It’s no secret that retail is a crowded and competitive industry. Consumers are presented with a large array of options, allowing them to choose where they want to spend their money.
For this reason, it is crucial brands explore retail market research options to learn about target shoppers - their preferences, habits, behaviors, relationship with competitors, and more.
By surveying or speaking with consumers, your retail store (whether it be online, in-person, or hybrid) will be able to better understand your target market and make better business decisions.
Common retail market research options include:
- Intercept surveys
- Mystery shopping
- Customer surveys
- Customer segmentation
- Competitive research
- Social listening and monitoring
- User experience (UX)
Keep reading to learn how to leverage consumer insights to drive sales, marketing, and strategy.
What is Retail Market Research?
Retail market research is the process of collecting and analyzing data about the retail industry, including consumer behavior, market trends, and competitive landscape. It involves gathering information about customer preferences, purchasing patterns, demographics, and economic factors that impact the retail sector.
Importance of Retail 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.
Without data, these important decisions are made off on assumptions and guesses.
As consumer preferences quickly change and evolve, it is impossible to rely on the same routine or what was considered the best practice a year ago.
For instance, 59% of consumers have a higher expectation for customer service than they did a year ago.
Additionally, 80% of consumers say the experience a company provides is as important as its products and services.
💡 The Key Takeaway: Retailers that conduct market research are able to avoid guessing games. Whether it is a customer survey or market analysis, brands earn actionable data to drive their decision-making.
Retail Market Research Options
The methods used in retail market research can vary depending on the specific objectives and scope of the study. Although they all share a similar goal: to provide insights and knowledge that can guide decision-making processes for retailers.
Below we dive into different types of retail market research methods and how each works to solve a specific business goal or objective.
Intercept surveys, or intercept interviews, are a very popular retail market research option.
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.
Though, as technology has evolved, intercept survey companies 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.
Additionally, website intercept surveys are an option for eCommerce sites.
This is typically accomplished in the form of a pop-up where site users can take a brief survey about their shopping experience.
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
💡 The Key Takeaway: Intercept surveys, whether accomplish on-site or online, engage with people who enter your store. It is a sure-fire approach to gathering feedback from people you know 100% interacted with your organization.
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.
💡 The Key Takeaway: If someone knows their being studied, they will act on their best behavior. Therefore mystery shops are a good idea to see how your store is being run on a typical day.
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 equity.
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.
When working with a customer satisfaction survey company, retailers are able to reach their ideal respondents through several customer survey options 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.
💡 The Key Takeaway: Perhaps one of the most common retail market research options, customer surveys are a great approach to gathering quick, cost-effective, and measurable metrics from your consumers.
In addition to collecting feedback, customer surveys can also provide brands with segmentation data.
By grouping your customers into market segments, you can deliver personalized marketing messages that are more likely to convert.
Often, customer segmentation targets:
- Purchasing habits
- Sources of awareness
For instance, our market research conducted a segmentation study with grocery shoppers across the U.S. Based on the survey results, we create seven grocery shopper segments each with defining characteristics.
Grocers can use this information to inform marketing strategies, pricing, product displays, and more.
Download the Grocery Segmentation Report to see what type of insights we can gather for your retail organization.
Here are more benefits of segmenting your customer base as part of a retail market research study.
Increase customer retention
Segmenting customers is a great way to retain them.
When you understand who your customers are, you're automatically going to see more retention. Why?
Because customers are more likely to stay with a brand they connect with.
When you've identified key factors related to demographics, you can narrow down your message and cater specifically to certain groups of people.
This leads us to our next point...
Identify niche markets
Locating niche markets within a larger group of consumers is necessary for any successful brand.
Customer segmentation will identify the needs of smaller groups, which we touched on in our last section.
Niche markets require specialized marketing due to their unique interests and what drives them to buy.
As a result, you'll need to be just as specialized in how you relate to these groups.
Think about the following questions when developing a unique, data-driven marketing strategy:
- What does this audience connect with?
- What products does this audience gravitate towards?
- How can I grow a relationship with this audience?
Drive higher ROI with data-driven marketing
Customer segmentation is the perfect tool for creating personalized marketing messages.
And with 90% of leading marketers saying personalization significantly contributes to business profitability, you can't afford not to.
By using data-driven marketing strategies, businesses know exactly who to target. As a result, the targeted groups will automatically gravitate to that product/service, boosting sales.
Another benefit of creating data-backed marketing campaigns? Brands will create a stronger bond with their audience.
Leads to better price optimization
By segmenting customers, brands will learn which pricing strategies work best.
It's a shot in the dark to create a pricing strategy without understanding your customers.
Are you overpricing or going too low?
You don't want to choose a price, only to turn customers away and into the arms of a competitor.
Customer segmentation will gather key data to let you know the sweet spot when it comes to cost.
And no surprise here, but good pricing can help with customer acquisition.
💡 The Key Takeaway: Customer segmentation promotes customer retention, locates niche markets, boosts ROI, and leads to price optimization. This all stems from learning in-depth insights about your customers through market research.
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.
This type of retail market option involves a trained interviewer observing a customer’s behavior while they shop in terms of navigation, decision-making, product selection, and overall experience.
By doing so, researchers are able to observe how customers...
- Respond to changes in the store layout
- Interact with product displays
- Value promotions or sales
- Determine purchasing motivators
Or even something as unique as 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.
💡 The Key Takeaway: Oftentimes online surveys can't capture the detail of a shopper's experience because it isn't fresh in their minds. Here is the value of a shop along. Researchers can ask shoppers why they purchased a certain product or stopped at a store display and therefore gather extremely in-depth feedback.
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 competitor analysis.
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.
For context, 56% of professionals are using some form of competitive research. If you aren't, it's a great retail market research option to add to your business strategy.
💡 The Key Takeaway: Retail is perhaps the most competitive industry in today's market. Therefore conducting market research on competitors seems like a no-brainer. Learn about their pricing, marketing strategies, customer satisfaction scores, and more.
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.
Therefore, creating a strategy for online reputation management (ORM) has several advantages for retailers.
Reputation management is a great market research option for retail organizations for the following reasons:
- Trend tracking and analysis
- Reputation and crisis management
- Social impact of marketing
- Competitive intelligence
Additionally, 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).
💡 The Key Takeaway: Online reviews are crucial in today's landscape. Learn more about increasing your Google reviews with this secret hack.
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?
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. This makes UX a vital retail market research option.
Though, eCommerce user experience market 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.
💡 The Key Takeaway: Online shoppers are quick to navigate away from pages that are slow to load or hard to navigate. Therefore stores that primarily operate online, conducting user experience research is a great idea.
Geofencing is a fairly new retail market research option, 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 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.
💡 The Key Takeaway: Whether you want to learn about your own storefront or a competitor, geofencing surveys allow you to gather feedback from people that enter a pre-determined virtual boundary. It allows for in-the-moment feedback without someone having to be onsite.
Working with Retail Market Research Companies
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).
💡 The Key Takeaway: If you are investing in any type of retail market research, you want to feel confident in the methodology and results. When working with a market research company (like Drive Research), your team can remain hands-off while also knowing your study is in good hands.
Common retail market research studies include intercept surveys, mystery shopping, customer segmentation, competitive research, and more.
These types of market research methods can be completed as stand-alone projects or combined to create a comprehensive research study.
When working with a retail market research company, brands can feel confident they are earning quality feedback to drive decision-making.
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
- Email us at [email protected]
- 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 Manager. She has earned certificates for both Google Analytics and Google AdWords.
Learn more about Emily, here.