the future of shopping | vol 5 2 Introduction: 21st-Centur y Retail 3 Four Imperatives for the Retail Brand of the Future23 The Internet and the Rise of the Smart Shopper
2 “I am the world’s worst salesman; therefore, I must make it easy for people to buy.” –F.W. Woolworth (1852–1919)→ INTRODUCTION: 21st-Century Retail Frank Winf ield Woolworth revolutionized retail in the 20th century, bringing goods out from behind the counter and into the open, where customers were free to inspect and touch the merchandise prior to purchase. His f ive-and-dime stores were the precursor to today’s big-box discounters, and, like Wal-Mart today, he was accused of driving local merchants out of business by undercutting prices. By its 100th anniversary in 1979, Woolworth’s had And there’s precious little room for missteps, become the largest department store chain in the especially in difficult economic times. It’s little world. Fewer than 20 years later, in 1997, Woolworth’s wonder, then, that the International Council of department stores were no more (though chains Shopping Centers estimates there will be 5,770 using the name continue to operate outside the store closings in the U.S. alone in 2008, up 25 U.S.). Unable to compete with the new generation of percent from 2007. discount retailers, F.W. Woolworth’s company changed This issue of Prosumer Report explores the future its name to Venator Group and now survives as of the retail category, with an emphasis on how sporting-goods retailer Foot Locker, Inc. Woolworth’s evolving customer demands and behaviors are fall stands as a reminder of just how competitive the changing the shopping experience. The report retail category has become. There are many more draws on findings from Euro RSCG Worldwide’s 2008 formats, more goods (about 180,000 new products a The Future of Shopping study. The online survey year), and more players. At the same time, retailers was conducted by Market Probe International in are facing increasingly demanding stakeholder four markets: the United States (n=700), France groups, ranging from everyday customers to NGOs (n=700), the United Kingdom (n=700), and and influential bloggers. They’re under constant China1 (n=700). Prosumer breakouts are included pressure to deliver innovative new products, services, throughout the report as indicators of where the environments, and experiences. sector will be heading next. 1 Prosumers in the China sample were identified using an algorithm refined for that market. In addition, the Chinese sample in general should be considered as representing the upper tiers of Chinese society rather than the mainstream, given that all respondents completed the survey online. At present, China has an Internet penetration rate of approximately 16 percent, according to the China Internet Network Information Center; that compares with rates of 69.7 percent in the United States, 55 percent in France, and 61 percent in the United Kingdom.
3 Four Imperatives for theRetail Brand of the Future Retail is a constantly evolving category, mutating in response to new ideas, pressures, technologies, and opportunities. Looking back over the centuries, one can see a progression that begins with basic survival and eventually morphs into something far more complex. The most primitive retail customers (and they still exist in every market) are concerned only about survival. Their focus: price and accessibility. Simply put, they look for the cheapest food they can buy at the nearest location. At the next stage, consumers focus on pleasure. In an environment of mass consumption, they want more than just low prices, and they’re making more purchases unrelated to basic needs (e.g., home furnishings, entertainment). These consumers value access to a variety of products and brands, and are looking for great deals with lots of extras. SURVIVAL PLEASURE MISTRUST MINDFULNESS E V O LV I N G A P P R O A C H E S TO C O N S U M P T I O N The next progression is marked by varying levels of on economic circumstance: mistrust–typically coinciding with a period of soft As finances become tighter, an individual growth and collective pessimism. Consumers are may decide considerations other than price more informed and marketing savvy, and they begin are less important. It’s essential, therefore, to question everything from brand promises and to be cognizant of where individual consumers are corporate practices to excess consumption. They along the spectrum at any given time, because that seek a sense of direction and control–to know that will determine how to target –and serve – them most their purchases aren’t made blindly and without effectively. real benefit. And, finally, many consumers are now Taking into account these differing consumer reaching a stage of mindfulness, a point at which attitudes and need states, The Future of Shopping they make the choice to become more responsible has uncovered four actions retailers must take consumers. These more mindful shoppers prefer to stand out and thrive in tomorrow’s ever more simplicity to excess and search for brand partners competitive environment: They must engage that offer a sense of humanism, moral values, and consumers, they must help consumers, they must authenticity. For them, shopping isn’t just about the motivate consumers by creating stronger incentives goods; it’s also about the people who produce and to purchase, and they must target consumers based sell the goods, and the impact one’s purchases have on their individual priorities and preferences. Each on the broader world. of these imperatives would seem to be common While it’s possible to identify large populations of sense, but precious few retailers have managed to “survivors” in undeveloped markets and “mindfuls” address one on a consistent basis, much less all four. in more mature markets, each type of consumer This section of the report showcases retailers– and actually exists in every country. Moreover, any one retail initiatives– that offer a glimpse of the best person may act according to any of these pillars practices of the future. when making different consumption decisions. In one product category, an individual might be focused solely on price, while in another, he or she is looking for something more. This can also change depending
4 What’s a Prosumer? Prosumers are the most inf luential men and women within any market. Empowered by new technologies and improved access to information, they have tipped the scales of power away from manufacturers and retailers, and toward themselves. They are highly knowledgeable and demanding consumers who expect their brand partners to acknowledge their value and treat them accordingly. Prosumers typically make up 15 to 25 percent of any market. Euro RSCG Worldwide has made them an ongoing focus, because, beyond their own economic impact, prosumers influence the brand choices of others. Simply put, what prosumers are doing today, mainstream consumers are likely to be doing six to 18 months from now. KEY PROSUMER TRAITS » Embrace innovation–curious » Are marketing savvy and plugged to try new things, challenges, in to multiple media sources and experiences » Demand top-notch customer service » Keen on new technology and gadgets and access to information » Transport new attitudes, ideas, » Proactively seek to maximize control and behavior–they are “human media” over their lives through information, communication, and technology » Pursue timeless value » Constantly seek information and » Recognize their value as consumers and opinions; eager to share their views expect brand partners to do likewise and experiences with others RETAIL CATEGORIES IN WHICH PROSUMERS YIELD MOST INFLUENCE* » Food and Beverage » Computers and Peripheral Equipment » Home Electronics » Health and Wellness » Travel Services » Beauty and Grooming * Based on responses of “among the first to try” and “my friends come to me for advice.”
