FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price...

17
Insights into the shopping behavior of the Connected Consumer FUTURE OF RETAIL © GfK 2016 Navigating the Future of Retail Future of Retail Convenience Choice Price Experience About GfK Conclusion

Transcript of FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price...

Page 1: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

© GfK 2016

Navigating the Future of Retail

Future of Retail

Convenience

Choice

Price

Experience

About GfK

Conclusion

Page 2: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

02© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Understanding a new breed of shopper

A combination of advances in technology and a continuing climate of austerity has created a new breed of shopper. These shoppers are Connected Consumers.

Glued to their smartphones, price aware and shopping as much for an experience as for a product, they are on a mission – and it’s a retailer’s job to help them fulfil it. Through our global study FutureBuy, we have gained unique insights into the future of retail.

Choice, price, convenience, and experience remain the four key factors to success in retail, but new battle-grounds are also emerging. We offer retailers fresh insights into how to win the battle for the connected shopper of the future.

ConvenienceBe where your shoppers are.

PriceBe transparent on price position.

ExperienceMake the shopper feel good about their choice.

ChoiceSell to need states not categories.

Convenience

Choice

Price

Experience

Conclusion

Page 3: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

03© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

ConvenienceBe where your shoppers are.

The end of the queue?

Being convenient has always been crucial to being effective in retailFrom the independent store perfectly positioned around the corner for a loaf of bread to large out-of-town shopping malls with a myriad of shops and plentiful parking, retailers know they must be located where their consumers are. Connected Consumers have added a new dimension, forcing retailers to go to them. This means it’s essential to be present at all points along the digital path to purchase.

Convenience means being where your shoppers are As consumers have become connected, retail has needed to be omnipresent to meet shoppers’ needs and achieve a sale. Shoppers expect products and services to be available to them at any time and in any place. Increasingly, they turn to their

mobiles as the first step in their purchase journey. In our FutureBuy study, one third (34%) of consumers globally told us that their mobile device is their most important shopping tool. Right now, retailers appreciate they must be optimized for mobile. In the future of retail, mobile may be replaced by devices such as wearables. Success tomorrow means changing your mind-set from creating shopper attraction to appearing when and where the shopper needs you.

Find me, try me, buy meWith consumers instinctively turning to their mobile devices to research and make their next purchase, being present at the early stage of the shopping jour-ney is vital. A first-rate search strategy is essential to capture shoppers at the start of their research. As shoppers continue their journey, shoppers migrate to apps. Apps offer engagement opportunities to convert browsers into buyers at trigger points. For example, offer commuters an app so that they can fill their grocery basket when offline and collection points on their route of travel. Delivering direct

to the consumer in their moment of need offers an advantage to many brands. Opportunities abound, from parents stuck without a nappy to weary travelers in need of a capsule hotel.

In summaryIn the future, delivering convenience in retail means anticipating shoppers’ requirements and appearing at the moment of need. The shoppers of the future won’t travel and they won’t queue, you will, and winning means jostling to the front of the queue.

Page 4: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

04© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

“Shoppers want to shop when they are in transit, at work, at home or on holiday. In the past shoppers went to retailers to buy goods but now the roles have reversed and the onus is on retailers to go to shoppers. This means being present at the moment of trigger.“ James Llewellyn, UK Head of Shopper, GfK

Be omnipresent to be convenient.

Shoppers crave convenience. You must be continually available. ▪ For Connected Consumers globally,

mobile is becoming the “most important shopping tool”. That’s true for three quarters of Americans (75%) and Indians (74%) and more than half of Mexicans (53%).

▪ Retailers are interpreting the desire for convenience in many forms. To succeed in this environment, you must be easier, faster and as price competitive as your rivals.

▪ Success means understanding what convenience means in all your categories and markets, and delivering it. Today that often means mobile, but in the future the device of choice may change. You cannot afford to be left behind.

Page 5: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

05© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

Mobile is quickly becoming the most important shopping tool.

Mobile is revolutionizing shoppers’ expectations of convenienceConvenience is now defined by connec-tivity. Continually Connected Consumers are turning to their mobile devices to research and complete their purchases on the go.

Consumers in China and India (75% and 74% respectively) are well ahead of the curve, agreeing that their mobile device is their most important shopping tool. Europe trails behind, but, at 35%, Britain keeps pace with the global average of 34%.

With the trend increasing steadily year on year and 3G and 4G connectivity continually improving worldwide, we expect mobile to become an increasingly indispensable shopping tool to consum-ers globally.

