1. BUY!SALE50%OFFGREAT DEALS!SALESPEND!!! SPEND!!!$$$$$$$$$$$$$SHOPRe:Store – Redefining RetailRegaining the emotional higher ground at retailredefining retail
2. Hotspex delivers provocative marketing researchinsights that help clients confidently make informed,inspired decisions. It differentiates itself from otherresearch companies in three ways:• Consumer engagement• Client engagement• Business focused analysisThe meaningful, actionable insights that result fromour work allow our clients – some of the worldsleading brands – to develop better strategies,innovations and executions.
3. Shikatani Lacroix is a leading branding and design firmlocated in Toronto, Canada.The company wins commissions from all around the world,across CPG, retail and service industries, helping clientsachieve success within their operating markets.It does this by enabling its clients’ brands to better connectwith their consumers through a variety of core servicesincluding corporate identity and communication, brandexperience design, packaging, naming and product design.
4. In 2009, Shikatani Lacroix launched Design Lounge, awebsite devoted to thought leadership and brandinginnovation.Since its inception, the website has hosted a wide variety ofthought provoking video webinars and white papers on allthings brand related. In 2011, Design Lounge launched itsfirst groundbreaking study on the role of packaging in anonline world.
5. Shifting power structure
6. Who will win this tug of war?
7. •Cross-Shopping Behavior: Howconsumers utilize the onlineand retail environments•The Emotional Content ofShopping: Online vs. offline•Brand Profiles•The Ideal Shopping Experience:What consumers want fromretailers online and offline
11. Online easyShoppers consider themselves veryknowledgeable and comfortable withcrossover shopping50% to 70% browse in the store andthen buy online70%Browse then shoponline30%Browse and shop instore
12. Online shopping on growth pathShoppers’ online shopping activity will continue to grow. In the nextfive to 10 years, about half of their shopping activity will be onlinerather than in storeLegendHOUSEHOLDGOODS/MASSMERCHANDISEPERSONAL CARE/COSMETICS/MEDICATIONSBOOKS/MAGAZINES/MEDIACLOTHING/FASHIONELECTRONICS/APPLIANCESredefining retail
13. Online shopping on growth path% of time spent shopping ONLINErather than retail5-10 yearsin the futurePresent11%10%19%15%24%29%28%46%30%42%redefining retail0-25%26-50%51-75%76-100%L E G E N D
14. Almost half of shoppers areusing their mobile phones tocheck prices while in store inthe electronics category andabout 40% in other categoriesSmartphone smart pricing
15. Retail sales erosionPotential retail sales leakage is about 15% of all browsers goingto an online retailer and specifically 7% going to Amazon.com
16. Browse store and buy onlineShopped for Category in StoreBut Bought Online(%)NET Electronics 24DVD/movies 5CD/music 3NET Clothing & Accessories 17Shoes 3Other clothing mentions 3Books 14Specific Store or WebsiteName11NET Personal Care 7NET Houseware/FurnitureAppliances6NET Cosmetics/Perfume 4Cleaning supplies 3Other 4Dont know/refused 3Store (%)Walmart 15Best Buy 11Barnes and Noble 7Target 6Amazon 5Macys 4Dont know/refused 2None 3Browseda store ……but boughtonlineWebsite (%)Amazon 46Walmart 8eBay 5Other clothing/apparelwebsites3Other website mentions 4Don’t know/refused 3None/nowhere/I didnot buy online3• Browse stores and buy online behavior most common in electronics• Walmart and Best Buy lead in stores browsed but then purchasesmade online• Amazon clearly dominates online purchases
17. Buying from retailer websiteBuying from a traditional retailer website (%)MassMerchandiseDrugstoreBooks/Magazines/MediaClothing/FashionElectronics/AppliancesA B C D En=211 n=199 n=202 n=203 n=205Very Often 26 24 30 2938ABSometimes 45 42 39 48 45Rarely 18E 18 18E 15 11Never 11 17DE 12E 8 670 66 69 76B82ABCBuying from a traditional retailer’s website appears to bequite important, particularly to those purchasingelectronics/appliances11%Never16%Rarely44%Sometimes29%Very Often
18. Non-retailer websitesWebsitesMassMerchandisen=157(%)Amazon 45eBay 13Walmart 9Overstock.com 4Target 4WebsitesDrugstoren=151(%)Amazon 42eBay 7Drugstore.com 7Walmart 7Target 7CVS 3Sephora 3Websites(Books/Magazines/Media)n=141(%)Amazon 58eBay 16Barnes and Noble 9Walmart 4Websites(Clothing/Fashion)n=145(%)Amazon 36eBay 13Macy’s 6Walmart 5JC Penney 5Target 4Overstock.com 3Kohl’s 3Websites(Electronics/Appliances)n=128(%)Amazon 48eBay 20Best Buy 6Newegg 5Target 5Walmart 5• Amazon has a very strong lead across all categories butparticularly for books/magazines• eBay ranks a distant second
