WSL Strategic Retail's 'How America Shops: From Buzz to Buy'

BACKGROUND AND OBJECTIVESSocial media has certainly created a "buzz" among marketers, retailers, advertisers and brand loyalty enthusiasts -- and rightfully so. The reach of social networks is extensive. Our research has found that 75% of people in this online sample have visited a social networking site in the past month, and users are engaged with them often -- on average 6 hours weekly.Today, social media and shopping websites have co-mingled. Online channel blurring has begun. Shopping websites like Amazon.com invite shoppers to exchange comments and post reviews; social networking sites advertise products and members write reviews. And then there is Twitter, which is neither shopping nor social, but has marketers feeling that they simply must be there and be followed.But after all the new hires, creative outsourcing and reallocation of marketing funds to social media, is it a go-to place where shoppers decide what to buy? What is the impact of social media beyond browsing? How does it impact buying?The overall objective of WSL Strategic Retail's benchmark study is to define the power of social shopping media to impact purchase decisions today, and to project how it will influence the future of shopping. objectives include:Identify the websites, social vs. shopping, that most impact buying.Identify the shoppers most influenced by social shopping media.Begin to track the categories that are most influenced by social shopping media, and the categories that are poised to be more influenced.METHODOLOGYTo accomplish the study objectives, an Internet survey was conducted May 17-21, 2010, among 1,690 respondents belonging to an online panel nationally representative on gender, income and ethnicity, and the total Internet-using population in terms of time spent online. The sample contained a mix of 1,507 adults 18+ and 183 teens 15-17. All went online for shopping information in the past 3 months, even if it was just to find a store location, and, all visited a Social Networking Site and/or Shopping Website in the last month.First, some definitions:This research defines Social Shopping Media as content found online with the potential to influence the purchase of products or services and the choice of retail places where these goods and services will be purchased.There are two types of Social Shopping Media:1. Social Influence: Content shoppers find when doing their online, pre-purchase research that is generated by peers. Examples include online product reviews, recommendations from friends through online conversations, or "Like" buttons.2. Fact-Finding Research: The information that shoppers find when doing their online, pre-purchase research that gives them the confidence to purchase. Examples include finding the best price, finding where to buy a product, or better understanding product specifications.We also track two "channels" where Social Shopping Media appears:1. Social Network Sites (SNS): Websites that provide virtual communities for like-minded people, to "hang out" together or to increase their circle of acquaintances. Sites such as Facebook, MySpace and Twitter were used for context in this research.2. Shopping Websites: Websites whose primary focus is around shopping, products and buying. Amazon, eBay, drugstore.com, and the websites of manufacturers and retailers were used for context in this report as destinations for information and buying.REPORT OVERVIEWIt's here! Social Media influences buying. It's a fact. It is much broader than kids talking to each other on Facebook or following a Tweet. It's about Moms, Men, Boomers and Hispanics who are all tapping and clicking onto sites that tell them what to buy and where. The influence of Social Media crosses generations and cultures. A new sector of advertising, a new "hidden persuader" is here: we've named it "Social Shopping Media."It's all happened so fast. WSL Strategic Retail has been publishing How America Shops trend studies since 1989, predicting channel shifts and preparing our clients for the next generation of retail. In the 2010 "How America Shops MegaTrends" study, the Internet jumped into third position as the channel 24% of women shopped in an average week, behind only Mass Merchandisers and Supermarkets. And, 47% of women buy something online at least once in three months. (That's the same percentage buy in a Department Store.)It was only two years ago, in the 2008 How America Shops MegaTrends study, that shoppers rated peer reviews posted online as more trustworthy than retail sales associates, at a ratio of 2 to 1. Two years later, shopper reviews have become the new advertising and shoppers the new copywriters --- with misspellings and little attention to grammar, but lots of influence. It's not going to go away.Social Shopping Media is already a powerful tool for manufacturer and retail marketing. Companies have quickly reallocated funds to become "friends" on Facebook and celebrities on Twitter, hoping to attract