China

Britain

India

Global

Page 6: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

06© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

ChoiceSell to need states not categories.

Time to collaborate with your competitors.

Choice in retail has traditionally been about helping consumers to select one product over anotherToday, it’s about helping shoppers choose multiple products simultaneously. Categories are dead. Connected Consumers are bored of negotiating their way through multiple categories to find their product of choice. They want retailers to do it for them. What does this mean for the future of retail?

Streamline and cross-sellRetailers must engage with shopper mindsets and offer a range of well-chosen solutions if they are to succeed. They need to curate and merchandize products according to consumers’ specific need states. In the future, family cars will be sold alongside baby equipment,

and shoppers will be able to buy a pair of oven gloves on impulse while browsing the cookery book section. For retailers, this opens up a wealth of cross-selling opportunities to maximize the value of each visit. In this brave new world retailers and manufacturers will collaborate with their competitors in a joint pursuit of growth.

Towards a personalized assortmentOne of the fundaments of modern retail is to make shoppers’ lives easier. Bringing disparate products together facilitates choice and so benefits the time poor consumer. Sometimes we forget this, assuming that offering more creates confusion and dissatisfaction. The challenge for retail is to achieve the right balance between only satisfying the primary mission and offering too much at once. Our FutureBuy study points out that the seventh strongest driver (for 21% of shoppers) of in-store shopping is being able to buy multiple things at once. In the digital space this factor is the tenth driver, 18% of shoppers say they go online to piece together complementary products.

In summaryWith growth in developed markets being hard to come by and emerging markets slowing down, retailers and manufactur-ers are under pressure to grow through innovation. To do this effectively, you will need to broaden your horizons and collaborate with new friends.

Page 7: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

07© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

“As we look to the future of retail, we see a move towards “lifestyle” stores organized by need states. Help your shoppers visualize their purchases in their world.”James Llewellyn, UK Head of Shopper, GfK

Mission possible.

Categories are dead. Retailers need to become curators of choice. ▪ Retailers and manufacturers need

to rethink what choice means for Connected Consumers.

▪ Abandon linear category thinking. Expand your approach to visualize consumers’ need states and organize your store around those.

▪ Success as a “curator of choice” will involve collaborating – sometimes with competitors.

BBQ Sauces

BBQ Checklist

MeatCoalSauce

Page 8: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

08© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

Ultimate choice.

Stores organized according to consumer need states that make multiple purchases easy.

Choice has traditionally been about choosing one product over another. But today’s Connected Consumers want stores to do the work for them and display products side by side that meet a particular need state – for example, gin displayed next to limes.

One fifth (21%) of shoppers globally buy in-store because they can purchase multiple goods simultaneously. It’s the fifth most cited reason for buying in-store.

In a store, choice is about experiencing products for real. The primary reason for shopping in-store for 51% of shoppers is to see and feel the products before purchase. Price is more important for web shoppers – more than a half (55%) buy online to save money.

want to save money

In-store shoppers

see and feel the product beforepurchase

purchase multiple goods simultaneously

Online shoppers

Page 9: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

09© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

PriceBe transparent on price position.

Beware the perils of dynamic pricing.

The theoryDynamic pricing is the practice where near identical products are sold to different consumers at different prices. The theory works on the principle that some shoppers are more price sensitive than others, so different people can be charged varying prices. But some instances of dynamic pricing have led to vehement shopper and media condemnation of a practice that lacks both transparency and fairness. As we look towards the future of retail, we ask whether dynamic pricing has a place either now, or in the years to come.

The realityToday’s consumers are price savvy. But some are more price savvy than others. Using dynamic pricing, a retailer can identify those shoppers who respond

keenly to changes in price or who are loyal to promotions. They can then target them with lower prices and offers. Using the same approach, retailers can isolate those who are insensitive to price changes and ensure they are offered full price products and services.

The practice of charging a price premium to a captive market is as old as retailing itself. For instance, if you are operating a theme park, you might charge more for a soft drink in the middle of a queue for a ride than you do in a kiosk. There is a logic to this approach, but given that today’s Connected Consumers are just a few taps away from broadcasting their displeasure via social media, retailers should think carefully before embarking on this opportunist strategy.

In some cases today, shoppers are prepared to pay more for convenience and so accept price differentials between channels. But in the future, consumers simply won’t pay more for a loaf of bread, regardless of whether the identical item is bought in a convenience store around the corner or a superstore 10 kilometers

away. As a consequence, retailers and manufacturers are rethinking their approach to price.