19. Reasons for going onlineReasons for Going Online (%)NET Prices 60Value/price: online is cheaper 49Offers special deals or promotions 8Compare prices 4Check prices 2NET Selection 25Variety/carries the brands I like 14SUBNET Had What I Wanted/Needed 11Had what I wanted/needed 3In stock 3Had my size/more sizes 3NET Easier/Faster 14So easy - click and buy 11Fast/ faster 3NET Convenient 12Convenience 8I can do it all from home 2I can shop anytime I like 2NET Shipping 10Free shipping 7Delivery/home delivery 2NET Out of Stock/Unavailable in Store 6Not available/couldnt find in store 4NET Other Positive Attributes 6Comparison shop 3NET Information/Research 4NET Gift Card/Credit 3Other 4Dont know/none/refused 4• Price is the overridingreason for purchasing onlineversus in store• Selection is a distantsecond; consumers sayonline provides greatervariety or is more likely toinclude exactly what isneeded
20. Would have bought at store if …Would Have Bought at Store If … (%)A guarantee that prices shown will match onlineretailers45Offer a selection not available online 37Ability to quickly price compare with online prices 31Reward points/store loyalty program 27Free shipping and installation 23Ability to shop online at the retailers site while inthe store19An in-store guarantee/extended warranty offeredby retailer15A retailer app that allows me to scan and pricecompare all competitor prices13Better financing on big-ticket items 8Concierge service 5Seminars on how to best use the product 5Other 11If notnever…(88%)Browse in store but buy online (%)15%Very Often29%Rarely12%Never44%SometimesMatches online prices, offers uniqueitems, introduces loyalty programs,makes it easy to compare retail toonline pricing, and offers freeshipping and installation
21. Reasons for not buying at storeReasons for Not Buying at Store (%)NET Prices 49Value/price: online is cheaper 45Offers special deals or promotions 3NET Limited Selection 30SUBNET Out of Stock/Unavailable 22Not available/couldnt find in store 12Not in stock/out of stock (in store) 7Didnt have my size (in store) 4Less/limited selection 9NET Having To Travel 5Driving/did not want to drive/cost of gas 3NET People In Store 3Bad customer service/sales staff 3Other reasons for not shopping in store 7NET Less Crowded 6I don’t like crowded malls 5NET Selection 5Had what I wanted/needed 3Dont know/none/refused 7• Price and selection are also thekey reasons for not making apurchase at a retail outlet• Almost one in four specificallysay they turn to onlineshopping when the item theywant is not available via retailoutlets
22. Consumer knowledgeIf very/somewhat knowledgeable (95%)…% just as knowledgeable if not morethan salespersonMassMerchandise DrugstoreBooks/ Mags/MediaClothing/FashionElectronics/AppliancesA B C D En=207 n=187 n=191 n=188 n=197Very Often 40 37 38 43 39Sometimes 53 50 51 46 46Rarely 6 11 10 9 13ANever 1 2 1 2 293BE87 89 89 852%Never10%Rarely49%Sometimes39%OftenApproximately nine out of ten consumers say they are asknowledgeable as the salespeople they deal with
23. If cannot find a salespersonTry to find a salespersonKeep shopping/browsingWait for someone to help meBuy item I had in mind anywayLeave the storeOther§1§24§25§27§43§52MassMerchandiseDrugstoreBooks/Magazines/MediaClothing/FashionElectronics/AppliancesA B C D En=56 n=53 n=48* n=59 n=7352 47 48 47 6039 45 50E 53E 3227 30 23 25 3021 26 27 34E 1629 23 17 24 25- - - 5 1If often/sometimes rely on salesperson (89%) …If cannot find a salesperson (%)Overall, one in four will leave a store if they cannot find asalesperson to help them and a similar percentage willsimply buy the item
24. Owning the emotional connection
25. Cracking the code of emotionsWhile research techniques to measure “emotions” continue todevelop (brain scanning, etc.), Hotspex has invested four years indeveloping a comprehensive online measurement approach, whicheffectively captures how people “feel” about, and react emotionallyto, brands• This methodology is based on a comprehensive list of 85 emotions and 182 personalities• We have proven conclusively across over 34 categories and over 101 brands that, onaverage, “soft” drivers account for half of all buying behaviorHow people feelabout brands, newproduct concepts,and packages.The personality that is projectedoutwards by brands, newproduct concepts, and packages.