5 Imperative 1: Engage In the past few years, engagement has emerged as one of the advertising industry’s favorite buzzwords. The idea, of course, is to get consumers who are beyond the “survival” stage more involved with brands – and even brand creation – rather than simply bombard them with brand messaging. In the retail sector, we’ve identified three primary means of engagement: 1. Create experiences that engage consumers in the brand 2. Provide opportunities for communication and connection 3. Offer endless innovation The Retail Brand of the Future Ian Schrager’s Gramercy Park Hotel in New York City provides conversational currency (RBoF) Of fers More Engaging by giving guests a key to the city’s only private Experiences park, offering a unique experience, a sense of elitism, and something to talk about upon their With so many choices available, mature return home. London’s Selfridges provides plenty consumers are gravitating toward retailers that of cocktail-party fodder with its Wonder Room–a offer a fundamentally different experience or place where shoppers can find such high-end little extras that elevate a mundane activity purchases as a sip of Pétrus Bordeaux ($66), a into something more. Consider the difference first edition of Sylvia Plath’s The Bell Jar, or a between picking up a bar of packaged soap at handcrafted winged saddle from Hermès. a discount store and purchasing a freshly made and cut Figs and Leaves handmade soap at Lush. Indulging the senses is another way to create Everything about the experience is different, engaging experiences. In London, Tiffinbites from the sights and scents to the level of pleasure uses aromas to turn lunchtime into a cultural derived. The former is an errand, while the latter adventure. New York City’s Chop’t uses the sounds is an indulgence. of simple kitchen tasks to draw diners in to the beauty of making something fresh. Consumers There are all sorts of ways to create retail also are being enticed with varying levels of visual experiences that engage and indulge. Single- hypnotism, both inside and outside the store. focus retailers such as Apple Store and Ethel’s Think: the displays at Dylan’s Candy Bar in New Chocolate Lounge offer plenty of scope to York, the edible art created by Pierre Hermé in support and encourage connoisseurship and Paris, and the architectural art that can be seen a deeper brand experience. On Paris’s Champs in Apple’s flagship New York store and Selfridges’s Elysées, Heineken has created an immersive Birmingham location. experience centered on beer in hopes of reaching a more sophisticated crowd than is generally As prosumers gravitate toward more experiential found in sporting arenas and pubs. Culture Bière shopping, a growing number of retailers are combines a sophisticated restaurant, three turning their venues into living, breathing bars, a terrace, a boutique, and a gallery. In lifestyle statements, reflecting the values of China, Beijing’s Lenovo Brand Experience Center both brand and consumer. London’s Microzine provides an interactive experience that immerses store features a constantly changing array of consumers in the brand, offering insights into upscale fashion, art, furniture, and technology, the company and its technological achievements, all geared toward the tastes (and aspirations) while also letting visitors get a taste of the of the readership of such magazines as GQ and digital life in home and business settings. Arena. And in France, SFR’s new store doesn’t just sell mobile phones; it also contains a concert Starbucks was quick to recognize the value of hall, a design-focused restaurant and lounge conversational currency. By providing a glimpse with free Internet access, and the Fashion Room, of the people and processes behind its products, containing trendy phone accessories. the retailer was able to turn coffee into a cultural adventure.