In summaryWith the advent of digital creating an in-creasingly transparent retail environment for Connected Consumers, dynamic pricing may soon be consigned to the history books of retailing.

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

Page 10: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

10© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

One product, one price.

Retailers and manufacturers have trained shoppers to be savvyConnected Consumers know that by scrutinizing prices while shopping they might find the same item at different costs across retailers. In some cases, they can find the same retailer has a product for sale at different prices online and in-store. There are even some instances of dynamic pricing, where identical products are found to be sold to different consumers at different prices by the same retailer. In an era of uber-transparency, what is the role of price in the future?

One product, one priceShoppers are increasingly baffled by the idea that they should pay a different amount for the same item at a different place. 58% of all shoppers in our FutureBuy survey said: “It is important to me that the price of an item is the same whether I buy it online or in-store.” The proportion of Leading Edge Consumers who agree is even higher at 70%. Consumers expect prices to be transparent and, we predict, simply won’t accept paying a different amount for the same item depending on where it is bought in the future.

Upsell, price-match or trade downIn the future, you must offer more to charge a price premium at retail. We think of it as a first floor, ground floor and basement pricing model. On the first floor, retailers upsell, offering better service – for example, longer warranties, unique private label ranges, or complementary services such as coffee shops. On the ground floor, items are price-matched. At basement level, the discounters trade down with their own private label. Discounters in grocery

do this very successfully because their offer is simple and transparent: they offer a similar product that is good enough at a lower price, not the same product.

In summaryThe idea that equivalent items should be priced exactly the same regardless of circumstances in the future seems radical and doomsday – a nightmare race to the bottom. But is that really the case? We think not. Price checking costs shoppers time, and the shopper who takes longer to decide spends less, and sometimes spends nothing at all. Retailers and manufacturers need to think “one product, one price”. Price matching can free the shopper to concentrate on choosing and buying products and services, rather than waiting for the best deal.

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

Page 11: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

11© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion Creating the best retail environments with the best service will no longer be justification for charging more for the same item. Retailers that want to charge a price premium will need to offer unique product ranges and additional paid for services.”James Llewellyn, UK Head of Shopper, GfK

Protecting price premiums in the retail of the future.

Price matching vs. price premiums ▪ In the future the market will set

prices for brands, and retailers will match this benchmark. Charging more for the same item won’t work as there will be many ultra-convenient routes to buying that same product else-where.

▪ This means that charging less will no longer be viable. Everyone will auto-matically match the low price, bringing down margins.

▪ To differentiate retailers will become creators of products and services. The defining line between retailers and manufacturers will start to erode as manufacturers explore new and direct routes to shoppers.

€220€300

XXXX

€300€300

+ better

warranty!

price matching vs. price premiums

Page 12: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

12© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

One product, one price.

Shoppers expect prices to be the same, wherever they buyToday’s savvy shoppers want transparent, consistent pricing. They are Connected Consumers and they scru-tinize prices, at the touch of a button.

More than one half (58%) of global shoppers agree they expect prices to be the same wherever they buy an item. This number is high across the board and especially so in young and growing markets such as Brazil (69%), Turkey (72%) and India (74%) but also in mature and digitally savvy markets such as UK (63%) and US (65%).

To demand a price premium, you must offer shoppers more value – extended warranties or exclusive private label products. Stores will cover their costs by adding other services such as cafes and crèches, not by charging higher prices.

Having a deep understanding of shopper behavior, price-matching and a unique offer will be the key to success in the retail of the future.

"It is important to me that theprice of an item be the same whetherI buy it online or in-store."

+ betterwarranty!

say:

Page 13: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

13© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

ExperienceMake the shopper feel good about their choice.

Create experiences not transactions.

Shopper expectations are set by their best experienceTo earn loyalty, retailers need to delight shoppers, not just persuade them to buy. A better environment and experience will keep shoppers coming back. But in an omnichannel environment, our Future-Buy research suggests that some retailers with a physical store presence simply aren’t maximizing their advantage effectively.

Let your environment inspire shoppersAnticipating the future, some retailers have already made changes to get the most from their physical stores. For example, Virgin Holidays has said: “We like to do things differently. While most stores are designed to sell, sell, sell, that isn’t the top of our agenda. We want to provide a retail space that is designed

to inspire consumers through immersive experiences.” In the financial services sector we have seen some forward-think-ing providers design a space in which people want to dwell, reducing the formal and intimidating nature of old-fashioned banks. We also expect the automotive sector to adopt similar practices in its showrooms so that those of us who aren’t car enthusiasts can better visualize the benefits of a vehicle and not just the product.

