The Hot New Online Retail Strategy: Pushing More In-Store Purchases

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You’d think that when retailers enhance their online shopping options, the goal would be increased online sales. Not so with Target, Gap and Rite Aid — which are adding new online tools with the hopes of boosting in-store sales.

During the recent winter-holiday shopping season, retailers like Kohl’s, JCPenney and Sears were actively blurring the lines of online/off-line shopping with a mix of promotions — some meant to entice in-store shoppers to visit the store website, others intended to attract Web shoppers into physical stores. The offers represent the latest example of how we are living in an omnichannel “bricks and clicks” retail world, where shoppers are comfortable hunting for deals and making purchases in virtually every manner possible — and where retailers are therefore trying to reach shoppers everywhere they’re willing to spend.

Even so, while retailers aren’t going to turn away online sales, it’s clear that they prefer shoppers to be walking among the aisles of tempting merchandise inside physical stores. Why? It’s assumed that consumers who make the effort to visit real-life stores are more serious about their intent to spend. The online experience is perfectly suited for quick, easy browsing. But all too often, the browsing doesn’t translate into actual purchases — hence the better-than-average chance of so-called shopping-cart abandonment. There are plenty of looky-loos in real-world stores as well, but the need for immediate gratification, and the way that holding an item, seeing it in person, or trying it on can push a shopper over the edge with desire, means that the in-store shopper is generally quicker to pull the trigger on purchases than his online counterpart.

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There’s also the impulse-purchase factor: consumers are more likely to make unplanned purchases in actual stores. According to a survey conducted last year by Dimensional Research and Wanderful Media, 65% of consumers who use their mobile devices to shop had made an impulse purchase online during the previous month, compared with 74% who had made an impulse buy in a physical store. Again, these are percentages for people who use their mobile devices to shop; presumably, there would be an even bigger difference among consumers who don’t shop with tablets or smartphones.

So there are good reasons for retailers to want to transform online shoppers into in-store shoppers. Last week, Target introduced one rather obvious ploy to accomplish just that: the new “Cartwheel” feature lists special offers online — 20% off a Justin Timberlake CD, 25% off women’s handbags, 5% off Archer Farms frozen appetizers — with the caveat that the discounts can only be redeemed while making purchases inside a physical store. Facebook is a partner in the Cartwheel program, currently in the beta-testing stage, and shoppers are able to find and share offers they like via the social network.

Starting in June, meanwhile, shoppers will be able reserve clothes in specified sizes and colors at Gap and Banana Republic stores. The customer will then go to the store and try the item on before purchasing it in person. The service is a twist on the widely available order-online/pick-up-in-person option, with the key difference that basic in-store pickup can be conducted very quickly, without much opportunity for browsing and potential impulse purchases. If, on the other hand, the customer has merely reserved an item, she’s likely to try it on while also scoping out plenty of other things to buy.

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Analysts consulted by Internet Retailer think in-store reservation especially makes sense for apparel retailers:

Gap’s move is a sensible one, says Lauren Freedman, president of the E-tailing Group Inc., an e-commerce research and consulting firm. ‘It drives customers to the stores and has the product ready, so it’s a great convenience for the shopper,’ Freedman says. ‘They’re likely to buy incremental product.’

Rite Aid is also hoping that its online presence helps attract more shoppers into its physical drugstore locations — where there are ample opportunities for unplanned purchases. When the chain announced its redesigned website a couple of weeks ago, a statement from Ken Martindale, Rite Aid chief operating officer, indicated that changes were made with in-store shoppers clearly in mind. “Our internal research showed that 80% of visitors to also visited a Rite Aid store, meaning the online experience we provide is a key driver of our in-store business,” said Martindale. “By creating a website that is easy, informative and engaging, we’re not only elevating the online experience, we’re setting a solid foundation for growth of our in-store business too.”