6 Retailer Websites Offer a Reliable Channel to Prosumers In each market surveyed, the vast majority of prosumers – and large percentages of mainstream consumers –already are engaged in communication with retailers online. They visit corporate websites to download coupons, sign up for newsletters and special offers, and enter sweepstakes. Every visit is an opportunity for the retailer to learn more about its customers and discover more compelling ways to keep them involved with the brand. How often do you do each Indicate your involvement of the following? with each online activity FREQUENTLY/SOMET IMES DO IT NOW sign up to receive coupons or request or download coupon other store promos via e-mail or coupon code p: 88% 77% 82% 87% p: 96% 78% 88% 80% 0: 78% 66% 68% 71% 0: 86% 61% 74% 72% FREQUENTLY/SOMET IMES DO IT NOW sign up to receive info/news subscribe to a retailer’s from a retailer or manufacturer e-newsletter p: 77% 71% 82% 81% p: 90% 89% 93% 91% 0: 64% 56% 66% 67% 0: 77% 80% 75% 76% FREQUENTLY/SOMET IMES DO IT NOW go to a company’s website to arrange enter an online sweepstakes for service on a product i own p: 52% 66% 43% 87% p: 75% 93% 38% 68% 0: 36% 45% 33% 67% 0: 70% 89% 33% 52% p: prosumers o: others
7 The RBoF Brings People The RBoF Keeps It Fresh Together Innovation is arguably this century’s most important driver of business and brand growth–in Smart retailers understand brand engagement is every category. In the retail sector, innovation all the more potent if it brings people together, allows companies to develop entirely new creating dialogue and encouraging collaboration business models (e.g., eBay, Netflix), to regain and communal action. It can be as simple as or grow market share (e.g., Apple), and to get providing communal dining spaces, as the noticed. It’s also an increasingly important Wagamama noodle-bar chain does in more than a component of financial performance: According to dozen countries, or as involved as creating cause- Boston Consulting Group, the top 20 percent of focused events, such as Avon’s annual Walk for innovative companies deliver up to four times the Breast Cancer. shareholder return of the bottom 20 percent. Taking a cue from Starbucks, more retailers are Keeping it fresh at retail is what flash goods creating hangouts where customers can get and pop-up stores are all about. By limiting the together around shared interests. Club Libby Lu time most items stay in stores, apparel retailer (U.S.) provides a space for girls ages five to 12 to Zara averages 17 store visits per customer a year, shop, socialize, and even hold birthday parties. compared with an industry average of three to four. In New York, Nike and Foot Locker have teamed Rather than follow the standard pop-up route of up to create a retail/socialization venue called renting empty storefronts, Japan’s UNIQLO drove House of Hoops. The concept store features a two shipping containers around New York City, hardwood basketball half-court with backboard, opening daylong stores in various locations to give Nike Basketball merchandise, and exclusive limited- shoppers a taste of their logo-free apparel. Bonne edition products. Maman, a company that makes jams and preserves, Claseo is billing itself as the world’s first invitation- targeted its next generation of customers during based fashion label. Members receive a limited a two-week appearance in a trendy Parisian number of invitations to share with friends, who neighborhood by offering cartoons introducing must enter a code and make a purchase to become young children to “jam culture.” members themselves. Every item is emblazoned Limited-edition merchandise also drives interest with a unique ID code that allows members to and demand. Carlsberg 900 launched in just a few recognize one another and learn more about people select bars in Stockholm. Nike opened a pop-up of interest by entering the wearer’s code on the store in SoHo for just four days with the sole website. purpose of selling 250 pairs of $250 Zoom LeBron IV NYC basketball shoes. Chinese convenience- store chain KEDI had great success with a promotion that allowed customers to preorder a limited-edition Hello Kitty MP3 player. In the U.K., restaurant chains Itsu and Leon are experimenting with flexible spaces, changing their environments and offerings according to the time of day. In the mornings and afternoons, they cater to a crowd looking for fast, fresh, healthy fare, while in the evenings they behave more like traditional restaurants. Innovative ideas that shake up a category can prove a substantial boon to a retail business. Recent examples include Wal-Mart’s decision to sell hundreds of generic prescription drugs for just $4 apiece, and Bank of America’s Keep the Change® program, which rounds up purchases to the nearest dollar and transfers the difference from the user’s checking account to his or her savings account. The company matches 5 percent of savings, up to $250 a year.
Prosumers Can Make or Break New StoresOnline and off-, prosumers are both early adopters of retailersand influential in drawing others to (or away from) new retailoptions. Prosumers’ more varied retail experience and overallenjoyment of shopping make them the go-to source formainstream consumers.New online storeamong the first to try my friends come to me for advicep: 71% 67% 80% 64% p: 55% 63% 62% 60%0: 44% 43% 41% 49% 0: 30% 34% 24% 57%New brick-and-mortar storeamong the first to try my friends come to me for advicep: 61% 72% 54% 84% p: 44% 51% 32% 53%0: 33% 54% 26% 67% 0: 22% 31% 12% 50%p: prosumers o: others
10 The RBoF Is a Consumer Advocate Today’s more proactive consumers are demanding more from their corporate partners, a reaction to both unprecedented levels of distrust in business and heightened expectations regarding the social role corporations should play. Retailers are responding by providing information and services that position them as consumer advocates and IMPER AT I VE 2: HELP helpmates. In the U.K., Pret A Manger has taken transparency As everyone knows, consumers to new levels: The trendy deli chain is sharing its are more demanding today. With trade secrets by offering its sandwich and soup recipes online, in a cookbook (Food On The Move), so many choices available to them, and printed on packaging and postcards. they’re in a position to choose to Retailers are also taking steps to help their do the bulk of their business with customers make smarter choices. In the U.S., the Hannaford supermarket chain has created the retailers that respect their time, Guiding Stars system, which uses between one and offer value-added conveniences, three stars to let customers see which items in the store have “good,” “better,” and “best” nutritional and conduct business in a way that value. The Meijer supermarket chain has created is both ethical and supportive a Gas Alert program, letting customers sign up for text messages alerting them to upcoming gasoline of customers. price hikes. And France’s Leclerc has launched a website that lets consumers compare prices on more than 2,000 goods in 246 stores (Leclerc stores and those of eight national competitors). As part of their customer-engagement efforts, more retailers are also offering learning opportunities. Apple Stores offer workshops ranging from product instruction to podcast creation and the basics of Web design. Tesco’s website includes expert advice and forums on going “green” at home. Done right, such efforts don’t just push product and strengthen the bond between company and consumer; they also bring customers together in an organic community that adds life to the brand.
