Archetypical Consumers and the Stores They Like to Visit

Why does a consumer buy from a particular type of store? A study by Yeheskel Bar-Isaac of the University of Toronto and Sandro Shelegia of Barcelona School of Economics finds that it depends on the type of consumer they are. 

The study describes “showroomers” as shoppers who research the item they want to buy by going to a physical store to examine it, then buying it elsewhere at a cheaper price. “They know what they want, they already know what that retailer may charge, and they go to stores with more limited or shallow selections in search of a better price,” the authors write.

Retailers that offer more choice through a deeper selection tend to keep their prices higher because they know that once a consumer enters the store, its broader offerings will likely help them find the best fit for the item they are searching for, and they will buy there.

On the other hand, the retailer that offers less choice is likely to attract “not-so-choosy” shoppers who expect to buy in its store “as long as they can find a sufficient fit.”

“This group of consumers is the only one in the economy that compares prices,” Bar-Isaac noted. “The size of this group is large enough that it plays a key role in price determination.

“Still, most consumers are not as likely to search more than one store to look for the perfect match and a lower price. This helps ensure that stores we have dubbed ‘shallow’ are more likely to sell a higher volume of a given product at a more competitive price, while stores we’ve dubbed ‘deep’ are more likely to sell their products at a higher price, oftentimes to more selective customers.”

The study, “Search, Showrooming, and Retailer Variety,” was published online by Marketing Science, a journal of the Institute for Operations Research and the Management Sciences (Informs).