Do customers shop online more than at clothing stores?
We believe that your customers will spend more at clothing stores than online in a given year.
Null hypothesis: clothing store spending=online spending
Alternative Hypothesis: clothing store spending>online spending.
Online spending is very straight forward, if the customer makes a purchase from a website it is considered an online purchase. Online shopping has several factors that appeal to internet users. Online shopping provides the right level of product information, can find a product easily, convenient, and quickest way to shop (Retail Industry, 2005). According to the United States Department of Commerce, in 2003, e-commerce spending accounted for 1.6% of total sales*. This is a relatively low number in relation to total retail sales. If customers are spending habits are similar to the National Averages, then they can only receive incentives on 1.6% of their purchases. However, the Incentive Program may increase the customers online spending. Instead of going to a store to purchase something (as they normally would), they might take advantage of the incentive program and order it online instead.
On the other hand, spending at clothing stores is a lot more complex. The first thing to understand about clothing store purchases is what we consider a clothing store. Would a super mart like Target or Wal-Mart be considered a clothing store because they sell clothes? Would e-commerce sites like JC Penny, and LL Bean be considered clothing store purchases? If we consider all stores that sell clothes clothing stores, then it is obvious that they would spend more at clothing stores in a year. They could get incentive credits for buying items other than clothing as long as they bought them in a “clothing” store. For instance, if one was looking for new bedding, they could buy it at a Department Store that also sells clothes and receive credit on their Department Store Card for the Incentive Program.
The statistics and results of Pricewaterhouse Cooper’s survey:
Clothing Expenditures results, % In Order by Stores, Catalogs, Online Shopping Sites, and Other
All internet users 78% 11% 10% 2%
Online Purchasers 75% 11% 12% 2%
Online Non-Purchasers 87% 9% N/A 3%
Based on this survey, it would be best to offer cash back when consumers make a purchase at clothing stores. According to PricewaterhouseCoopers, their survey revealed brick and mortar stores are still preferred over online shopping. Internet users prefer stores because of several factors: returns and exchanges, customer assistance, charges fair prices, quality, enjoy shopping and carries related products (Retail Industry, 2005). However, online shopping is quickly catching on. Pricewaterhouse Coopers surveys approximately 500 internet users a month. In conclusion, without consumers changing their current spending habits, it is our belief that the customers will be able to take advantage of the Clothing Store Incentive Program more than the On-line spending program.
*given a 90% confidence interval
King, Carol. Scheleur, Scott (2004) United States Department of Commerce News retrieved July 26, 2005 from http://www.census.gov/mrts/www/current.html
Retail Industry (2005). Retrieved July 28, 2005, from www.retailindustry.about.com.