shoppers who fast forward through commercials on TV shows they have recorded and have changed their traditional (print) reading habits. And it continues to evolve fast.Mobile smart phones now give shoppers even more power to control their shopping decisions. Online access in stores transfers product information, competitive price comparisons and coupons (once exclusively offered in circulars and on the shelf) into the palm of their hand in real time, so they can act upon it -- or not -- as they see fit.Social Shopping Media is full of nuance, as it evolves fast. For one thing, manufacturer and retailer websites are still important -- more important than you might think -- but you need to know how to fit them into the overall marketing process, category by category. Not every category usage is the same.Social Shopping Media: The Target AudienceHalf (48%) of the online audience used the Internet to perform a shopping activity in the last 3 months. On average, people spend 16 hours a week online, and one-third of those hours (5) are related to shopping.Men and women are online equally, but women spend about an hour more a week than men on shopping activities (5.1 for women vs. 4.4 for men) and at Social Networking Sites (5.8 for women vs. 4.6 for men.)Gen X (33-44) is most engaged in Social Shopping Media. Today they spend 5.5 hours a week online doing shopping activities, almost a full hour more than any other generation.Millennials (15-32) spend the most hours on Social Networking Sites (7/week) but because so many of them are younger, they are not as active online shoppers as older generations. Their hours spent on shopping is 4.3/week, which is as low as Senior Citizens who are over 64.African Americans and Hispanics devote an hour more a week to online shopping activities than Caucasians (5.4 vs. 4.4 for Caucasians.)Information Destination: Where Shoppers Go for Shopping InformationInternet shoppers use a mix of online and traditional sources to do their shopping research. At the tops of their list is Manufacturer Websites (67%) where they will chat with a manufacturer about its product or find a coupon.The historical favorite of consulting Family and Friends has moved into second place. About half of these online shoppers go to Retailers' Websites. That's a lot of visitors looking for price and coupons.Don't stop those magazine and TV ads, because almost half of online shoppers also acknowledge that traditional advertising gives them information to help them make buying decisions.Sales associates are another story. 25% of these shoppers turn to a Sales Associate for help, but we feel safe concluding that if we excluded the Electronics and Pharmacy categories, Sales Associates would not make the chart.As for Social Networking Sites, 13% admit that they go to their Facebook friends or follow a Twitter to find out about a product before they buy. This is the "Core 13" that we begin to track today, and will follow in future reports.Age Matters Less Than You Might ThinkWe analyzed the influence of Social Shopping Media by generations: Millennial (15-32), Gen X (33-44), Boomer (45-63) and Senior (64+), and you might be surprised at the findings.Millennials and Gen X are the most reliant on others for shopping advice, more so than Boomers and Seniors. That makes sense as younger people buy their first homes and launch their family, however, they have also grown up in an information world with an infinite universe of online advisors available to them from their desktops, and now from their mobile. They rely more on advice because they can.Family and Friends are most important to the youngest Millennials (75%).Gen X rates Family and Friends as important as Manufacturer Websites (64% and 69%). Shopping websites become more important to shoppers under 45; and Social Networking Sites are used by twice as many Millennials (18%) and Gen X (15%) compared to Boomers (9%) and Seniors (4%).The view of the future is the unimportance of Sales Associates in stores to younger shoppers (Gen X 20%) compared to older shoppers (Boomers, 26%, and Seniors, 30%).Social Networking Sites and ShoppingIt is only recently, and without too much controversy, that Social Networking Sites have added product commentary, advertising and links establishing SNS as a new place to put media dollars. SNS members seem receptive.75% of this online sample used a Social Networking Site in the last month. That's almost universal.45% used their SNS for a shopping-related activity, but that goes up to 57% of the newest generation of shoppers among Gen X, and to 52% among the Affluent.Although they can't buy product directly from an SNS, the most prominent use of an SNS for shopping advice is to check out a buying decision with friends and read their clever comments.Gen X'ers are the most active users of SNS. They outscore Boomers and Seniors by over 10 points on all the shopping-related uses of their SNS, and they outscore Millennials by about 5 points. Up to 1/3 of Gen X will exchange shopping-related