REimaginging the Retail Store: GlobalShop 2011 Presentation

The Shopper's PerspectiveREimagining

the retail store

GlobalShop: The Retail Solutions Event

Alan Treadgold Director of Retail StrategyLeo Burnett Group

Bryan Gailey Retail Design DirectorArc Worldwide

BEFOREShoppers had to visit a store to make a purchase.

© 2011 Leo Burnett and Arc Worldwide

They shop when they want, where they want, however they choose.

NOW


INCREASINGLYThey are choosing not to go to stores at all.

* Deloitte Survey May, 2010

are purchasing more onlinecompared with a year ago*

33%


so we wanted to study from a shopper's perspective . . .


What makes stores interesting and inviting to shoppers?

How does the use of technology influence and enhance their store visit?


What stores do shoppers like to visit and why?

What are their expectations for personal service within the store?

What role does the store visit play within the overall shopping process?

What role does price play when shopping in a retail store?

How synergistic does the store need to be with other shopping channels?

The Research


Online Survey

June 2010220040 Retail Brands

Quantitative Research

US Adults


Writing the obituary for the retail store is very premature.


However, a new shopper calculus requires retailers to have a NEW MINDSET.

Facebook/newsfeedreadblogs

retailerwebsite

manufacturerwebsite

productreviews

instockorbackorder

completethedeal

pricecompare

productreviews

productavailability

visitstore


The relationship between retailer and shopper has changed.

In the past, the store managed the shopperʼs experience.

Now, the shopper manages her own shopping experience, in-store and beyond.


Itʼs SHOPPERS, not retailers, who are in control of the buying journey.


Access to technology and a recession mindset have prompted shoppers to seize power.


Shoppers arrive at the store armed with information and some have already decided what it is they are going to buy. (or think they have)


! It is crucial for all retailers to understand the changed role of the physical retail store in a multi-channel Internet enabled world.


Shoppers are creating their own retail experiences, using a variety of tools and resources

TV sales

retailer/manufacturer websites

social network mobile

store circulars& catalogs


The web, while often used, is not necessarily preferred.Shoppers still prefer some aspects of the traditional bricks and mortar store.

50%Online alone just doesnʼt work.

17%I would prefer shopping online and never go into a store.

vs

43%I like to touch and feel a product before buying it.

23%A storeʼs website is already a good substitute for going into the store itself.

vs

(Top-3 box agreement scores)


in 3 territories

8 DYNAMICSUnderstanding the shopper

Fixing the basics

Going beyond expectations


Understanding the shopper


Shoppers organize stores in terms of the experiences they want to have, not just the merchandise they want to buy.1

Key Finding


These shopping experiences can be mapped by two dimensions.

Retailer Guided

Buying

Self Directed

Browsing


Y: Are they in store to 'close the sale' or to look around, gather ideas, immerse in a theme, and maybe purchase something?

X: Are they handling their experience more or less on their own, in a self-directed manner or are they letting the store play a role guiding the purchase process?

Retailer Guided

Buying

Self Directed

Browsing

Strong valueConvenience

Environment

Effective service

Technology empowered

Friendly

Right brand and products

Me tailing

Returns

Cell phone reasonable

Experimental

Engaging ideas

Physical over virtualRetailIntegration

Shoppers organize their retail world by these two dimensions as well.

They group stores together, not by merchandise category, but by how they, as shoppers, interact with the store.


A shopper-centric perspective is required for retailers to better deliver on the

experiences desired by their shoppers.


The way that shoppers cluster stores isvery different from the way that retailers do.


Low prices important, self service can help. Convenience and good return policies. Store environment lacks inspiration. Service can be lackluster. In-store experience doesn't offer much that consumers can't find online.

Price Led

Extraordinary in-store experience. Fun for consumers, even if they don't buy. Don't tend to sell wide array of products. Prices thought to be high.

All About Atmosphere

Good value on what they sell. interesting place to shop, but not as much so as other clusters. Frequently add new merchandise. Shoppers take their time. Offer a more seamless online and offline experience.

Price Plus

Convenient locations. Get what you need in time. May include self-service. Don't tend to have good return policies. Don't offer inspiration, but doesn't matter. High penetration and frequency in physical store. Low web penetration.

All About Ease

A bit experimental. Have greater product selection than other cluster. Appealing displays. Offer fresh ideas and unique products.

Ideas Led

Convenient locations with decent service. knowledgeable sales people. Lack interesting environment. Seen as pick-up places.