26. Defining the emotional regionsADULTCHILDOppositeZones HaveOpposingRelationshipsUnderstanding the emotional regions redefining retail“LIKE YOU”RIGIDUNDESIRABLEARROGANTUNRELIABLEDISHONESTINCOMPETENTBORINGDANGEROUSADULT (SERIOUS)SPEX(CONSERVATIVE)CHALLENGING(MALE)CHILD (FRIENDLY, CHEERFUL)HOT(REBELLIOUS)NURTURING(FEMALE)PASSIVE(INTROVERTED,HOME)ACTIVE(EXTROVERTED)SHOWOFFNAUGHTYAUTHORITARIANDEMANDING OUTDATEDORDINARYIMPRACTICALWEAKEXCITINGDESIRABLECAPABLEINSPIRINGTRUSTWORTHYFAMILIARFRIENDLYNUTURINGBrown: TheCompetent ZoneIncludes core emotions ofacceptance and fellowship,as well as feeling informedand self-confidentPurple: The Friendly ZoneIs associated withemotions related to likingBlue: The Nurturing ZoneIs linked to feelings ofhuman warmth such aslove, caring, andcompassionRed: The Fun ZoneIs associated withemotions such asenjoyment, amusement,and desireGreen: TheTrustworthy ZoneIs grounded in emotionssuch as trust, loyalty, andrespectOrange: The Inspiring orLeadership ZoneIs based on feeling inspiredand optimisticGrey: The Familiar ZoneIs home to feelings ofsatisfaction and gratitudeYellow: TheInteresting ZoneIs built on the core emotionof Interest as well asfeelings of amazement andsurprise, and being aliveand energized
27. Emoti – Mass Merchandise (Retail vs Online)
28. Emoti – Drugstore (Retail vs Online)
29. Emoti – Books (Retail vs Online)
30. Emoti – Clothing/Fashion (Retail vs Online)
31. Emoti – Electronics (Retail vs Online)
32. Shift in emotional powerAverage core emotional connectionAverage core emotional connection In Store OnlineMass MerchandiseDriven by the emotions of optimism and trust, the emotional connection with onlineshopping is stronger than in-store shopping for the mass – merchandise category 46 55DrugstoreOnline shopping is generating a great deal of interest and connection, as well asoptimism, indicating a strong opportunity for growth and development of the onlinedrugstore category.41 55Books & MagazinesEmotional connection with online book shopping is undoubtedly due to Amazon.However, in-store shopping for books is the high core emotional connection of allcategories due to continued warmth and connection. Optimism is much lower for in-store than online.61 67Clothing & FashionIn the clothing and fashion category, the gap between online and in-store emotionalconnection is relatively narrow. Optimism and a feeling of interest drive down the in-store emotional response.51 58ElectronicsIn electronics and appliances, the emotions associated with online shopping are muchstronger than for the in-store shopping experience. Pleasure and trust account for thehigher online emotional connection.46 62Online clearly has a stronger emotional connection with customers inthe majority of categories
33. 80%70%60%50%40%In storeOnlineredefining retailThe emotional connection:In store vs. online
34. Drivers of consumer choiceStated/ClaimedImportanceTABLESTAKESThe cost of entry into a category,these attributes are important butnot proven to be a strong driverof choice.Claimed to be important, andproven to significantly influencechoice.Notacknowledgedto be veryimportant, butproven tosignificantlyinfluencechoice.Neither claimed nor proven tobe important.Derived Impact on Positive Emotional ScoreKEYDRIVERSUNIMPORTANT HIDDENDRIVERSzzNEGATIVEDRIVERSNegative attributes do notappear in driver maps, butthey are shown in theHotspex Heatmaps.Drivers areplotted against adependent variable(Emotional score) inorder to calculate aderived impact score.