11 The RBoF Offers Convenient A growing number of retailers are serving as“editors,” creating collections that carry the Solutions cachet of the retailer’s approval. In the U.K., There are two things most modern-day Topshop prides itself on being an arbiter of “mass consumers feel are in short supply: time and cool,” partnering with some of today’s leading money. Smart retailers are finding ways to save designers to offer fashion and accessories that customers one or both. meet its criteria for cutting-edge style. At the premium end, Priscilla Carluccio (sister of design For many retailers, self-service has become an icon Terence Conran) has opened Few and Far, a economical way to cut down on lines and wait shop of vintage and new merchandise that reflects time. In the U.S. and Canada, consumers spent the owner’s style and taste. She has been quoted in an estimated $525 billion at self-checkout lanes, Vogue as saying nothing is sold at the shop “unless ticketing kiosks, and other self-service machines I think it’s really lovely and would have in 2007, up from $438 billion in 2006, according it myself–that’s my only benchmark.” to IHL Consulting Group. Tesco’s Fresh & Easy stores in the U.S. are 100 percent self-checkout. We’re also seeing more efforts to let shoppers try And VinoVenue automated wine bars let customers before they buy –an option that can work to the select and serve their own wine using prepaid advantage of both parties. Appliance maker Maytag cards. No more time wasted trying to flag down has “tryout” stores in which potential buyers a waiter. can run a load of laundry, bake cookies, etc. To connect with potential customers, Senseo Coffee Efforts to simplify shopping can be seen installed machines at European bus and tram stops, across the category. In the grocery sector, offering waiting passengers a cup of fresh-brewed the U.S.’s Piggly-Wiggly chain is revamping its coffee. And Sleep Number has installed its beds in stores to make shopping more convenient for every guest room at Radisson hotels and resorts customers. Rather than have all dry goods in one throughout the U.S., Canada, and the Caribbean. section and frozen in another, for instance, the stores arrange items based on food types and meal Taking “try before you buy” to an entirely new solutions. So, for example, all fresh, frozen, and level, France’s Celio, a men’s apparel retailer, keeps canned vegetables and fruit are in one location, 17 “fit models” on staff. Ranging in age from 19 to and one-stop stations offer such items as ground 63, these male staff members come in all shapes beef, hamburger buns, marshmallows, potato and sizes, and are available to try on individual chips, and beer for backyard barbecues. garments or entire outfits. That way, female shoppers can be sure they’re buying the right sizes Other retailers are simplifying the shopping for the men in their lives. process through the use of new technologies. Bloomingdale’s department stores have installed interactive mirrors that let shoppers try on virtual outfits and e-mail the images to friends for an instant thumbs-up or thumbs-down. Through its ScanExpress program, France’s Géant Casino lets shoppers scan their groceries as they add them to the cart. The system helps customers keep track of their tabs as they go, removes the need to empty and refill carts at checkout, and offers privacy from cashiers when buying personal items.
13 The RBoF Is Moving Toward Sustainability Results of The Future of Shopping show the extent to which both prosumers and mainstream consumers have become more eco-conscious at retail. Large majorities in each country already purchase environmentally friendly products, and most intend to do so more often in the future. Responding to pressures from environmentalists and everyday consumers – as well as to the financial incentives that come from cutting energy consumption and reducing waste– more retailers, big and small, are taking steps to become environmentally responsible. There’s also a growing understanding that when consumers can choose from among comparable products and retail venues, an eco-friendly come-on may provide the incentive to choose one product – or store – over another. To reduce packaging costs and waste, Wal-Mart now scores its 60,000 worldwide suppliers on their ability to develop eco-packaging and conserve natural resources; the practice has resulted in an estimated corporate savings of $3.4 billion. Beyond that is the enhanced reputation that comes from IMPER AT I VE 3: MOT I VATE associating the much-maligned retailer with a popular cause. For some consumers, motivation Ice-cream maker Ben & Jerry’s brand identity at retail begins and ends with price: has always been tied to social action, including They want to get as much as they environmentalism. Now, with its “Lick Global Warming” campaign, it’s moving beyond monitoring can for the least amount of money. its own carbon footprint to getting consumers But that’s no longer the case for a involved. Among other initiatives, the retailer partnered with the Dave Matthews Band and Save growing number of consumers. Our Environment to launch its One Sweet Whirled As was confirmed by Euro RSCG’s flavor; purchases support the band’s global warming– focused Bama Works Fund. The GE Money The Future of the Corporate Brand Earth Rewards credit card allows customers to study (2008), shoppers around do good effortlessly: GE matches up to 1 percent of credit card purchases with greenhouse gas the world are increasingly taking emissions offsets. Britain’s Marks & Spencer stores into consideration more than how have given consumers an extra push toward eco- responsibility by charging five pence for each bag they personally benefit from the distributed at checkout. Since the initiative began, things they buy. They have come to bag use at M&S has decreased 80 percent. understand the broader impact of Retailers are also putting more effort into communicating sustainability to customers their consumption choices, and they through the use of natural materials, skylights, muted colors, and other nature-based cues. are intent on limiting the damage This is particularly evident in the grocery sector, their purchases inflict on other as more mainstream stores use visual distinctions to carve out niches and stores-within-stores people and on the environment. for organic and natural foods. Retailers are also Though noble intentions don’t taking cues from farmers’ markets, using bushel baskets, handwritten signs, and other “home-style” always translate into noble actions, measures to make their spaces seem less corporate the trend toward more mindful and more local. consumption is clear.
