It’s no secret that retail is a crowded and competitive industry. As a result, consumers are presented with a large array of options, allowing customers to choose where they want to spend their money.
For this reason, market research in the retail industry is more important now than ever.
By speaking with consumers, your retail store will be able to better understand your target market and make better business decisions.
Why should a retail store conduct market research?
Market research is valuable in helping retailers create or improve upon many business initiatives
Custom research studies help retail businesses with:
- Marketing and advertising strategies
- Social media tactics
- Store layout
- Website design
- Corporate social responsibility (CSR)
- Product offerings
- Employee training
- Store loyalty programs
- Sales and promotions
The list goes on and on, but I'll spare you.
In short, retailers that conduct market research are able to avoid guessing games.
Without data, these important decisions are made off of assumptions and guesses.
What market research options are available for retail stores?
When working with Drive Research, a retail market research company, retailers are able to choose from a long list of market research methods.
These may include:
- Intercept surveys
- Mystery shopping
- Customer surveys
- Competitive research
- Social listening/monitoring
- User experience (UX)
These types of market research methods can be completed as stand-alone projects or combined to create a comprehensive research study.
Let's dive deeper into each of these retail research methodologies and discuss how they could benefit your organization.
1. Intercept Surveys
Intercept surveys, or intercept interviews, are a very popular market research option, especially within the retail industry.
During a traditional retail intercept survey, an interviewer approaches customers leaving a store and generally asks them about their experience.
Intercept interviews can be conducted using a tablet, laptop, or paper survey to record data.
As technology has evolved, market researchers are also able to reach retail customers through smartphone apps and geo-fencing, allowing analysts to target shoppers of specific stores and even those who shopped during specific time frames.
Intercept surveys can be used by market researchers in a retail environment to better understand and collect data on a variety of topics including:
- Customer satisfaction
- Brand awareness
- Opinions on packaging
2. Mystery Shopping
Whether it be a sales associate’s knowledge or friendliness, store cleanliness, customer service experience, store management, product options or availability, or something else, there are a number of variables that impact a customer’s experience in a retail store.
During a mystery shop, a trained market researcher goes undercover as a customer. The researcher reviews the retail store environment, the staff, and any other variable that may impact a customer’s shopping experience.
Some popular methods of mystery shopping market researchers recommend for retailers include:
- Making phone calls or sending emails to specific departments (i.e., customer service)
- Wearing a video camera while shopping to record the experience
- Purchasing or returning merchandise from a specific department or through a specific method (i.e., brick and mortar or eCommerce)
Mystery shopping allows a retailer to take a deeper look into their business and evaluate where they may be room for improvement.
Often, mystery shopping reveals beyond what management or corporate alone are capable of seeing.
Mystery shopping has a massive return on investment (ROI) for retailers because the findings can be used to develop employee training, update policies, customer service practices, promotional materials, displays, and more.
Want to learn more about the benefits of mystery shopping? Watch this one-minute video.
3. Customer Surveys
It’s impossible to read a customer’s mind, and in a market that is crowded and competitive, retail stores need to be surveying their customers to stand out among their competitors.
Customer surveys enable retail stores to turn negative experiences into positive changes by collecting data such as:
- Net Promoter Score (NPS): How likely are you to recommend [store name] to a friend?
- Customer Satisfaction Score (CSAT): How would you rate your overall satisfaction with the service you received at [store name]?
- Customer Effort Score (CES): How easy was it to find the product(s) you were looking for at [store name]?
Each of these variables is useful in understanding customer satisfaction and determining brand loyalty. Retailers can also ask customers for NPS, CSAT, and CES of their competitors to see how they stack up and identify any room for improvement.
Retailers are able to reach their customers through methods such as including a URL to a survey on customer receipts, sending customers personalized emails, or embedding a survey link onto their website.
Some retailers may even have their sales associates allude to a customer satisfaction survey and any incentives during the checkout process to increase awareness of the survey.
Through a shop-along market research study, retailers are able to understand a customer’s journey from the entrance to the exit of their store.
During a shop-along, market researchers observe a customer’s behavior while they shop in terms of navigation, decision making, product selection, and overall experience.
Doing so, researchers are able to observe how customers respond to changes in the store layout, product displays, promotions or sales, marketing campaigns, purchasing motivators, and even how basket or cart size impacts purchasing behavior.
In the moment research studies, such as a shop-along, allow researchers a unique opportunity to explore the psychological factors that impact a customer’s decision-making process.
If a customer selects a specific product over another or skips over an aisle, the market researcher is able to ask why they did that.
5. Competitive Research
It’s no secret that retail is an extremely competitive market. With hundreds of options for customers to choose from, retailers are constantly competing with one another. Retailers, no matter what size, should be conducting competitive research.
What exactly do we mean by competitive research?