How do you excite shoppers online?Online retailers have their own advantag-es, one of which is data, which holds the key to personalization. In our FutureBuy survey, 35% of shoppers globally told us that they like it “…when a website keeps track of my visits and then recommends things to me”. 64% of consumers in Turkey agreed with this statement, followed by 57% of those in Brazil and 57% in China. But personalization can work even harder for retailers to grow ever elusive loyalty. 42% of all shoppers and the majority (74%) of Leading Edge Consumers agreed with the statement: “I would be more loyal to a brand/retailer

that lets me input into or help shape the products/services I buy.”

However, while consumers seek person-alization, they are also concerned about data privacy (see chart). Reassuring shoppers that you will protect their in-formation is the obvious solution, but it’s also important to consider the tone and content of your personalization. It is far better to discover what their needs are, and to respond to them, than to target them with something that doesn’t resonate or, worse still, they consider inappropriate.

In summaryThe future of retail isn’t all about closingthe deal as fast as possible. Shoppers often visit retailers to discover what’s new or simply to inform themselves. If your objective is happy, satisfied shop-pers that keep coming back, so that when they are ready to make a purchase they make it with you, you need to be offering them more than just a place to buy. You need to offer an environment, whether that’s online or offline, that inspires and a personal service that delights.

Page 14: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

14© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

“Storeowners must work harder to maximize their real estate in an era where online gains more and more share of transaction. At first this is about differentiation; physical retailers can deliver an immersive experience that online can’t match today. The next stage is creating synergy; getting on and offline to work together to delivery one experience.” James Llewellyn, UK Head of Shopper, GfK

Keeping shoppers satisfied in the retail of the future.

Physical stores must work harder. ▪ In Happy, satisfied shoppers must be

the goal of tomorrow’s retailers. ▪ Selling shouldn’t be top of the agenda

– if an environment inspires people, then making a purchase comes more naturally. An overt approach to sales builds business short term but will erode trust and loyalty long term, since shopper choice continues to expand.

▪ Retailers need to think beyond transactions to the experience and environment they offer if they are to satisfy tomorrow’s shoppers.

IN-STORE CONTEST!

Try first -

buy later!

Page 15: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

15© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

The personal way to enhance the shopper experience.

Let shoppers shape your offer to nurture loyaltyToday’s shoppers are attracted to personalization. They like it when online retailers recommend products and services that are relevant to them.

Being given the chance to input into or shape the products and services they buy also appeals to them. Four in ten (42%) of all shoppers agreed they would be more loyal to a retailer that offered this opportunity, rising to a significant 74% of Leading Edge Consumers (LECs).

But there is a fine line between being helpful and involving shoppers, and being too personal, bordering on creepy.

Understanding your shoppers and the relationship they want with you will allow you to enjoy all the benefits of their increased loyalty – but none of the disadvantages of getting too up close and personal.

Total

say:"I would be more loyal to a brand/retailer that lets me give input or help shape the products/services I buy."

say:

Page 16: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

16© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

Conclusion

Over the past two decades, the retail sector has witnessed a period of rapid and unprecedented change. Well-known stores have disappeared from the high street forever, and now omnichannel is king. Connected shoppers are increasingly demanding. Service has evolved to mean not just fulfilling, but instead anticipating shoppers’ needs. The internet has brought retail to us, into our homes and onto our many screens.

A strategy founded on “build it and they will come” may once have been sufficient, but today retailers must work harder and smarter to survive, let alone thrive. The four key battlegrounds of retail - choice, price, convenience and experience – may not look any different to those of the past, but mastering and maximizing them as they evolve now and next requires customer intelligence innovation, inspiration and investment. This is the future of retail.

ExperienceMake the shopper feel good about their choice

PriceBe transparent on price position

ChoiceSell to need states not categories

ConvenienceBe where your shoppers are

CustomerInformation

read more!

Page 17: FUTURE OF RETAIL - gfk.com · FUTURE OF RETAIL About GfK Future of Retail Convenience Choice Price Experience Conclusion “As we look to the future of retail, we see a move towards

17© GfK 2016

Insights into the shopping behavior of the Connected Consumer

FUTURE OF RETAIL

About GfK

Future of Retail

Convenience

Choice

Price

Experience

Conclusion

About GfKGfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK’s long-standing data science experience. This allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data,enabling its clients to improve their competitive edge and enrich consumers’ experiences and choices.

www.gfk.com GfK. Growth from Knowledge