REimagining the retail store Alan Treadgold
Director of Retail Strategy Leo Burnett Group
Bryan Gailey
Retail Design Director Arc Worldwide
GlobalShop: The Retail Solutions Event
The Shopper's Perspective
BEFORE Shoppers had to visit a store to make a purchase.
Š 2011 Leo Burnett and Arc Worldwide
NOW They shop when they want, where they want, however they choose.
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INCREASINGLY They are choosing not to go to stores at all.
33%
are purchasing more online compared with a year ago* * Deloitte Survey May, 2010
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so we wanted to study from a shopper's perspective . . .
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What stores do shoppers like to visit and why? What makes stores interesting and inviting to shoppers? 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? How does the use of technology influence and enhance their store visit? Š 2011 Leo Burnett and Arc Worldwide
The Research
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Quantitative Research
2200 US Adults
40 Retail Brands
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Online Survey
June 2010
Writing the obituary for the retail store is very premature.
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retailer website
product availability
manufacturer website visit
in stock or back order
read blogs
Facebook/ news feed
store
product reviews
product reviews
However, a new shopper calculus requires retailers to have a NEW MINDSET. price compare complete the deal
© 2011 Leo Burnett and Arc Worldwide
The relationship between retailer and shopper has changed.
In the past, the store managed the shopper始s experience.
Now, the shopper manages her own shopping experience, in-store and beyond.
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It始s SHOPPERS, not retailers, who are in control of the buying journey.
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Access to technology and a recession mindset have prompted shoppers to seize power.
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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)
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! Š 2011 Leo Burnett and Arc Worldwide
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
retailer/manufacturer websites social network
store circulars & catalogs
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mobile
TV sales
The web, while often used, is not necessarily preferred. Shoppers still prefer some aspects of the traditional bricks and mortar store.
50%
vs
43%
vs
Online alone just doesn始t work.
I like to touch and feel a product before buying it.
(Top-3 box agreement scores)
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17%
I would prefer shopping online and never go into a store.
23%
A store始s website is already a good substitute for going into the store itself.
8 DYNAMICS in 3 territories
Understanding the shopper
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Fixing the basics
Going beyond expectations
Understanding the shopper
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Key Finding
1 Š 2011 Leo Burnett and Arc Worldwide
Shoppers organize stores in terms of the experiences they want to have, not just the merchandise they want to buy.
These shopping experiences can be mapped by two dimensions. Buying
Y: Are they in store to 'close the sale' or to look around, gather ideas, immerse in a theme, and maybe purchase something?
Retailer Guided
Self Directed
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? Browsing
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Shoppers organize their retail world by these two dimensions as well. Buying
They group stores together, not by merchandise category, but by how they, as shoppers, interact with the store.
Convenience
Strong value
Right brand and products
Technology empowered Cell phone reasonable Friendly Self Directed
Retail
Returns Retailer Guided
Me tailing Physical over virtual
Integration
Effective service Engaging ideas Experimental Environment
Browsing
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A shopper-centric perspective is required for retailers to better deliver on the experiences desired by their shoppers.
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The way that shoppers cluster stores is very different from the way that retailers do.
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Shoppers distinguish 6 types of stores.
Price Led
All About Ease
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.
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 Atmosphere
Ideas 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.
A bit experimental. Have greater product selection than other cluster. Appealing displays. Offer fresh ideas and unique products.
Price Plus
Efficient Errands
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.
Convenient locations with decent service. knowledgeable sales people. Lack interesting environment. Seen as pick-up places.