opinions on their site, and 1/4 will search around their SNS to find new products that might interest them.There are many reasons why Gen X is the current target for SNS advertising -- they are of prime shopping age, they are information dependent, and friends, real and virtual, are very important to them. However, as Millennials grow-up and shop more they too will be even more information and Internet dependent, and unwilling to buy much without lots of opinions from their SNS buddies.21st Century Advertising: Shopping ReviewsWhat did you buy? What did you pay? Do you like it?On AMC's Mad Men the copywriters of the 1960s work for the short memorable, headline. Today, people post paragraphs on websites, and 69% of Internet shoppers sign on to read them. The fascination with online reviews crosses all demographics within a narrow range of 62% (African Americans) to 75% (middle income shoppers). But does reading reviews influence buying? Fifty-eight percent of review readers say "Yes," they found what they need and are ready to make a decision after doing their online research.The Impact Scores: Buzz Does Lead to BuyFor this benchmark study on the power of Social Shopping Media to drive sales, we looked at many product and service categories (26 to be exact) but for analytical and trending purposes we consolidated them into a list of 17 Leading Indicator Categories. The choice of Leading Indicator Categories reflects a breadth of things that shoppers buy: services, experiences, entertainment and consumer products. Future How America Shops with Social Shopping Media reports will track changes in the impact of Social Shopping Media on these 17 categories.An overwhelming majority, an average of 93% of buyers across all these categories, found something online that helped them make their decision, and 95% remembered what helped them.Using three quantitative metrics, we identified the Leading Indicator Categories that are most and least impacted by Social Shopping Media, including the form of social media that is most important to each category.No 1. Conversion: Where the "rubber meets the road" is the percentage of shoppers who actually buy a category after researching it online.Some categories are more likely to be bought after research, but the most popularly researched categories are not necessarily purchased most often following research, and, vice versa. Online research may be a necessity in a Mom's decision to buy products for her baby, but also serves as a good way for 15-year-old Johnny to wile away hours building the dream car he will never buy.Our report details the conversion ratios for the Leading Indicator Categories including those that are high (Baby Products and Food) and low (Financial Services/Insurance).No. 2. Social Influence, that is, reading a Review or a "Like" rating from friend. Overall, 58% of shoppers agree that they were influenced by social commentary, although Reviews outscore "Likes" or Tweets by almost 2 to 1.This ratio holds up category by category, that is, almost twice as many buy based on written Reviews rather than Likes or Tweets. The exception is Food and Beverages, where a "Like" click or a Tweet while eating something savory have as much power as a review.No 3. Fact-Finding is looking for the best price, product specs or place to buy. Seventy-one percent make a decision to buy once they had answered questions about the product specs or found the best price and place to buy. "Price" is most important for Vacations and Electronics, Clothing, Pet, Baby products and Men's Personal Care. "Product Information" is most important for Health Products, and as important as "Price" for Beauty, Computers, Cable TV/Cell Phone Service and Cars. "Where to Buy" is most important for Home Decor, Food, Beauty and Entertainment.Mobile is on Its WayMobile is its own information channel. It is transforming delivery of product information from point-of-purchase to point-a-finger. Shopping complicated categories will be easier with finger-tip access to the best sales force in the world: peer reviewers. Price checking will be done in seconds, standing in the aisle of a retail store.Mobile usage is almost universal among this sample of online shoppers:87% regularly use a mobile phone, and that doesn't change much by age.33% access the Internet from their phone, but that goes up 10 points among Millennials and Gen X, and down 10 points among Boomers.Today, 27% use their mobile in a retail store, and as you would expect this goes up 10 points among Millennials and Gen X.Using the mobile in store delivers: Convenience, Information and Price Advantage. In the report we advise how shoppers define the new era of store service on their mobile: how many shoppers use their phone camera to send an image, get directions, read reviews/ratings before they buy, check product specs or ingredients, look for price comparisons or coupons.

WSL Strategic Retail's 'How America Shops: From Buzz to Buy'

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