Ten Ways to Spot a Layaway Shopper this Holiday Season

While several major retailers, including Walmart, Kmart, and Toys R Us, have lowered or eliminated their layaway fees in efforts to spur holiday shopping, new insights from the BIGinsight™ November survey of more than 9,000 consumers reveal that this tactic doesn’t seem to be leading to a rise in this place-it-on-hold-and-pay-over-time purchase behavior. Just over one in ten holiday shoppers (12.3%) indicates they are using or planning to use layaway when shopping for gifts this season, relatively unchanged from one year ago (12.7%).

With a flatlining number of consumers boarding the layaway train for 2012, it appears that this Great Depression-era policy is more bygone gimmick rather than a modern day marvel. However, further analysis of layaway users uncovers a specific type of holiday shopper. So without further ado, let’s take a look at ten characteristics that help identify this special group of consumers.

Ten Characteristics of Layaway Shoppers

1. Layaway shoppers wouldn’t place in a Santa look-a-like contest. Nearly 75% more likely to have children in the household compared to average holiday shoppers, while layaway users might be more prone to play Santa this year for the kiddos, they just won’t look like the jolly old guy. Six years younger on average than typical holiday shoppers, layaway-ers are also far less likely to refer to themselves as “retired.”

2. Despite tighter budgets, layaway-ers intend to spend more this holiday season. As might be expected, those utilizing the budget-friendly aspects of layaway tend to earn less (about $49,000 per year) than holiday shoppers in general ($56,000/year). Despite this, though, two out of five (41.6%) layaway shoppers intend to spend “more” on the holiday season this year than they did back in 2011. Just 21.0% of shoppers in general are working within expanded holiday budgets this year.*

3. Layaway shoppers have a holly jolly outlook for the economy… Consumers reported that they were feeling better about the economy in November, but the sentiment among layaway users is downright giddy: 54.7% say they are very confident/confident in chances for a strong economy, much higher than typical holiday shoppers (40.4%). The issue of employment, though, is another story. About a third (32.7%) of layaway shoppers fears an increasing in the number of layoffs over the next six months, higher than holiday shoppers in general (22.0%). Layaway-ers are also slightly more concerned about becoming laid off themselves.

4. …Yet remain conservative with their everyday finances. Lower average incomes and greater concerns for layoffs are likely playing into layaway shoppers’ penchant for scrimping and saving in their everyday lives. Compared to holiday shoppers in general, more layaway-ers are making plans to pay down debt (38.6%), decrease overall spending (35.4%), and increase their savings (32.5%) over the next three months. Additionally, a higher proportion (28.6%) is attempting to pay with cash more often, which brings us to point #5…

5. Cold hard cash is key with layaway shoppers. For holiday purchases specifically, while debit cards are the preferred method of payment among layaway shoppers (49.9% plan to use them most often), more than a third of (35.5%) still plans to utilize cash most often, 40% higher than holiday shoppers in general (25.2%). Layaway shoppers are 60% less likely to use credit cards most often for holiday purchases than typical holiday shoppers.*

6. These early birds are getting the worms… Arguably one of the brightest benefits of using layaways services is the ability to place a hold on hot holiday merchandise before it flies off the shelves. So it shouldn’t come as a surprise that – as of early November – seven out of 10 layaway users (69.1%) had begun their holiday shopping as opposed to just 52.8% of holiday shoppers in general.*

7. …But still plan to bargain-hunt with the best of ‘em on Black Friday. And speaking of early bird tendencies, layaway shoppers are quite the night owls too: the majority (56.3%) is planning to shop Black Friday weekend, making them 75% more likely to brave the crowds than typical holiday shoppers (31.5%).*

8. Layaway shoppers use their connections to find best deals. While traditional advertising circulars are their top source for keeping track of holiday sales and promotions, layaway shoppers are more likely to connect on Facebook or Twitter, use retailer apps, and refer to coupon websites (i.e. RetailMeNot.com, FatWallet.com) compared to holiday shoppers in general.*

9. While they embrace their inner fashionistas, it’s electronics and toys that are bound for the layaway bins. While layaway shoppers are more likely to lean to familiar fashion labels and the newest trends/styles versus holiday shoppers in general, apparel is less likely to be put on hold compared to electronics and toys.

