(MVentur) Download: The young, multi-channel retail customer


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(MVentur) Download: The young, multi-channel retail customer

  1. 1. MVENTUR MEMO Q1 2013: RETAILSELLING SMARTPHONES: RETAILERS NEED TO START WITHTHEIR YOUNG, MULTI-CHANNEL CUSTOMERS“Every sofa, bus, train is a shop front as people are looking at theirphones.” - CEO of mobile phone retailer, Carphone Warehouse, AndrewHarrisonThe future customer journey will be defined by how youth interact withretail today. If retailers want to remain relevant in a multi-channel world,they need to engage these change agents.Retail: it’s not just about the store anymore.The store is a pitstop in the customer’s journey. The modern customer’sjourney isn’t linear like it used to be. Rather than a journey punctuatedby a definable end-point, it’s a process involving multiple consultationswith peers and online reviews. Youth are calling their peers for adviceand checking video reviews on their smartphones while in store.Retailers need to build around youth behavior and redefine how theydeliver this experience.
  2. 2. Meeting customer expectations is no longer enoughPeople don’t buy alone: shopping is a social process.Churn, brand and purchase decisions don’t happen in isolation but asthe result of long term consultation and influence. 66% of youthpurchase handsets based on what their peers not what brands or adagencies said (source The Mobile Youth Report). Similar percentages ofyouth call friends or family to consult about their purchase (source Pew).The end-to-end retail experience plays a crucial role in defining whichbrands youth recommend and ultimately buy.Youth are the key market influencers, shaping demand for new handsetsacross all markets but winning youth means going beyond storedisplays, promotions and advertising. What youth seek today is a retailexperience that exceeds expectations.The difference in satisfaction levels between the best and worst retailersaccording to the ACSI is only a factor of 20% (between Nordstrom &Walmart). Whereas the difference in recommendation between the bestand worst retailers based on NPS data is a factor of 300%. Amazon’sranks #1 in terms of customer experience and NPS because it doesn’tfocus on meeting expectations and satisfying customers but deliveringan experience that exceeds all and drives recommendation.Going Multi-channelRetailers need to redefine their offering from being a destination for thepurchase process to being a partner that supports it.Retailers need to provide a seamless mutlichannel experience thatconnects the online and offline journey. Data shows that while less than15% mobile phones are sold online, 70% of purchases began online(source Carphone Warehouse). Data from the 2013 Mobile Youth Reportshows that 65% of the purchases that started online began on asmartphone. Half of all searches for the iPhone 5 on the CPW site, forexample, were made from the mobile phone.This means that online retail isn’t about selling phones but aboutcurating the customer journey. While 4 mobile phones are sold in thehigh street for every 1 sold online, offline sales are heavily dependant onthe online component.
  3. 3. Traditional offline retailers face a significant online challenge from 2areas:1) Showrooming: The growth in customer showrooming behaviorpopular with youth shows that retailers not geared towards a multi-channel delivery end up becoming the physical front end for onlinecompetitors. Youth often research products in store before takingpurchases online, both to check product reviews and to compare prices.According to latest data from Pew Research, 50% youth match pricesonline, and more look up reviews on their mobile phone.2) Upstart Advantage: New entrants have been able to redefine retailfrom the bottom up to better suit the modern customer. Retailers gearedtowards multi-channel delivery, like Apple, are able to turn showroomsinto a positive brand experience and a generator of bothrecommendation and revenue. Some retailers have improved theircustomer engagement practices, increasing showrooming and in-storepurchases. In recent ACSI surveys, Apple ranked #2 (behind Amazon) interms of customer satisfaction. Apple’s ability to re-engineer retailbeyond traditional confines has enabled it to become the most profitableretailer per square foot in the US ($6000/sqft vs $3000 next placedretailer Tiffanys). Apple understands that retail isn’t just about sellingboxes but supporting the customer in the discovery and educationprocess.“There’s no better place to discover, explore and learn about ourproducts than in retail. It’s the retail experience where you walk in andyou instantly realize this store is not here for the purpose of selling. It’shere for the purpose of serving. I’m not even sure “store” is the rightword anymore. They’ve taken on a role much broader than that. Theyare the face of Apple for almost all of our customers.” Tim Cook, AppleCEORESEARCHResearch needs to step out of the retail store and into the retail process.The retail process begins with discovery and goes through variousstages of education. Smartphones, stores, websites, social networksand apps are tools of the retail process. Research needs to look intohow young people use available tools to move from discovery toeducation and finally to action.
  4. 4. The retail process is also a social process. Young people repeatedlyconsult their peers in each stage of the process. Consultations mighthappen in the store, over the phone or in the 3H (homes, hideouts andhangouts) of young people. Store intercept interviews can not reveal allfactors influencing a customer. Research needs to step into the youngperson’s world. Ethnographic research will help reveal the customermotives involved in the the retail process.Retailers with the best insight will win. The closer the retailer gets to thecustomer across the whole journey, the more insights they will gain, themore leverage the retailer has both with the customer and the supplier.MARKETINGRetailers need to curate rather than create stories about their products.The largest source of product information for customers is othercustomers. Customers no longer walk into stores looking for informationto help them decide on a purchase; they now walk in with a morecomplete product story in mind. People go to the store to buy a phoneknowing which model to buy a full month before the purchase.The best way for retailers to address this is not by creating and pushingmore content about the products into different online and offlinechannels. With the multitude of product reviews and hauling videos onYouTube, retailers should focus instead on curating the different storiescustomers already have out there to help the discovery process. Fromthe point of view of the customers, these videos are more trusted.CULTUREMultichannel is a customer-led movement.Customers today are more empowered because of technology. Thatmeans brands need to give control over to customers.Retail needs to move beyond shifting boxes and looking at how it canhelp customers connect with each other seamlessly. Traditional retail isa siloed environment characterized by walled processes; retail channels(e.g. offline vs online), experience (advertising vs in store) andmarketing (e.g. traditional vs social media).
  5. 5. Retail should not be an isolated function within the business. Retail iswhere marketing, customer service and innovation come together. It isalso a Frontline where brands can nurture, educate and empower Fans.Retailers like Amazon have embraced this seamless, unwalledexperience, prioritizing customer over official reviews and favoringcustomer service over traditional advertising as a key to drivingrecommendation (NPS).
  6. 6. About MVenturMVentur is the world’s first youth mobile consultancy.We have 2 roles:1) Advisor to our clientsWe oversee marketing plans, act on advisory panels and consult ourclients. Find out more about our consultancy work.2) Commercial think tank for the mobile industryWe promote progressive marketing ideas that help mobile companies gobeyond advertising. Read more about our youth mobile opinion pieces.www.MVentur.com