Survey shows retailers think Internet useful

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More than 85 percent of retailers use a computer at home or at work, over 70 percent use the Internet at home and almost 60 percent use the Internet at the office according to a new survey conducted at Michigan State University.

The survey, conducted in 2002 by Brenda Sternquist, a professor of merchandising management and researcher at Michigan State University, looked at 230 members of Michigan Retailers Association and gathered data regarding these retailers’ use of computers and the Internet, both at home and at work.

“We know the Internet and electronic retailing are experiencing dramatic growth,” explained Sternquist. “We wanted to answer questions such as ‘Do retailers themselves perceive the Internet as useful, secure and easy to navigate?’ and ‘Do web sites contribute to retailers’ performance?’”

The study found that retailers spend about 20 hours on a home computer and 74 hours on an office computer per month. Searching for information is the most common use of the Internet at home, whereas e-mail is the most common use at the office.

“The results of our study show that retailers tend to use the Internet at home and then transfer this knowledge to the office,” said Sternquist.

“It appears that retailers begin using the Internet for financial transactions at a personal level and then use the Internet for financial transactions such as buying for the business. Their personal lives serve as an experiment for what they will do in their business.”

Sternquist also concluded, based on the survey, that having a company website contributed to Michigan retailers’ performances relative to major competitors and other stores in the industry. This is despite the fact that only five percent of retailers surveyed said the majority of their revenue came from Internet-based sales.

Here’s a snapshot of participating retailers:
• A great variety of retailer/business types were represented; gift, apparel, jewelry and furniture were heavily represented. More than 75 percent of the stores could be considered specialty stores.
• Retailers had owned businesses in their current community for an average of 18 years and had an average of 22 years retail experience.
• More than half of surveyed retailers performed well and made a profit in 2001. Their total family incomes ranged from $7,800 to $79 million, with a median of $82,000.
• While 80 percent of retailers surveyed employed five or fewer full-time employees, some retailers employed as many of 200 full-time employees and/or 170 part-time employees.

Nearly half of the retailers surveyed have websites, according to the study. Most were developed in the past five years; 55 percent used an outside web developer, while 45 percent used an in-house IT team.

Of retailers with websites, 43 percent sell merchandise online. Almost half of them are direct sellers.

“One surprising finding is that retailers’ online sales lay at both ends of the spectrum, with not much in between. For 95 percent of retailers, online sales were 15 percent or less of total sales, but for the other five percent, online sales were 90 percent or more—in other words, this five percent were primarily Internet retailers,” Sternquist said.

Product or service information is the most common feature of retailers’ websites (93 percent), followed by e-mail customer service (60 percent). Other website features include:
• Online ordering (37 percent)
• Acceptance of credit cards (31 percent).
• Online shopping carts (29 percent).

The survey also looked at ways retail websites tie in with physical (“bricks-and-mortar”) stores, what Sternquist terms “clicks-and-mortar synergies.” The websites of every retailer surveyed offered one or more of the following synergy features:
• Presented store location on the website and published the website address in traditional advertising.
• Allowed customers to check prices online for products that were sold in the store.
• Allowed customers to order on the web and pick up from the store or return a product bought online to the store.
• Accepted coupons both online and in the store.
• Allowed online customers to check in-store availability of a product.

Nearly 30 percent had at least two of these features, but only two percent had all five features.

“Almost all retailers who have online customer registration used it to collect customer information. Nearly a third of retailers with websites sent e-mails to customers on a regular basis,” Sternquist summarized.

In addition, the study used a six-question, seven-point scale to rate retailers’ “Internet innovativeness” (openness to new experiences) and found that overall, Michigan retailers were slightly less innovative than the neutral score of 4. Not surprisingly, retailers who scored higher for innovativeness established websites earlier than others did.

“We also asked retailers how they perceived the Internet in terms of usefulness, ease of navigation and security. Generally, Michigan retailers perceive the Internet as useful and easy to navigate, but the vast majority have concerns about Internet security,” Sternquist said.

Retailers with websites perceived the Internet to be less risky than did those without websites, and retailers who sold merchandise online viewed the Internet as less risky than did retailers who did not sell online.

Sternquist’s study found that ease of navigation appears not to be related to whether a retailer decided to sell on the Internet. “When comparing retailers who sold on the Internet with those who didn’t, we found significant difference in their perceptions of how easy the Internet is to navigate,” she said.

This article was written by Michigan Retailer staff writer Amy Buttery.

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