14 Buy environmentally friendly products do it now do it now and likely to do it more in the future p: 85% 92% 82% 89% p: 64% 73% 45% 72% 0: 79% 76% 78% 77% 0: 45% 54% 42% 55% Buy energy-efficient lightbulbs do it now do it now and likely to do it more in the future p: 82% 90% 85% 96% p: 70% 82% 55% 81% 0: 76% 82% 83% 85% 0: 53% 63% 51% 64% Bring reusable bags to the grocery store do it now do it now and likely to do it more in the future p: 50% 98% 76% 75% p: 42% 79% 55% 51% 0: 44% 93% 78% 62% 0: 29% 78% 59% 44% p: prosumers o: others
15 Buy/refuse to buy a product based on the company’s expressed values or political/social activities do it now do it now and likely to do it more in the future p: 71% 68% 47% 79% p: 45% 50% 24% 45% 0: 52% 44% 39% 57% 0: 27% 26% 18% 31% Make purchase decisions based on country of origin do it now do it now and likely to do it more in the future p: 59% 85% 49% 84% p: 40% 59% 16% 49% 0: 50% 52% 41% 78% 0: 25% 30% 18% 45% Avoid buying products from a particular country/region do it now do it now and likely to do it more in the future p: 54% 73% 54% 59% p: 37% 45% 24% 35% 0: 45% 47% 38% 45% 0: 23% 26% 17% 22% I avoid shopping at stores that don’t treat their employees fairly p: 70% 73% 32% 85% 0: 56% 56% 38% 77% I am willing to pay a bit more for a product if a portion of the proceeds goes to a good cause p: 60% 74% 28% 87% 0: 52% 46% 28% 68% p: prosumers o: others
16 The RBoF Has a Purpose Beyond Profit Being more conscientious about consumption Rather than create one-off promotions, choices isn’t just about concern for the environment. more leading retailers are creating long-term Consumers are also looking to vote with their partnerships in support of a particular cause. pocketbooks, supporting those companies (and/or In the U.S., Target stores have supported the countries) that share their values while refusing to Red Cross for more than a decade through donations do business with those that don’t. to relief efforts, employee volunteerism, and sales of a first-aid and emergency-preparedness kit, all of The survey results show significant majorities of which benefit the organization. Nike is a founding prosumers in the U.S., France, and China avoiding partner of ninemillion.org, a U.N. Refugee Agency– retailers that don’t treat their employees fairly and led campaign committed to raising awareness and making purchase decisions based on a company’s funds for education and sports programs for refugee values or socio-political activities. A majority of youth around the world. In Northern Ireland, prosumers in each market avoid buying products from Musgrave Retail Partners (SuperValu and Centra a particular country or region, and many expect to do stores) has partnered with Action Cancer since 2001 so more in the future. to operate a mobile unit offering onboard digital In looking at the country breakdowns, Americans breast screening, and cancer prevention and health are significantly more likely to boycott a particular promotion education and services. company rather than an entire country or region, Getting consumers involved is key to furthering while respondents in the U.K. appear least inclined the cause and further engaging the consumer in to make purchase decisions based on socio-political the brand. Some retailers make it easy for consumers stances or even the treatment of store employees. to participate by creating product lines benefiting French respondents stand out as the most likely to specific causes. The Body Shop’s Daisy line, for factor provenance into purchase decisions. instance, benefits organizations working against A majority of prosumers in each market but domestic violence. In Japan, retailers host charity the U.K. are willing to pay extra for a product if vending machines, which enable users to specify a portion of the proceeds goes to a good cause. which of a number of causes they’d like their A willingness to pay more is particularly evident in purchases to benefit. France and China. From Apple and Toyota to Starbucks and Whole Foods, many of today’s leading retail brands have one thing in common: a strong set of beliefs that are clearly articulated. Such beliefs are all the more compelling at a time when consumers are reconsidering the social role corporations should play – and raising their expectations of corporate conduct and contributions. At retail, brands are expressing shared values through messaging, promotions, and cause-linked activities. Lush stores post a list of brand beliefs, ranging from no testing on animals and making products fresh by hand to “making our mums proud.”As part of an antipoverty initiative, China’s Intime department stores provide financial aid to help needy children complete their compulsory education.