35. Amazon.com key driversQuick purchase processValue / priceI am already onlineI am sure of my decisionI know it matches my needsI trust the retailerI have always gone to thisretailerPrice comparison is easyOffers special deals orpromotionsTheir products are not availablein storesNice looking / attractive siteOne stop shoppingMy friends use the siteFeels comfortable to meI am confident in the quality I getThey are leaders in the fieldAlready set up for onlinepurchasing / have an accountI can do it all from homeSo easy – click and buyI don’t like crowded mallsI can shop anytime I likeQuality is guaranteed – I don’tneed to see it / touch itVariety /carries the brands I likePrevious experience with thewebsite10%20%30%40%50%60%70%80%0.150 0.200 0.250 0.300 0.350 0.400 0.450 0.500StatedImportance(Association%)Derived ImpactElectronics Category - Amazon.com
36. Brand persona – ElectronicsBest Buy (retail)Amazon.com(online)CompetentReliableSuccessfulInterestingCoolLikeableEasy-GoingDown-to-Earth37Like Me(25)35242736283242CompetentReliableSuccessfulInterestingLikeableCoolLikeableEasy-GoingDown-to-Earth6566535364566467Like Me(59)
37. Emotional connections•In the mass merchandise/household goods sector, Costco is thesatisfaction and emotional leader, closely followed by Target.Walmart has strong satisfaction levels, but much lower emotionalvalence•Walmart manages to have the highest overall online relationshipscore for the category, but it lags the in-store experience andother categories significantly•Target scores well with many positive personality attributes, and isparticularly likeable. Its online experience is a bit more polarizing,with some negativity apparent around reliability
38. Emotional connections•eBay’s brand personality has many positive attributes but alsosome minor negatives around reliability and being “like you”•While value and price are the main factors for shopping atWalmart or Target, past experience and trust are more favorablefor Target than Walmart•In the online segment, eBay challenges the traditional retailerswith much easier price comparison
39. The ideal shopping experienceOne of our proprietary tools allows respondents to project theirsubjective or deep-rooted feelings and beliefs through an image. Forthis project we used a standardized library of 220 contemporaryimages. Respondents were asked to select pictures that describe:Step 1:Pick theFinalistsRespondents were asked to selectup to six images as “finalists.”Step 2:Pick the“Winner”Respondents were then asked toselect the one photo that bestdepicts the experience.Step 3:ExplainChoiceFinally, respondents wereasked to explain why theychose this photo.
40. The ideal shopping experienceIn Store OnlineMass Merchandise19% Relaxing12% Good Deals20% Relaxing10% Good DealsDrugstore23% Relaxing17% Good Deals23% Relaxing13% Good DealsBooks & Magazines31% Relaxing8% Variety and Discovery23% Relaxing11% Fast, SimpleClothing & Fashion13% Relaxing10% Exciting15% Relaxing9% Good DealsElectronics20% Good Deals14% Relaxing18% Relaxing15% Good Deals
41. Accounting for theexperiential factors and theoverall emotional connectionwith a retailer, either onlineor in store:•Satisfaction•Recommendationpotential•Net positive or negativeemotional reaction to aretail brand
42. Store indexes – Top 20 redefining retail75625454515150494645444443424240393938amazon.comCostcoapple.com* (Bookstore)TargetCVSKohlsMacysapple.com* (Electronics/Appliances)ebay.com (Electronics/Appliances)WalmartMarshallsllbean.com*Walgreenswalgreens.comwalmart.comSams ClubTJ Maxxthegap.com*ebay.com (Mass Merchandiser)Amazon.com has the highest overallrelationship index for all retailers. The brandhas unique strength in emotional responseareas like trust and success, and has verystrong satisfaction ratings.Costco also has strong emotional valence andhigh satisfaction ratings, particularly incomparison to more traditional retailers.
43. Store indexes – Bottom 20 redefining retail37373736363634333230302926252523161677Barnes & Noblemacys.comJC Pennytarget.comThe Gap**Caution: Low base size. Base varies by retailer (total U.S. = 1020)ebay.com (Bookstore)Local/independent bookstore*bestbuy.comBorders*jcpenny.combarnesandnoble.comBest Buydrugstore.com*Radio Shackcvs.comlandsend.com*Searskmart.comsears.comKmartOnline retail store properties(macys.com, target.com) tended tohave lower relationship indexes thanthe traditional retail store. Target.comscores much lower than its retail parent,for example, due to some negativeemotions stemming from reliabilityconcerns.Troubled retailers such as Radio Shack,Sears and Kmart round out the bottomof the American retailer ranking.