Efficient Errands

Shoppers distinguish 6 types of stores.


Retailer Guided

Buying

Self Directed

Browsing

How shoppers cluster stores.

All About EasePrice Plus

Efficient Errands

Price Led

Ideas Led



Retailer Guided

Buying

Self Directed

Browsing

Neighborhood market by Walmart

CVSWalmartSears

TargetBest Buy TJ Maxx

Price Led



Best Buy: Price Led poster child

7-Eleven: All About Ease poster child

Retailer Guided

Buying

Self Directed

Browsing

7 Eleven

McDonaldʼs

Dollar General

Chase Bank Local Grocery Store

All About Ease



Tiffanyʼs: All About Atmosphere poster child

Retailer Guided

Buying

Self Directed

Browsing

Pottery Barn

Bass ProTiffanyʼs

Williams Sonoma

Abercrombie

NordstromBarnes and Noble




Whole Foods: Ideas Led poster child

Whole Foods Trader Joeʼs

Hallmark/Goldcrown

Retailer Guided

Buying

Self Directed

Browsing


Ideas Led


Kohlʼs: Price Plus poster child

CostcoB.B.&B

Kohlʼs

Nike Stores

Price Plus


Retailer Guided

Buying

Self Directed

Browsing


Loweʼs: Efficient Errands poster child

Retailer Guided

Buying

Self Directed

Browsing

Verizon

AutozoneLoweʼs

Home Depot

Walgreens

GAPFoot Locker

Efficient Errands



Understand which retailers your shoppers are really judging you against.1

Implication


Itʼs not just about price, shoppers want everything else too.

2Key Finding


Price is important.

36% Price is the most important consideration in choosing a brand.

And so are quality and experience.

42% The most important thing when shopping is to find high quality products.

When it comes to stores, itʼs important to me to go to those that have high quality products and excellent service. 42%


Price competitiveness gets you an invitation to the party, but price alone wonʼt get you a dance.2

Implication


Fixing the basics


3Shoppers are disappointed in retailersʼ inability to deliver the basics.

Key Finding


Has a consistent online and in-store return policy

Convenient location

Store I can trust

Items in stock

Has good value for the money

Right mix of products

Makes shopping quick and easy

Good range of prices on the items I shop for there

Prompt service

Keeps prices lower than the competition

61%

59%

59%

56%

55%

55%

53%

53%

52%

52%

54%

Great selection of products

What matters most to shoppers: Importance




Convenient location

Store I can trust

Items in stock





Prompt service


61%

59%

59%

56%

55%

55%

53%

53%

52%

52%

54%


What matters most to shoppers:


Convenient location


Store I can trust

Items in stock





Prompt service


47%

47%

50%

40%

39%

43%

43%

40%

38%

33%

42%

Delivery



Successful retailers are making sure they are delivering the basics their shoppers are demanding.


It may not be sexy, but thereʼs work to do – and profit to be made – from making the basics better.3

Implication


4Key Finding Shoppers are largely unimpressed with in-store

service. Itʼs not just the delivery thatʼs weak – itʼs the service proposition itself.


New school(Relevance)

Shoppers want more.

Old school(Acknowledgement)


! And stores can help shoppers with all of these, often without relying on store associates.

They want real help to make better informed decisions.

40% They want help when they need it, but to be acknowledged and left alone when they donʼt

49% They expect service personnel who are insightful and well informed

They donʼt want to wait 52%

46% They want easily accessible information in the store


Shoppers donʼt want to wait on service

Apple store© 2011 Leo Burnett and Arc Worldwide

Shoppers want good information


Shoppers want help when they need it, but to be acknowledged and then left alone when they donʼt


Shoppers only need to interact with a person if that person is

going to add value to the transaction.

Sales associate at Shibuya 109, Tokyo


Reframe service from staff ʻjust being thereʼ to service being truly effective and delivered by both staff and the store environment. 4

Implication


Shoppers are promiscuous. They shop around. Their loyalty has to be earned every visit, not just bought with a card in their wallet.

5Key Finding


Loyalty to retailers is, for the most part, notably weak.

52% 48%Definitely prefer to go to this store or a competing store.

Donʼt have a strong preference.

Use the scale below to indicate how much you feel you need to go to that particular store or venue versus a competing store or venue.Q Loyalty is limited

even among a storeʼs current shoppers.


