Conversion of Shoppers in Brick-and-Mortar Retailing - An Analysis of Observational Data

Abstract

Each store visitor presents a sales opportunity to retailers. However, not every visitor becomes a buyer. Converting store visitors into buyers is a fundamental challenge in retailing. Within-store conversion is divided into several steps. This paper focuses on the conversion of visitors to buyers who stop during their shopping process in a certain area of the store. The contribution to the literature is twofold: (1) Based on the literature, it is hypothesized that haptic exploration of the product and salesperson encounters positively influence category stop-to-purchase conversion. We find strong empirical support for the influence of haptic exploration based on various models. This result is independent of planned or impulse buying and product categories, thus extending previous research on the influence of haptic exploration. We also analyze the influence of sales assistance, but cannot conclude that this is a significant driver of buying. (2) The Data used in our study stems from 193 visitors to a German consumer electronics store who were observed during their shopping episodes. In-store observation is a rarely used, yet owerful technique for analyzing purchasing behavior at the POS (Granbois 1968). Because of the potential shortcomings of observational data (unobserved heterogeneity on the consumer level), a hierarchical Bayes method is applied to the empirical analysis. We link unobserved consumer-level heterogeneity to additional results from an exit survey of observed store visitors and demonstrate that the hierarchical Bayesian approach effectively captures latent and relevant consumer characteristics.