44. Where to next?Regaining the emotional connection
45. Consumer feedback redefining retail“Customer service in Canada needsto be improved. Whoever finally getsit right stands to make lots of money.”“Excellent customer service is para-mount.”“No matter the product you’re selling,a customer will only remain loyal if thecustomer service is pleasant.”“Increase the number of cashiers atthe check-out to improvesatisfaction.”“Have more cashiers on.”“Make sure that you have enoughcashiers during the day.”“Have enough check-out repsworking to accommodate line-ups asthey change.”“Educate your staff to be moreknowledgeable about the merchan-dise they are selling.”“You need staff who are reallyknowledgeable, really helpful andnot just mouthing polite words.”“Make sure your staff is both friendlyand knowledgeable about the prod-ucts and services that theyare selling.”“Offer more promotions and cou-pons - will encourage return custom-ers.”“Need more promotions to attractpeople.”“How about some more specials andpromotions?”“You have the selection, but youshould have more sales/specials.”Knowledgeable staffMore cashiers More promotions/discountsBetter customer serviceRetailshopping
46. Consumer feedback redefining retailOnlineshopping“Free shipping to Canada is a must.If it is worth my while to get it fromthe U.S. with free shipping, Ill do it.”“Lower the shipping and handlingprices to be competitive.”“I only shop at sites that offer freeshipping.”“Offer reasonable shipping rates.”“Make it simple to understand andnavigate for those like my mom anddad.”“Keep it simple and uncluttered.”“Keep the layouts simple and haveprices available on the website.”“Keep the site simple. Allow for quickordering of products.”“Have a reward program of somesort, where you can earn pointstoward future purchases.”“Offer some sort of rewards/loyaltyprogram.”“Offer more rewards, make it easierto accumulate. Pay back for loyalty.“Get a points/loyalty program.”“Clean up search results and makepurchase options clearer.”“Improve the search functions so Ican get the short list easier.”“I wish that the search generatorswere not as broad so that I couldsearch very specific items and notsift through all the results.”“Products need to be easyto search.”Loyalty programsKeep it simple Improve search toolLower shipping fees
47. Where to from here?OverallTo effectively compete and regain the emotional connection, retailerswill need:• Unique items such as private label platforms and added-valueservices• New and exciting store designs that engage customers• Stronger customer service• Better loyalty programs• Easy price comparisons between retail and online pricing• Free shipping and installation
48. Where to from here?Mass Merchandise• While retail leakage is more prominent in the electronics and bookscategories, online purchasing of household goods fromAmazon.com is growing• Most mass merchandisers operate their retail sites independent oftheir in-store offering and consumers have concerns over therelevance of the experience. Consumers want a seamless, problem-free environment with good prices and some good deals foroccasional excitement
49. Where to from here?Drugstores• There seems to be a great deal of emotion associated with onlinedrugstores, perhaps due to the low emotional connection felt withtraditional U.S. drugstore chains• Drugstores will need to continue to drive convenience whileshoring up value-added services such as estheticians, out-patientservices, eye care and health advisors
50. Where to from here?Books and Music• Amazon is unquestionably the dominant player in books.iTunes.com and Apple.com may have a challenge in music with theease of use associated with Amazon• While in-shop cafés are commonplace, we wonder about thepotential for book kiosks in cafés to drive demand back to theonline retailer and supplement the calm, relaxing environmentsought after by consumers
51. Where to from here?Clothing/Fashion• Having simultaneous attributes of relaxing and exciting are a tallorder for “retail choreography” but excitement brings consumersinto the store, and a relaxing relationship encourages spending• Deal-driven retailers such as Kohl’s and Marshalls (Winners inCanada) have strong relationship ratings due to high satisfaction,despite some concerns over reliability• Overall, Macy’s seems to maintain a strong relationship basewithout consistently compromising on price• Retail leakage concerns are growing in this category as well, andlow ratings for online brand properties will provide opportunity forAmazon in this category if not addressed
52. Where to from here?Electronics• Amazon is also the dominant player in electronics both in the U.S.and Canada. Negative perceptions have significant impact onchains like Best Buy and Future Shop rankings, and seem to forcethem to compete on deals with Amazon• Retailers will need to offer unique items, introduce loyaltyprograms, make it easy to compare retail to online pricing, andoffer free shipping and installation• Importance of private label will rise in this sector to providegreater differentiation