Loyalty programs can emphasize distinction and differentiation, setting you apart from your competition.The data collected can be analyzed to help retailers speak more distinctly to their shopper segments about what is important to that shopper . . . and itʼs often not just about price!


Loyalty can be strengthened by a personalized experience.

At Samʼs Club, shoppers print out a list of personalized special offers, and the check-out register recognizes them and rings up the discounted price. No coupon clipping required!


Loyalty programs are great, but

what really keeps a shopper interested is a new and fresh experience each time they visit.


Loyalty has to be truly earned by understanding and delivering on the expectations of shoppers. 5

Implication


Eataly, NYC

Shoppers look to stores to deliver what the web cannot

6Key Finding


The store performs better than the web in some functional and emotional ways.

51% Getting it

Returning it 47% Saving time 42%

32% Stimulating or entertaining me

Learning about brands or products 26% Saving money 25%

The physical store is better than their website for… Average store

Stores excel at being pick-up points and time savers.

They do relatively poorly when it comes to stimulation and learning.


But physical stores can offer experiences beyond

the reach of the web


Stores can become meeting and gathering places for like-minded enthusiasts.


Stores can offer learning and participation opportunities.


Dial up the attributes where stores can by creating more engaging, entertaining and ideas-oriented environments.6

Implication


Technology for technologyʼs sake is a low priority for shoppers and often undermines the shopperʼs relationship with the store.7

Key Finding


Retailer Guided

Buying

Self Directed

Browsing

Quick and easy self-service checkout

Welcomes, tries to enhance my cell phone use during in-store shopping

Kind of store where I go on their website on my cell phone while I'm in the store

A place to go pick up something I've already learned about online

Makes it easier to order online & pick-up products at the store

Has put lots of technology in the store to improve my information access

Allows me to shop online but return in-store

Itʼs easy to move between their website and store - a lot of synergy between them

A store I can trustI can learn more about the merchandise in the actual store than online or catalog

Has figured out how much or little interaction I want with the sales staff & has gotten it right

When I leave the store, I always feel good - like I got something out of the experience above & beyond any products I may have purchased

The kind of store where I go there more because I want to than because i have to

In-store technologies are being used to deliver on basics, but at the expense of emotional engagement between the shopper and the retailer.

Technology for efficiency.

Technology can enhance a shopperʼs relationship with the store if it provokes a positive, emotional response.

Technology to deliver more enriching, engaging experiences.


Technology can be used to help establish trust.


Technology can be used to reinforce the breadth of selection.

Adidas virtual footwear wall features 4000 styles of shoes, and links to Twitter and Facebook.


Technology can help ease shopper pain points.Kohlʼs in-store kiosks will check stock inventory in other locations and ship product directly to shoppers, free of charge.


Use technologies in store and in the hands of shoppers to enhance the relationship between retailer and shopper, not undermine it.7

Implication


Physical stores need to be made relevant with the Internet. Itʼs not stores or Internet, itʼs stores and Internet.

+8Key Finding


The shopping journey (toothbrush shopping)

Dentist recommends a power toothbrush and offers

purchase options.


®

®

The shopping journey (toothbrush shopping)

$

Loves her new toothbrush!


Doll hair salon

Web offer

Diningfor dolls

Movie/theater

Books

Apparel for kids and dolls


Web offer

In-storesale

Productemail

Recycleemail

In-storesupport


Shoppers want seamless integration between the physical and the virtual.

Make sure that every touchpoint is speaking in the same voice, making the same offers, and projecting the same emotional experience.8

Implication


To conclude


in 3 territories

8 DYNAMICSUnderstanding the shopper

Fixing the basics



...that retailers must understand in order to succeed.

Shoppers still want stores…


retailers must be willing to REimagine and reinvent to stay relevant

in the new shopper landscape.

… but


The paradox in the 21st century retailing: Playing safe might just be the riskiest plan of all.


Zara

Selfridge & Co.

Zara

Apple

IKEA

Victoriaʼs Secret

Winning retailers break conventions...


and become more memorable and meaningful to their shoppers.


...their in-store experience.

...their own service proposition.

...their shoppersʼ expectations.

...their use of technology.

...their integration of physical and web experience.

HOW?Winning stores are

always REimagining...


Thank you and good luck.Alan TreadgoldLeo Burnett London+44(0)20 70711140

Bryan GaileyArc Worldwide Chicago312 220 5959

REimaginging the Retail Store: GlobalShop 2011 Presentation

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