to a degree the effect of pricing.
With those learnings about 3-D, online 3-D store simulations might one day find application in the web sites of big-box stores that consumers visit frequently enough to know the layout, Burke suggests.
However, immersive 3-D environments face some barriers in the lack of broadband access in most U.S. households. Navigation is another barrier: Burke says there’s little standardization among the different developers of 3-D shopping environments as to navigation. Mass retailers have so far done little if any broadscale testing of this application, Burke says.
But online boutiques and higher end-retailers have already moved to adopt a second 3-D application that Burke also has reviewed in the lab: one that strives to create an online experience that’s rich and engaging, like a video game. “In the first type of 3-D application, there’s more of an emphasis on the realism of the environment and making shoppers see what’s familiar to them. The second application seeks to create retail theater, drawing people in and potentially increasing impulse purchases,” Burke says. “You use the same software to create both applications.”
It’s human behavior as much as technology that makes one application a winner for shopping while another strikes out-something Burke keeps top of mind while figuring out which ones have the stuff to become retail shopping tools.
Whether surveying retail sites to determine which tools consumers like or going in-store or online to test applications, Burke’s work puts the consumer at the table. “We hope, through our research, to help the retail industry hear the voice of the consumer and to identify the most promising application of new technologies for specific product categories and consumer segments,” he says. l
Founding director, Customer Interface Laboratory of the Center for Education and Research in Retailing at the Kelley School of Business, Indiana University
E.W. Kelley Professor of Business administration at Indiana University’s Kelley School of Business
Associate professor, Harvard School of Business, Harvard University
Assistant professor, Wharton School of Business, University of Pennsylvania
Ph.D., psychology and marketing,
University of Florida, 1985