17 IMPER AT I VE 4: TARGET The ability to segment shoppers to uncover new opportunities is crucial to staying competitive in the retail environment now and next. It’s no longer enough to know when and where people are shopping; leading retailers are also tracking how and why people make purchase decisions in order to find new ways to reach and engage them. Messaging that would appeal to a person in “survival” retail mode would be unlikely to capture the attention of someone currently taking a “pleasure” or “mindful” approach to shopping. It’s important to be clear on the motivations behind any behavior. Euro RSCG’s The Future of Shopping study has uncovered a new market segmentation that will help retailers better understand and communicate with their customers and targets. These segmentations, ranging in size from 10 to 35 percent of the population of each market, offer fresh insights into how and why certain individuals shop, the benefits they seek, and the extent to which they are adopting new channels. Savvy retailers will use these segmentations for precision targeting of communications and sales tactics. EXPERIENCERS: The golden grail of the retail sector. Rhapsody, and Nordstrom in the U.S.; Making up between 10 and 15 percent Starbucks, Monoprix, Sephora, and The Body of the population, this group loves the shopping Shop in France; H&M, New Look, and Next in experience and has the knowledge and resources the U.K.; and Sohu, Tesco, Best Buy, IKEA, and to participate fully. Not surprisingly, the group Lenovo in China. skews somewhat young (18–34), upscale, and decidedly female (60 percent). They are the first to try most new products and services, and frequently are called upon for their advice and expertise. Experiencers shop online and off-, wherever they can maximize their enjoyment. Experiencers are a prime target for e-retail; already, 40 percent of them make 20 or more online purchases a year. Favorite retailers2 include Apple Store, Sephora, 2 Sample of favorite stores based on Euro RSCG Brand Momentum data and insights from local Euro RSCG category experts.
20 PLANNERS: Constituting 10 percent to 15 percent of the population, these people possible. Generalist e-retailers such as Amazon. com are a boon to this segment, giving them don’t love to shop, but they’re good at it. a broad array of merchandise and a quick-and- They approach shopping pragmatically, easy shopping experience, including “one click” fully researching purchases online and offering purchases. personal information to marketers Favorite retailers include Lowe’s, CVS, and in exchange for clear benefits. Many influence Walgreens in the U.S.; Lidl, Amazon, and MUJI other shoppers by being early adopters of products in France; MUJI, Amazon, and Tesco in the U.K.; and services, and posting their own reviews. The and Dangdang, Taobao, OCJ.com.cn, and KEDI in group is better educated than average and skews China. somewhat male. MODERN MIDDLERS: The largest group To effectively target Planners in a tough economic (roughly 30–40 percent of the population), climate, retailers must offer something extra– Modern Middlers represent the core values added value that gives these men and women more in each country we studied. Their scores on most reason to buy than abstain. One way to do this demographics and attitudes were average, and is by offering products that are environmentally they neither love shopping nor seek to avoid it. In responsible or by adding a socially conscious a testament to how mainstream online shopping element to the purchase. More than any of the has become, these people have made the Internet other identified groups, Planners aspire to an important part of their shopping process (even conscientious consumption. when they plan to make the purchase at a brick- Favorite retailers include Whole Foods, and-mortar retailer). They seek out customer Trader Joe’s, and Barnes & Noble in the U.S.; eBay, reviews online when making purchase decisions Franprix, and Cdiscount in France; ASDA, Marks and consider shopping a game in which whoever & Spencer, John Lewis, and Waitrose in the U.K.; gets the best price for the least amount of effort and eBay, H&M, Li-Ning, IKEA, and China Mobile wins. in China. Like Planners, Modern Middlers are open to ESCAPE ARTISTS: Like Experiencers, this group environmentally focused come-ons and are even loves to shop, but they’re more focused on fashion willing to spend a bit extra (1–5 percent) for and grooming–categories in which they are often products that are eco-friendly. While always happy innovators. Somewhat less well educated and less to score a great deal, this group now expects more upscale than the overall respondent base, this than just discount pricing. group views shopping as a bit of an escape from Favorite retailers include Target and Wal-Mart in boredom and the ordinary. Representing roughly the U.S.; Decathlon, IKEA, Leclerc, and Celio in 15 percent of the population, Escape Artists skew France; B&Q and M&S in the U.K.; and HaoYouDuo, younger and female (75 percent). Gome, Suning, and Yole in China. Escape Artists are rejecting more expensive STRAGGLERS: Older and with fewer economic department stores in favor of discount-oriented resources, Stragglers do not like to shop and have general merchandisers. Above-average Internet resisted the Internet. This is a group that’s best shoppers, they look to online retailers to create targeted by such traditional price-focused tactics engaging experiences. They enjoy being part as discount coupons, two-for-ones, and sales. of online communities of customers who share opinions and information about companies and Favorite retailers include Dollar Tree, brands – a clear opportunity for fashion brands to Wal-Mart, Kroger, and Home Shopping Network in get on their radar. the U.S.; C&A, Conforama, Intermarché, and La Halle in France; Ocado, Superdrug, and Netto in Favorite retailers include Whole Foods, the U.K.; and Dangdang, Taobao, KEDI, and Trader Joe’s, IKEA, Sephora, Old Navy, China Mobile in China. H&M, and American Eagle in the U.S.; Fnac, Nature et Decouverte, L’Occitane, and Carrefour in France; Boots and B&Q in the U.K.; and KFC, M-zone, and Taobao in China. AVOIDERS: This group hates to shop, regarding it as a major hassle. They are frequent users of the Internet, as it lets them bypass much of the retail shopping experience. Making up roughly 15 percent of the population, Avoiders skew male (60 percent) and are more highly educated than most. Getting Avoiders to part with their cash, especially in difficult economic times, requires making the entire transaction as simple and hassle-free as
