For Discount Retailers, Mobile Moves Onward and Upward - eMarketer

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For Discount Retailers, Mobile Moves Onward and Upward

Mobile has much bigger role in traffic than sales

July 6, 2015

Discount and variety stores encompass a range of retail business models, from dollar stores that have traditionally shunned ecommerce altogether to warehouse membership clubs with limited online selections to mass merchants fully committed to a digital experience across channels. Because of a brick-and-mortar emphasis, even most of the leaders in this category have online sales penetration under 5%, a smaller figure than the 7.1% contribution eMarketer expects ecommerce will make to total US retail sales in 2015, according to a new eMarketer report, “Discount Retailers and Digital Commerce: Trends and Benchmarks.”

Favorite Retailers Among US Internet Users, Sep 2014 (% of respondents)

Because of their wealth of products and perceived value, discount and variety stores, particularly Wal-Mart and Target, have a broad appeal. Brick-and-mortar may still rule for this sector, but as smartphone usage reaches unprecedented levels—59.3% of the US population in 2015, eMarketer estimates—even the most price-sensitive retailers are paying attention to mobile.

In a September 2014 PricewaterhouseCoopers (PwC) survey, US internet users were asked why they shopped at their favorite retailer. Good prices overwhelmingly swayed shoppers (71%), followed by having items in stock (50%). With those criteria in mind, these shoppers were asked to name names. Mass-merchandise discounters Wal-Mart (41%) and Target (29%) were outranked only by (52%). Costco was the remaining store from this sector that made the top 10.

Top 10 US Retail Websites, Ranked by Visits, Dec 2014

Unsurprisingly, Amazon led US retailers in site visits and share over the 2014 holiday season, according to Experian Marketing Services. As with PwC’s ranking, Wal-Mart and Target trailed in second and third for site visits, though notably both saw greater shares of site traffic from mobile devices than did Amazon—for Target that measure tipped past 50%.

In October 2014, Target spokesman Eddie Baeb said two-thirds of the retailer’s digital traffic was mobile, a figure expected to reach three-quarters in 2015. Yet mobile traffic doesn’t guarantee mobile sales. “Purchasing on mobile is becoming a bigger piece, but it’s still got a ways to go,” Baeb said, citing the need for more seamless payment methods in order to convince users to do so.

Target may not be pushing mcommerce but its in-store couponing app Cartwheel was responsible for $1 billion in sales in 2014, according to the company. Driving foot traffic while also encouraging ecommerce remains a competitive strategy. In a March 2015 investor presentation, Target chairman and CEO Brian Cornell reported that shoppers who buy both online and in-store generate triple the sales of in-store-only shoppers.

Mobile is also making waves at Wal-Mart: The world’s largest retailer broke its own records for mobile traffic over the 2014 holidays. The company reported that roughly 70% of traffic to between Thanksgiving and Cyber Monday was on a mobile device.

eMarketer corporate subscription clients can view the full report here.

Get more on this topic with the full eMarketer report, “Discount Retailers and Digital Commerce: Trends and Benchmarks.”

eMarketer releases over 200 analyst reports per year, which are only available to eMarketer corporate subscribers.


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