10. Discounters are most likely to get those layaway dollars. When it comes to the retailers shoppers are utilizing for layaway services, discounters score a definitive win here. Nearly two-thirds (65.5%) of holiday shoppers planning to use layaway this season will head to Walmart, while 42.2% say they will sign up with Kmart. Fewer will make use of the programs at Toys R Us (21.2%), Sears (15.2%), Burlington Coat Factory (12.4%), Marshall’s (12.1%), or TJ Maxx (9.9%).

* Source: National Retail Federation/BIGinsight™. For more insights on the holiday season, visit the NRF’s Holiday Headquarters.

This post originally appeared on Forbes.com as a contribution to the Prosper Now blog.

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The Showroom Showdown: Best Buy vs. Amazon

Once upon a time, Best Buy was a magnet for shoppers. We came, we saw, and we unflinchingly bought. Fast forward to 2012, and Best Buy is seemingly no longer a “best bet” among consumers. The big box made news recently, not because of stellar sales performance, but because of its store closings, layoffs, and failure to evolve with changing consumer needs. Best Buy’s growing reputation as Amazon.com’s showroom isn’t doing much to help the matter, either.

For this post, you’ve got ringside seats to the bout pitting the big box veteran against the online “underdog.” We’ll go three rounds with BIG insights to see who might have more long-term stamina.

Round One: Customer Share

It’s interesting to note that – despite its troubles – Best Buy still remains a top-of-mind reference among electronics shoppers. About a third of the 8,000+ consumers we talk to each month indicate they shop most often at Best Buy for electronics (an unaided, write-in response), leading Walmart (with about 20%) as well as Amazon.com (just under 10%). Further, our 10+ years of insights show us that Best Buy’s lead as the store shopped most often hasn’t been challenged – ever.

Amazon didn’t start gaining traction in this category until late 2009 (the same year which marked Circuit City’s demise) and has been steadily been increasing ever since. However, with Best Buy’s current customer share quadruple that of Amazon, the online giant will have to vastly pick up its growth pace to catch up with Best Buy within the foreseeable future.

Winner: Best Buy. There’s still equity in the Best Buy nameplate – and that’s a high percentage of customers who still consider the big box their prime destination for electronics.

Round Two: Cross-Shopping

Let’s discuss the meaning of the “shop most often” phrase we use to gauge customer share; the term “shop” can mean “browse” and/or “buy.” So while it appears that Best Buy may be the store shoppers head to or think of first for electronics, the retailer’s recent performance suggests that it isn’t the only option (i.e. they are, in fact, shopping around). And in the realm of high-dollar electronics, who can blame them in this economy?

We collected some interesting cross-shopping insights in July that highlight Best Buy’s current predicament:

– Among Best Buy’s most loyal electronics shoppers, 51.6% admit to surfing Amazon (for any category) within the past 90 days. Fewer (40.6%) perused the offerings at Best Buy during this same time period. Ouch.

– On the flip side, among Amazon’s most loyal electronics shoppers, a whopping 92.4% had visited the site within the past three months, while just 16.8% had been curious enough to enter a Best Buy. Double ouch.

Best Buy’s electronics shoppers were more prone to visiting Amazon within the past 90 days than the big box itself.

Is there any loyalty towards retailers in an uncertain economy? As evidenced by our cross-shopping data, Best Buy customers were more likely to head to Amazon than they were to the big box itself in the past 90 days. Granted, they could have been surfing Amazon for books, toothbrushes, or even apparel, but how hard would it have been to check out the electronics offerings? Just a few mouse clicks.

Winner: Amazon. While the online retailer’s customer share for electronics is relatively minor, Amazon’s vast product offerings are a major plus with shoppers.

Round Three: Price Comparisons and Showrooming

One of the biggest retail buzzwords today is “showrooming”: the art of demoing merchandise in a physical store and using mobile devices to locate the retailer with the best price. It’s the most modern way to compare prices [for now].

When Best Buy began reporting problems, pundits began pointing the finger at showrooming (and that handy little Price Check by Amazon app). But are Best Buy’s customers guilty of using the big box’s sales floor for this purpose?

Also in July, we found that among Best Buy electronics shoppers carrying mobile devices, 67.1% regularly or occasionally comparison shop via their mobile devices – and about two in five (38.3%) use Amazon’s Price Check app specifically (regularly or occasionally). However, these figures aren’t out of line with what we recorded for Amazon’s mobile-wielding electronics shoppers: 70.4% regularly or occasionally compare prices using their smartphones or tablets and a higher percentage (45.4%) utilize the Price Check app. Further, these percentages are nearly identical to mobile owners in general (67.2% compare prices with their devices; 40.3% report using the Price Check by Amazon app).