21 Prosumers Inhabit Two Segments Where do prosumers fit into this shopper segmentation? They make up the bulk of two important groups: Experiencers and Planners. This is in keeping with our understanding of prosumers as people who both enjoy shopping and are good at it. They approach significant purchases carefully, conducting research and soliciting the opinions of others online. And they serve as a source of advice and recommendations for those less willing to put in the time to fully vet a product or brand prior to purchase. The segmentation also shows two important groupings based on shopping motivations: Experiencers and Escape Artists are both emotional shoppers. They derive more pleasure than average from the act of shopping and scoring a good deal. These are the people who will be most receptive to creative retail experiences and environments, and most open to innovative promotions. At the other Targeting today’s most proactive consumers–the end of the spectrum are the Planners and Avoiders, Experiencers and Planners who make up the both of whom fall into the category of pragmatic prosumer segment–makes sense in any category shoppers. Though Planners approach shopping and economic climate. That’s why they’ve been an with far more interest and gusto than do Avoiders, ongoing focus of study for Euro RSCG since 2002. both groups welcome opportunities to gather This newest study also spotlights the value to be information easily and quickly. When shopping gained by accurately targeting two other groups: online, they’ll favor sites that offer customer the Escape Artists and Avoiders. Together, these reviews, detailed product descriptions, and hassle- two groups make up a quarter of the population free purchases (e.g., free shipping, easy returns, in each market, and they’re more likely than stored customer information). Experiencers and Planners to change their shopping behaviors during economic downturns. These are the customers who could most easily be lost to retailers who don’t take the time to understand their motivations and meet their unique needs. s er pp ho a ls escape artists n io ot em modern middlers experiencers co ns um um ers ers pros avoiders planners stragglers pragmatic shoppers
More than 80% of our food products in France are made in France*. When in France, buy French, and when in Brazil, buy Brazilian. It’s the logical way to shop, especially when it comes to groceries. At Carrefour, most of the foods for our locations around the world are produced locally. And most of our products come from small or midsize businesses. At Carrefour, to be useful every day is to commit to local producers and small and midsize businesses. www.groupecarrefour.com*Percentage of French Carrefour food products produced locally in France.
23 The Internet and the Rise of the Smart Shopper It would be difficult to overstate the impact of the Internet on shopping behaviors and attitudes. Virtually all prosumers and the vast majority of mainstream consumers in each market said the Internet has become an important part of their shopping and their first step In and of itself, online retail has become a key competitor in the category over the past decade. in major purchase decisions. This When asked how often they shop at 15 types response rate is up significantly in of retailers, respondents ranked the Internet among the top five overall, behind only grocery every market compared with data stores, discount chains, super centers, and drugstore chains. In most markets, respondents from Euro RSCG’s 2004 Prosumer are more likely to shop online than in department Pulse® study. The increase in people stores (traditional or discount), warehouse stores, convenience stores, or independently using the Internet to research owned stores and boutiques. Prosumers in the major purchase decisions is up most U.K. actually cited the Internet as their most frequented type of retailer; 74 percent shop online dramatically in France, rising 42 somewhat often/often, up 20 percent since percent among prosumers and 36 the 2004 Prosumer Pulse survey. percent among others in the four Perhaps more important than the migration to online shopping is the impact the Internet is years since the previous study. having on shopping in general. Large majorities in each market indicate they conduct a lot of consumer research online–much of which arguably would not have occurred prior to the Internet. Virtually all consumers and approximately eight in 10 mainstream consumers search for customer reviews while making purchase decisions, and most indicate they will do so even more in the future. Actually writing and posting product/retailer reviews online is an activity in which a majority of prosumers are already involved–testament to their proactive natures. It’s interesting to note that even mainstream consumers are inclined to join an online community of customers who share opinions about companies and brands, suggesting further scope for consumers to band together online as a means of increasing their clout at retail.
