NEW YORK—A positive relationship between online and physical sales for a retailer has long been suspected, but now a new study by the retail association group ICSC not only shows that it is true but also quantifies it. In what it has dubbed the halo effect, ICSC finds that a single retail transaction—whether it is online or in a store—can lead to further sales in a different channel within a short period of time.
In other words, a consumer that buys something online from a retailer, tends to make a purchase in that retailer's physical store within 15 to 30 days. And vice versa.
“What we found was that consumers take advantage of the channels available to them and it has a positive impact on total sales,” Tom McGee, president and CEO of ICSC, says in prepared remarks.
The research found that, following an online transaction, a consumer could make 2.1 transactions in-store with the same retailer within 15 days. Likewise, following an in-store transaction, the average consumer makes 1.3 online transactions with the same retailer within 15 days.
Purchases Mount Quickly
The dollar amounts of this trend add up quickly. ICSC found that a consumer will purchase additional $131 in the retailer's store, following a $100 purchase it made online. Likewise, he will spend additional $167 online following a $100 in-store transaction. In both cases, the time frame is within 15 days.
Over a 30-day period, an initial $100 online purchase will result in an additional net online and in-store spending of $171. An in-store purchase of $100 purchase generates an additional $163 in spending over a 30-day period.
One Theory
ICSC posits one theory about this relationship: Omnichannel strategies perpetuate the positive consumer experience that initiated the sale in the first place. Physical stores are where brands meet their customers and offer them what they cannot get online: human interaction. In turn, the knowledge gained from the in-person interaction allows retailers to create an even more personalized experience for the customer. As a result, ICSC says, 67% of click-and-collect shoppers buy additional items at the store when they pick up their online purchase.
Methodology
The study analyzed $31 billion in consumer spending from more than 41 million unique credit and debit card records from 2016 through 2018. It covers retailers across multiple categories: home; large-format specialty retailers; discount department stores; apparel; cosmetics; traditional department stores; and emerging digitally native brands. The halo effect, or the influence on spending in one shopping channel starting with another, was calculated from the total net value of purchases starting in stores and ending in online transactions, and vice-versa, in five-day increments.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