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How shoppers cluster stores. Buying
Price Led All About Ease
Price Plus Efficient Errands
Retailer Guided
Self Directed
Ideas Led All About Atmosphere
Browsing
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How shoppers cluster stores. Buying
Price Led Neighborhood market by Walmart
CVS
Walmart Sears
Self Directed
Target Best Buy
TJ Maxx
Retailer Guided
Best Buy: Price Led poster child
Browsing
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How shoppers cluster stores. Buying
Dollar General
Chase Bank
Local Grocery Store
All About Ease
Self Directed
Browsing
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7 Eleven
McDonald始s
Retailer Guided
7-Eleven: All About Ease poster child
How shoppers cluster stores. Buying
Self Directed
All About Atmosphere
Retailer Guided
Nordstrom Barnes and Noble Abercrombie Pottery Barn Williams Sonoma Tiffany始s Bass Pro
Browsing
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Tiffany始s: All About Atmosphere poster child
How shoppers cluster stores. Buying
Retailer Guided
Self Directed
Hallmark/Goldcrown Whole Foods
Ideas Led
Browsing
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Trader Joe始s
Whole Foods: Ideas Led poster child
How shoppers cluster stores. Buying
Costco B.B.&B Kohl始s Self Directed
Retailer Guided
Nike Stores
Price Plus
Browsing
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Kohl始s: Price Plus poster child
How shoppers cluster stores. Buying
Walgreens Autozone Lowe始s Verizon Self Directed
Home Depot Foot Locker
GAP
Efficient Errands
Browsing
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Retailer Guided
Lowe始s: Efficient Errands poster child
Implication
1 Š 2011 Leo Burnett and Arc Worldwide
Understand which retailers your shoppers are really judging you against.
Key Finding
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It始s not just about price, shoppers want everything else too.
Price is important. And so are quality and experience.
Price is the most important consideration in choosing a brand.
36%
The most important thing when shopping is to find high quality products.
42%
When it comes to stores, it始s important to me to go to those that have high quality products and excellent service.
42%
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Implication
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Price competitiveness gets you an invitation to the party, but price alone won始t get you a dance.
Fixing the basics
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Key Finding
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Shoppers are disappointed in retailers始 inability to deliver the basics.
What matters most to shoppers: Importance 61%
Convenient location Great selection of products
59%
Store I can trust
59% 56%
Items in stock Has good value for the money
55%
Right mix of products
55%
Has a consistent online and in-store return policy
54%
Makes shopping quick and easy
53%
Good range of prices on the items I shop for there
53%
Prompt service
52%
Keeps prices lower than the competition
52%
(Top-3 box agreement scores)
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What matters most to shoppers: Delivery Convenient location
47%
Great selection of products
47% 40%
Items in stock
42%
Has a consistent online and in-store return policy
43%
Makes shopping quick and easy
40%
Good range of prices on the items I shop for there
38%
Prompt service
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55%
43%
Right mix of products
33%
59% 56%
39%
Has good value for the money
(Top-3 box agreement scores)
59%
50%
Store I can trust
Keeps prices lower than the competition
61%
55% 54% 53% 53% 52% 52%
Successful retailers are making sure they are delivering the basics their shoppers are demanding.
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Implication
3 © 2011 Leo Burnett and Arc Worldwide
It may not be sexy, but thereʼs work to do – and profit to be made – from making the basics better.
Key Finding
4 © 2011 Leo Burnett and Arc Worldwide
Shoppers are largely unimpressed with in-store service. Itʼs not just the delivery thatʼs weak – itʼs the service proposition itself.
Shoppers want more. Old school (Acknowledgement)
New school (Relevance)
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They want real help to make better informed decisions.
46%
They want easily accessible information in the store
They want help when they need it, but to be acknowledged and left alone when they don始t
They expect service personnel who are insightful and well informed
They don始t want to wait
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And stores can help shoppers with all of these, often without relying on store associates.
40% 49% 52%
Shoppers don始t want to wait on service
Apple store 漏 2011 Leo Burnett and Arc Worldwide
Shoppers want good information
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Shoppers want help when they need it, but to be acknowledged and then left alone when they don始t
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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
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Implication
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Reframe service from staff ʻjust being thereʼ to service being truly effective and delivered by both staff and the store environment.
Going beyond expectations
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Key Finding
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Shoppers are promiscuous. They shop around. Their loyalty has to be earned every visit, not just bought with a card in their wallet.
Loyalty to retailers is, for the most part, notably weak.
Q
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.
Loyalty is limited even among a store始s current shoppers.
52% 48%
Definitely prefer to go to this store or a competing store.
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Don始t have a strong preference.