While showrooming may be contributing to the big box’s woes, it’s evident that this isn’t a “problem” unique to Best Buy in particular. Showrooming just “is” – it’s another smart shopping strategy being adopted by today’s well-informed consumers and an inevitable trend born from the mobile movement.

Winner: Amazon. The online retail threw a hard punch at more retailers than just Best Buy when it introduced the Price Check app. And the intel it receives from Price Check participants ensures that Amazon’s sticker prices remain low – making non-price competition a “must” for other retailers.

Best Buy seems to be missing the benefit of its so-called showroom status: the retailer has the initial opportunity to make a direct connection with customers and close the sale before shoppers begin scanning SKUs. Instead of placing blame on Amazon and the showrooming trend, perhaps these are the real questions we should be asking: Why has Best Buy failed to capitalize on the customers entering their stores? And, why haven’t shoppers felt compelled to buy from Best Buy once inside the store? Where is Best Buy’s value proposition to its customers?

With pricing transparency between retailers only likely to increase as we become a more technologically-savvy society, Best Buy’s near knockout should serve as a warning. Retailers will have to look to their customers – creating value that will fulfill customers’ needs, fit their budgets, and leave them feeling good about their purchases – and wanting to return for more.

This post originally appeared on Forbes.com as a contribution to the Prosper Now blog.

Thanks for the Customer Service, but my Smartphone Found a Better Price

Forget about shopping in your pajamas – with smartphones and tablets, you can shop in multiple stores by going to just one store. Sure, you can do that online, from the comfort of your own home, but you can’t feel the product and really see it up close. You also don’t have the advantage of picking the brains of customer service reps and product experts.

I recently had the chance to “borrow” customer service from a store I wasn’t planning to purchase from. Sadly at the time, I did not have a smartphone (those were tragic times), but I still went in to an electronics store knowing prices and stats of laptops I had found online. I spent time chatting up a member of the customer service team and he helped me pick the model I wanted. When the associate was ready to ring me up, I chuckled a little and said “No thanks, I found this same model online for $200 less…in red.” Although the associate was bummed, he knew he was defeated (he could not offer me my heart’s desire – a new metallic red Toshiba!). He groveled and tried to counter the offer with warranties, but I would already be getting one from the manufacturer no matter where I purchased. Had his boss been aware of better deals and color selections elsewhere, perhaps the store could have made me a better offer.

Using smartphones and tablets, Mobile Users have pulled this same maneuver—they shopped one store, compared prices on their device, and then left to purchase somewhere else! 40.6% have gone to another physical store and 25.6% have purchased from a different online retailer:

Have you ever done any of the following on your smartphone or tablet while shopping in a store? (Check all that apply)
Compared prices and purchased from another retailer’s physical store	40.6%
Read product reviews to decide between products	35.8%
Compared prices but still purchased from the same retailer	30.6%
Scanned a QR code to get more information about a product	29.7%
“Checked in” for a discount	26.7%
Requested a price match	26.4%
Compared prices and purchased from another retailer’s website using my device	25.6%
Compared prices and purchased from another retailer’s website using my laptop/desktop after leaving the store	23.1%
Compared prices and purchased from the same retailer’s website using my laptop/desktop after leaving the store	13.3%
Compared prices and purchased from the same retailer’s website using my device	13.3

 

Source: Prosper Mobile Insights™ Mobile Survey December 2011
Be sure to check out the release Opportunity Lost: 40% of Mobile Users Compare Prices, Purchase From Competition, According to Prosper Mobile Insights™

Several Mobile Users are also taking advantage of customer reviews, QR codes and check-ins.

Retailers need to watch out for these “smart” shoppers and iPad price investigators! Physical stores need to be able to compete with online stores, as well as their physical next door neighbors, since smartphone and tablet shoppers have all the competition’s price and selection information at their fingertips. Retailers can’t rely on the idea that shoppers like to touch and feel the merchandise before they buy—most shoppers still do, but they can experience your products in person and still purchase them somewhere else where the price is better! (They can take advantage of your knowledgeable sales people and still take the better price elsewhere 🙂

We want to hear your stories! How have you used a mobile device to help you shop? Have retailers lost your business because you found better deals somewhere else? (Have you made an electronics guru cry recently?) We want to hear from you!