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IBM Survey Finds Consumers Were More Informed and Focused During 2006 Holiday Shopping Season

Company Advises Retailers to Turn Connected Consumers Into Advocates

NEW YORK, NY - 14 Jan 2007: NRF 96th Annual Convention & EXPO 2007 -- In a new IBM (NYSE: IBM) national survey on the heels of the 2006 holiday shopping season, consumers said that influences such as the Internet, peer recommendations and instant feedback via text messaging increasingly helped determine where they shopped and what they bought.

While price remained a key factor with seven in ten consumers, 53 percent of the 1,000 consumers surveyed said they used the Internet to compare product features and prices across retail outlets. According to the survey, advertising influenced about 36 percent of purchasing decisions.

In addition, friends and family continued to influence buying decisions with 24 percent of consumers identifying them as a factor. Interestingly, one in 10 consumers reached out to friends and family via text messages as they shopped to get input or share information on products.

In a complementary IBM research study released today, IBM recommends to retailers that catering to these informed and connected consumers can be a means to differentiate themselves in the competitive retail marketplace. The study, titled "Turning shoppers into advocates: The customer focused retail enterprise," suggests transforming traditional retail business models by putting consumers at the center of strategies and operations. Traditionally, retailers have operated their businesses with an internal focus on their core operations that is product-centric.

"Retailers understand the need to have stores create efficiency in their supply chains and innovate in their merchandise offerings," said Fred Balboni, IBM Global Retail Industry Leader, IBM Global Business Services. "The next generation of growth in the industry is going to be defined by a retailer's ability to overlay the customer dimension onto those strategies. Shoppers' expectations of service are very high and retailers who can attract and establish loyalty with their most profitable customers will reap the rewards."

The IBM research paper details a number of core capabilities retailers can embrace in their quest to become customer focused. Among them was the need to develop "Associate Commitment" to better satisfy customers. The importance of having motivated employees was reflected in the IBM holiday survey findings where 50 percent of consumers surveyed indicated that they avoided specific retailers during the 2006 holiday shopping season because of unhelpful employees. On the other hand, 72 percent of consumers identified "helpful and knowledgeable associates" as the number one characteristic of retailers that provided them excellent customer service during the holiday season.

IBM also identified "Multichannel Execution", which is seamless coordination across all the ways customers buy products, as another important capability for retailers. Multichannel convenience is important to customers as an overwhelming 84 percent of consumers reported they prefer to shop at retailers with streamlined processes between online and physical stores.

Leveraging "Customer Insight" to offer "Tailored Offers" and "Personalized Dialogs" also are called out by IBM as key characteristics of customer-focused retailers. Clearly these are priority areas for consumers as 89 percent said they want stores that understand how they shop today but also can adapt to their needs as they change over time. Also, 84 percent of consumers said one way to meet their expectations is with products and services customized to their individual preferences.

As part of its ongoing consumer research efforts, IBM is also making available a recently completed analysis comparing the shopping preferences of teenagers and baby boomers, titled "Retail opportunities in a world of extremes: Understanding today's teens and boomers." This study and a free executive summary of the IBM research study, "Turning shoppers into advocates: The customer focused retail enterprise," are available at www.ibm.com/retail

IBM Survey Methodology

A 7-minute telephone survey was fielded among a representative sample of 1,000 adult Americans immediately following the 2006 holiday shopping season, December 27-30, 2006. The results can be considered statistically significant at the 95% confidence level and have a margin of error of +/- 3%.

About IBM

For more information on IBM's activities at NRF 2007 please access the company's online Press Kit at www.ibm.com/press/nrf2007

Contact(s) information

Michael Rowinski
IBM Media Relations
917-472-3324
rowinski@us.ibm.com

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