Clicks vs. Bricks Part 3: How Low Can You Go?

October 06, 2017

How many times have you walked into a store, found an item you absolutely loved and wondered, “Can I get this for a cheaper price online?” In a recent episode of The 19 – “Is Brick and Mortar Dead?” – a few of the shoppers we interviewed scoped out items in-store, but, ultimately, made the final purchase online.

Price was a big factor in this decision, as stores like Amazon and eBay have a reputation for offering a variety of items at competitively low prices. IRI’S 2017 Consumer Connect Survey found that consumers are price-shopping, with 95 percent of all participants choosing a store based on its ability to “fulfill [their] needs at the lowest possible costs.” Millennials are especially impacted by price, with 53 percent describing their current financial situation as a “struggle to make ends meet.”

I can also speak to this from personal experience. For example, I, like many others, will be purchasing a Halloween costume on Amazon this year simply because I think I can find something cheaper online than I would in-store. Notice my choice of words here – I think, not know, I can find something cheaper online. That’s why we’re going to find out the truth: Is online shopping more affordable than in store?

2017 was the first year Adobe’s Digital Price Index (DPI) followed online apparel sales with a specific focus on discounts. While DPI experts noted that fashion-specific pricing data is “notoriously tricky” to track, as fashion trends rapidly change from season-to-season, they did notice an interesting trend. Looking at the DPI, which measures inflation of goods purchased online, and the CPI, which measures inflation of goods purchased in-store, there was a major difference. Online apparel sales saw a fall in prices while in-store inflation stayed relatively stagnant. Why? DPI Data Science Analyst Sid Kulkarni points to the appeal of online sales: “We think the difference reflects online shoppers’ dedication to seeking out deep discounts, and the fact that consumers are more likely to buy off-season clothes online.”

Okay, so if you want to buy a new sweater or a pair of shoes, online stores may have the best prices out there, but what about everything else? In 2016, Adobe partnered with Austan Goolsbee, a professor of economics at The University of Chicago and former chairman of the Obama Administration’s Council of Economic Advisers, and Pete Klenow, a professor of economics at Stanford University, to expand the DPI. Now, researchers could take an even closer look at online inflation in an even wider range of retail categories. Month-over-month, the goods that saw the largest drop in online pricing were computers and tablets. Furniture and Bedding, Appliances and Toys were also online retail categories that were significantly cheaper online than in-store. Major discount holidays, like Black Friday and Cyber Monday, had a huge impact on online sales for every retail category. 2015 saw the same number of Black Friday shoppers make purchases online as in person. Since then, the number of shoppers who buy online during Black Friday has been on the rise. To compete with the growing popularity of online shopping during discount holidays, retail chains are starting sales earlier than ever, sometimes dropping prices days before Black Friday.

So, online shopping may offer some pretty competitive prices, but is it really driving shoppers away from in-store purchases? In a Market Track survey of over 1200 “primary household shoppers,” data indicated that in-store shopping was the most popular form of retail by a landslide. Big ticket items like cars, major appliances and jewelry led the way for in-store purchases, while users preferred to purchase items like books, toys and games online. Taking an even more granular look at the data, over half of those who fell in the 60+ age group preferred to shop in-store. Online shopping was the most popular among the 30-39 age group, indicating a clear divide in preference according to age.

There’s no denying that price is a hot button topic in the world of retail response marketing. With key demographics, like Millennials, on the hunt for majorly discounted deals, online stores can fulfill a portion of that need – but not entirely. It is important to note that there is a difference between price and value. While online stores may offer the best prices around, there is still value in making purchases in-store. Whether its customer service or getting to touch and feel an item, there is a special part about the brick-and-mortar experience that even the lowest-priced online stores cannot compete with. It all comes back to the question that started it all: Is brick and mortar dead? The answer, clearly, is no. Is online shopping alive and thriving? The answer, clearly, is yes.

Written By: Janell Rowland

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