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 it始s often not just about price!
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Loyalty can be strengthened by a personalized experience.
At Sam始s 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!
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Loyalty programs are great, but
what really keeps a shopper interested is a new and fresh experience each time they visit.
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Implication
5 Š 2011 Leo Burnett and Arc Worldwide
Loyalty has to be truly earned by understanding and delivering on the expectations of shoppers.
Key Finding
Eataly, NYC
6 Shoppers look to stores to deliver what the web cannot
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The store performs better than the web in some functional and emotional ways. The physical store is better than their website for‌
Average store
51%
Getting it
47%
Returning it
42%
Saving time
32%
Stimulating or entertaining me
Learning about brands or products
Saving money
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26% 25%
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
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Stores can become meeting and gathering places for like-minded enthusiasts.
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Stores can offer learning and participation opportunities.
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Implication
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Dial up the attributes where stores can by creating more engaging, entertaining and ideas-oriented environments.
Key Finding
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Technology for technology始s sake is a low priority for shoppers and often undermines the shopper始s relationship with the store.
In-store technologies are being used to deliver on basics, but at the expense of emotional engagement between the shopper and the retailer.
Buying
Quick and easy selfservice checkout Welcomes, tries to enhance my cell phone use during in-store shopping
Kind of store where I go on
A place to go pick up something I've already learned about online
their website on my cell phone while I'm in the store
Self Directed
A store I can trust I can learn more about the merchandise
Has put lots of technology in the store to improve my information access
in the actual store than online or catalog
Makes it easier to
Has figured out how much or little
order online & pick-up products at the store
interaction I want with the sales staff & has gotten it right
Allows me to shop online but return in-store
Retailer Guided
When I leave the store, I always
It始s easy to move between
feel good - like I got something out of the experience above & beyond any products I may have purchased
their website and store - a lot of synergy between them
The kind of store where I go there more because I want to than because i have to
Browsing
Technology can enhance a shopper始s relationship with the store if it provokes a positive, emotional response.
Technology for efficiency. Technology to deliver more enriching, engaging experiences.
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Technology can be used to help establish trust.
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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.
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Technology can help ease shopper pain points. Kohl始s in-store kiosks will check stock inventory in other locations and ship product directly to shoppers, free of charge.
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Implication
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Use technologies in store and in the hands of shoppers to enhance the relationship between retailer and shopper, not undermine it.
Key Finding
8 漏 2011 Leo Burnett and Arc Worldwide
Physical stores need to be made relevant with the Internet. It始s not stores or Internet, it始s stores and Internet.
+
The shopping journey (toothbrush shopping)
Dentist recommends a power toothbrush and offers purchase options.
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The shopping journey (toothbrush shopping)
$ ®
®
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Loves her new toothbrush!
Doll hair salon
Dining for dolls
Apparel for kids and dolls
Web offer
Movie/ theater Books
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Product email
In-store support
Web offer In-store sale
Recycle email
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Implication
Shoppers want seamless integration between the physical and the virtual.
8
Make sure that every touchpoint is speaking in the same voice, making the same offers, and projecting the same emotional experience.
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To conclude
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8 DYNAMICS in 3 territories
tand
ders n u t s u m ers that retail
...
Understanding the shopper
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eed. c c u s o t in order
Fixing the basics
Going beyond expectations
Shoppers still want stores‌
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‌ but retailers must be willing to REimagine and reinvent to stay relevant in the new shopper landscape.
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The paradox in the 21st century retailing:
Playing safe might just be the riskiest plan of all.
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Winning retailers break conventions...
IKEA Zara
Victoria始s Secret
Selfridge & Co.
Apple 漏 2011 Leo Burnett and Arc Worldwide
and become more memorable and meaningful to their shoppers.
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...their integration of physical and web experience.
HOW? Winning stores are always REimagining...
...their in-store experience.
...their shoppers始 expectations. ...their own service proposition.
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...their use of technology.
Thank you and good luck. Alan Treadgold Leo Burnett London +44(0)20 70711140
Bryan Gailey Arc Worldwide Chicago 312 220 5959