Competitive research is conducted by market researchers to collect data on competitors through methods such as mystery shopping, primary qualitative or quantitative research, secondary desk research, social media monitoring, and many other methods as researchers feel fit.
The findings from these research methods are often compiled into a competitive analysis, offering retailers a complete overview of their competitors.
Competitive research for retail stores may include data on competitors’:
- Product offerings
- Sales or promotions
- Marketing strategies
- Social media tactics
- Customer satisfaction scores
- Design or layout
- Reviews or ratings
For retail stores, staying competitive through their marketing, promotions, and customer satisfaction is essential to being successful.
6. Social Listening and Monitoring
As a retailer, especially in a competitive space, it’s essential to stay in the know about the conversations that are happening online about your industry.
There’s nothing worse than an unhappy customer rambling on about their negative experience with your company on social media for the world to see.
Just one negative customer experience in a retail store can fuel a social media wildfire. Setting up alerts for these situations is important to putting out the fire before it’s too late.
That’s not to say every situation is going to be negative. Being not only aware of but involved in online conversations within your industry, whether it be on social media or in the news, allows your company to make better business decisions.
Creating a strategy for online reputation management has several advantages for retailers including:
- Trend tracking and analysis
- Reputation and crisis management
- Social impact of marketing
- Competitive intelligence
Monitoring and listening to relevant social and news media, such as your company’s name, any key terms, and direct and indirect competitors allows retailers to forge positive relationships with current and potential customers (and perhaps even customers of your competitors).
For example, if a customer is tweeting about their negative experience at Walmart, other retailers such as Target, now have the opportunity to respond and sell themselves to the Walmart customer (sometimes even using a bit of humor).
For a quick overview of what online reputation management is, how the process works, and additional benefits of ORM, watch our quick video.
7. User Experience (UX)
Have you ever been shopping on a retailer’s website and then up pops a request asking you to participate in a survey about your experience? While this is a form of a “website intercept survey,” its purpose is largely to collect information about your user experience (UX) as an online customer.
For many online retailers, UX surveys can uncover important insights surrounding factors such as:
- Cart abandonment
- Website design
- Website load times
- Search terms used to find the website
- Website navigation
- Check-out process
For eCommerce websites, understanding the factors listed above is essential to providing a positive user experience, boosting brand loyalty, and positive customer satisfaction.
UX research isn’t limited to the typical “pop-up” intercept surveys. eCommerce retailers can send personalized emails to customers inviting them to participate in a survey or even a one-on-one in-depth interview (IDI) about a retailer’s website.
Geofencing is a fairly new methodology in the retail market research industry, compared to mystery shopping or in-person intercept surveys.
Geofencing has similar advantages as mystery shopping and intercept surveys, with one major difference: there are no on-site interviewers needed.
So, how does it work? Geofencing surveys create a virtual boundry around your retail store. They can be created with GPS location technology commonly used in cell phones.
When someone enters the imaginary boundary they are sent a text alert asking if they would like to participate in a survey about your retail store.
This type of market research allows you to ask questions such as:
- How long did you travel from your starting point to come to [INSERT STORE NAME]?
- Did you stop at other locations before arriving at [INSERT STORE NAME]?
- How was your experience shopping at [INSERT STORE NAME]?
- What was your reason for shopping at [INSERTY STORE NAME]?
- Did you purchase additional items from what you were originally shopping for?
Better yet, these questions are answered by customers who currently visited or shopped at your store. There is a very little lapse in memory regarding their experiences.
Lastly, geofencing is also a popular methodology for gaining insight into competitor stores.
With intercept surveys, you must have permission to have an interviewer on-site. As you can imagine your competitor would not be willing to give you this allowance.
Therefore, brands choose geofencing surveys because it is a virtual boundry that competitors are unaware of.
Should retailers work with a third-party to conduct market research?
While it’s possible to cut costs and conduct a market research study in-house, DIY market research isn’t always the best option for retailers.
Chances are, you know the ins and outs of your retail brand. While that’s important for you to do your job, your passion and knowledge can lead to bias when conducting market research in-house.
Working with a third-party ensures that you don’t influence the data, yielding a better ROI, and fueling stronger insights.
Plus, market researchers know the right questions to ask your target market and how to ask them. After all, we’ve done this a time (or two).
Editor's Note: This post was originally posted in June 2016, but has since been updated for further context.
Drive Research is a national market research company located in New York. Our experts work with retail companies across the country to help execute both quantitative and qualitative studies to deliver the insights they need to drive the business forward.
Interested in receiving a quote for a retail market research study? Contact us through any of the 4 ways below.
- Message us on our website
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- Call us at 888-725-DATA
- Text us at 315-303-2040
A SUNY Cortland graduate, Emily has taken her passion for social and content marketing to Drive Research as the Marketing Coordinator. She has earned certificates for both Google Analytics and Google AdWords.
Learn more about Emily, here.