24 Even if I don’t make purchases I do lots of [consumer] online, the Internet is a very research online important part of my “shopping” strongly/somewhat agree strongly/somewhat agree p: 88% 70% 84% 88% p: 99% 88% 92% 92% 0: 67% 42% 65% 66% 0: 81% 76% 78% 81% For major purchase decisions, The Internet has had little my first step is usually the Internet to no impact on my shopping strongly/somewhat agree strongly/somewhat agree p: 92% 94% 92% 88% p: 6% 17% 5% 25% 0: 75% 71% 75% 71% 0: 10% 22% 11% 21% I read consumer feedback/reviews I would like to be part of an online before making a purchase community of customers who frequently/sometimes share opinions and information about companies and brands strongly/somewhat agree p: 91% 90% 87% 95% 0: 79% 67% 72% 90% p: 74% 68% 78% 93% 0: 46% 48% 53% 83% I search for customer reviews while making purchase decisions do it now do it now and likely to do it more in the future p: 96% 98% 96% 97% p: 74% 65% 69% 79% 0: 86% 85% 79% 87% 0: 57% 38% 41% 65% I write online product or retailer reviews do it now do it now and likely to do it more in the future p: 71% 72% 55% 80% p: 38% 34% 31% 47% 0: 46% 53% 32% 61% 0: 21% 15% 13% 36% p: prosumers o: others
Search for airline/car rental/hotel information and/or make25 reservations do it now do it now and likely to do it more in the future p: 96% 98% 93% 95% p: 85% 77% 64% 79% 0: 91% 92% 81% 80% 0: 67% 52% 44% 57% Search online for financial information and/or purchase financial products do it now do it now and likely to do it more in the future p: 65% 71% 87% 89% p: 41% 29% 53% 65% 0: 58% 56% 75% 77% 0: 28% 17% 35% 52% How often do you do each of the following? Visit company website Use online coupon in to locate store near me brick-and-mortar store frequently/sometimes frequently/sometimes p: 96% 84% 87% 85% p: 82% 71% 77% 77% 0: 89% 75% 82% 88% 0: 76% 61% 57% 64% Research purchase online Visit retailer with info before visiting store to buy it printed from website frequently/sometimes frequently/sometimes p: 95% 88% 97% 97% p: 79% 92% 69% 72% 0: 89% 82% 82% 88% 0: 70% 76% 56% 61% See product in store and then Return online purchase to wait to order online brick-and-mortar store frequently/sometimes frequently/sometimes p: 62% 73% 72% 87% p: 42% 26% 31% 45% 0: 50% 58% 58% 71% 0: 35% 19% 25% 34% p: prosumers o: others
26 ADVAN TAGE: SHOPPER The Interplay of Online and Off- There are all sorts of ways consumers are using Successful retailers of the future will the Internet to their advantage when shopping. understand – and make full use of – the interplay Price and product/service comparisons are an between online and brick-and-mortar stores. As obvious choice, and nearly all respondents are mainstream consumers become more proactive making use of this capability in at least one retail shoppers, the line is blurring between the virtual sector. Researching purchases in areas that offer and “real” worlds. Even people who intend to a sometimes confusing array of choices and that make purchases at a local store will visit the have potentially serious consequences for wrong company website to research a product prior to choices is particularly prevalent. Two of these purchase, download a discount coupon, and/or categories are Travel/Hospitality and Finance. get directions to the store. It’s also common Nearly all prosumers – and almost as many for people to see a product in a store and then mainstream consumers – turn to the Internet wait to order it online, whether for reasons of when making travel plans. Most indicate they convenience or based on the assumption that a will do so even more in the future. In looking at lower price can be found on the Internet. Retailers the percentages of respondents who search for will want to take steps to ensure the offline-online financial information online, it’s telling that the transition is seamless and that each medium fully gap between U.S. prosumers and mainstream supports the other. consumers has narrowed dramatically since the 2004 study. Four years ago in the U.S., 68 percent of prosumers and 43 percent of others searched for financial information online – a gap of 25 points. In the current study, the gap is just seven percentage points, illustrating the extent to which what used to be leading edge is now mainstream. It’s also worth noting the tremendous jump in online financial research in France and China. In both markets, the prosumer scores rose 33 percent from 2004, while mainstream consumer scores rose 27 percent and 29 percent, respectively.
27 Conclusion: Reaching the Retail Target of the Future The Future of Shopping study makes clear that, in the future, shopping will be more proactive and considered. Consumers will continue to seek new and better ways to research products and services prior to purchase–and smart companies will help them do so. We can expect increased consumer-to-consumer communication via online reviews, recommendations, and consumer blogs, as well as new mechanisms through which individuals can work together to elicit better deals. This study also confirms the shift to more mindful consumption– a trend that will influence how retailers package, present, and promote their goods. In the background of each of these shifts is the Internet, a tool that has forever changed how people shop. Virtual shopping baskets will grow heavier, as e-retailers continue to compete on cost, convenience, and selection. And retailers will continue to find new ways to engage their customers so as to add value to the brand and to the shopping experience, both online and off. With change taking place at such a rapid clip, retailers are well advised to keep an eye on the prosumers in their markets. These men and women continue to offer a glimpse of the future in terms of both how people will shop and what they’ll be buying.
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Prosumer Reports is a series of thought leadership publications by Euro RSCG Worldwide – part of aglobal initiative to share information and insights, including our own proprietary research, across theEuro RSCG network of agencies and client companies.Euro RSCG Worldwide is a leading integrated marketing communications agency and was the firstagency to be named Global Agency of the Year by both Advertising Age and Campaign in the same year.Euro RSCG is made up of 233 offices in 75 countries and provides advertising,marketing, corporatecommunications, and digital and social media solutions to clients, including, Air France, BNP Paribas,Charles Schwab, Citigroup, Danone Group, Heineken USA, IBM, Kraft Foods, Lacoste, L’Oréal, Merck,PSA Peugeot Citroën, Pernod Ricard, Reckitt Benckiser, sanofi-aventis, and Volvo. Headquarteredin New York, Euro RSCG Worldwide is the largest unit of Havas, a world leader in communications(Euronext Paris SA: HAV.PA).For more information about Prosumer Reports, please visit www.prosumer-report.com or contactNaomi Troni, global chief marketing officer, at firstname.lastname@example.org.Follow us on Twitter @prosumer_report