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McKinsey New European Consumer 2014

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  • 1. The New European Consumer Enrique Garcia, Khiloni Westphely – McKinsey & Company Barcelona, March 13th, 2014
  • 2. McKinsey & Company | Online and multichannel will continue growing as it in general offers a more compelling experience than “store only” McKinsey & Company | 1 Online shopping Traditional retail Price Conven- ience Choice ServiceShopping experience
  • 3. McKinsey & Company | Online grocery typically attracts the most profitable customers: dual-income households, customers who prioritize convenience … these are the type of customers you’ll be making more loyal to the franchise. Losing these customers will disrupt your equilibrium in the bricks and mortar Christian Wanner, Founder and CEO of LeShop.ch McKinsey & Company | 2 Multichannel can also be compelling on the “supply side”
  • 4. McKinsey & Company | Technology evolution will drive change faster than most people think McKinsey & Company | 3 Augmented Reality Augmented reality enables a real life experience while on line Radio Frequency Identification (RFID) RFID technology enables seamless experience while in store Near Field Com- munication (NFC) NFC technology enrich the use of mobile while in store (e.g. payments) SOURCE: Company websites, press search
  • 5. McKinsey & Company | McKinsey’s iConsumer: a longitudinal research program to understand consumer evolution across markets McKinsey & Company | 4 ▪ Over 30,000 annual surveys (200,000 cumulative surveys) ▪ Over 10,000+ PC panel, with observed browsing paths and purchase details Annual coverage Occasional coverage SOURCE: McKinsey iConsumer
  • 6. McKinsey & Company | Still in store ROPO: not all categories are equal Europe (UK, Germany, Spain, France, Italy), 2013 McKinsey & Company | 5 Digital battleground Gone to digital ResearchedOnline Purchased Online Click and buy 0 7560453015 70 0 60 50 40 30 20 10 SOURCE: McKinsey iConsumer 2013
  • 7. McKinsey & Company | Device usage: clear acceleration towards multichannel and mobility across countries ... Europe, percent Share of Usage time 2007 2010 2009 McKinsey & Company | 6 Penetration of internet users 71 45 0 30 2013 2010 75 58 25 9 0 33 PC Smartphone Tablet 2014? SOURCE: McKinsey iConsumer 2013
  • 8. McKinsey & Company | The Consumer Decision Journey (CDJ) … McKinsey & Company | 7 Reaction to the purchase and delivery, interaction with the product and brand Experience Consumer’s initial set of brands and retailers Consider Selection of what to buy and where to buy Buy Evolution of the consideration set as the consumer gathers information Evaluate Selection of the same brand or retailer without reconsidering and reevaluating Loyalty SOURCE: McKinsey
  • 9. McKinsey & Company | 8 … is already heavily multichannel More than 50% of Europeans say that digital was an important influence for considering a retailer 30% of European customers buy online, but pick-up in the store 41% of Europeans check availability online before going to a store US Amazon Prime members use Amazon for more than of their online purchases50% Experience Consider Buy Evaluate Loyalty 36% of European consumers use social media for customer service SOURCE: McKinsey iConsumer 2013
  • 10. McKinsey & Company |McKinsey & Company | 9 Buy Experience Consider Evaluate Loyalty
  • 11. McKinsey & Company | Consider: Promotions are what all Europeans find most useful on Facebook Percent McKinsey & Company | 10 #2 #3#1 11% 44% 14% 12% #2 #1 11% 35% #3 #2 35% 12% #1 17% #3 10% #2 #3 37% #1 10% #3 35% 16% #1#2 12% SOURCE: McKinsey iConsumer 2013
  • 12. McKinsey & Company | Consider: Cultivate a massive following 11 EXAMPLE: APPLIANCES ONLINE SOURCE: Facebook
  • 13. McKinsey & Company | Consider: Cultivate a massive following 12 EXAMPLE: APPLIANCES ONLINE SOURCE: Facebook
  • 14. McKinsey & Company |McKinsey & Company | 13 Buy Experience Consider Evaluate Loyalty
  • 15. McKinsey & Company | 30 31 34 35 22 Evaluate: Mobile research is taking off at different rates across Europe Percent, 2013 McKinsey & Company | 14 Share of mobile research (9%) (13%) (9%) (12%) (8%) Mobile in-store SOURCE: McKinsey iConsumer 2013
  • 16. McKinsey & Company |McKinsey & Company | 15 EXAMPLE: JOHN LEWIS Evaluate: Embrace showrooming SOURCE: Company website
  • 17. McKinsey & Company |McKinsey & Company | 16 Evaluate: In-store sat nav EXAMPLE: ALBERT HEIJN SOURCE: Company website
  • 18. McKinsey & Company | Evaluate: Amazon is increasingly the starting point for web research across categories McKinsey & Company | 17 more searches start at Amazon more searches start at Google SOURCE: McKinsey iConsumer 2013
  • 19. McKinsey & Company |McKinsey & Company | 18 Buy Experience Consider Evaluate Loyalty
  • 20. McKinsey & Company | 54% 45% 59% 46% 34% 55% Buy: The reasons for using each channel vary Apparel example McKinsey & Company | 19 “Why did you buy the product in a store?” I wanted to inspect / try the product “Why did you buy the product online?” I enjoy going to the physical store Easier to compare choices in store More convenient Better prices or promotions online Easier to compare choices online SOURCE: McKinsey iConsumer 2013
  • 21. McKinsey & Company |McKinsey & Company | 20 EXAMPLE: BONOBOS Buy: Guideshops SOURCE: Company website
  • 22. McKinsey & Company |McKinsey & Company | 21 Buy Experience Consider Evaluate Loyalty
  • 23. McKinsey & Company | EXAMPLE: OASIS Experience: 90 minute delivery by Shutl McKinsey & Company | 22SOURCE: Company website
  • 24. McKinsey & Company | Experience: Drive-through groceries McKinsey & Company | 23 EXAMPLE: LE SHOP SOURCE: Press search
  • 25. McKinsey & Company | Experience: Collect in 5 minutes McKinsey & Company | 24 EXAMPLE: SCREWFIX SOURCE: Company website
  • 26. McKinsey & Company |McKinsey & Company | 25 Buy Experience Consider Evaluate Loyalty
  • 27. McKinsey & Company | Loyalty: Charging for loyalty McKinsey & Company | 26 EXAMPLE: AMAZON PRIME 25M Prime subscribers estimated by 2017 2-3x Spend of Prime customers vs. non-Prime customers Amazon 10M Prime subscribers in March 2013 $78 Average Prime member yields Amazon $78 more in profits than other customers 35% Share of Amazon’s EBIT that can be attributed to Prime SOURCE: Press search, McKinsey Amazon Prime Survey
  • 28. McKinsey & Company |McKinsey & Company | 27 Beyond MC “tactical” moves: retailers need to fundamentally rethink economics of their store networks Sales density Gross margin density Space SOURCE: McKinsey
  • 29. McKinsey & Company | The role of the store needs to evolve: fewer, better, more integrated Sales of clothing and footwear in Spain, percent McKinsey & Company | 28 Space Base 100 Base sales 1 2008 5 88 2 86 2011 99 100 84 2015 79 100 97 ?? Online Offline SOURCE: Euromonitor, Forrester, McKinsey
  • 30. McKinsey & Company | New approaches McKinsey & Company | 29 Burberry – taking multichannel “brand experience” to the next level Hointer – changing the cost model through technology SOURCE: Press searches
  • 31. McKinsey & Company | enrique_garcia@mckinsey.com khiloni_westphely@mckinsey.com

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