Consumer trends and the way they affect retail

1. Key Consumer Trends and how they affect retail FUTURELAB

2. On a mission to make the world a more customer-friendly place Alain Thys: ath@futurelab.net Some credentials FUTURELAB

3. PART ONE Key shopper trends and how they affect retail PART TWO How to prepare for the changing retail reality. PART THREE A few words on payment FUTURELAB

4. PART ONE Key shopper trends and how they affect retail PART TWO How to prepare for the changing retail reality. PART THREE A few words on payment FUTURELAB

5. Key shopper trends and how they affect retail Demographics Technology Mindset • • • (cc) nggalai FUTURELAB

6. FUTURELAB Demographic Pyramid EU-27 2021 2011 1991 Men Women Demographics Shoppers are getting older Source: Eurostat, 2011 (cc) ThomasSoerenes

7. FUTURELAB > 50 yrs old ± 1/3 of the population > 80% of the wealth Average age of Harley Davidson driver. 49.6 48 46.1 43.4 1999 2004 2008 2013 Demographics Shoppers are getting older Sources: trendwatching.com, 2013 Cyril Huze Post - 2013 Image: (cc) Chris_Parfitt

8. FUTURELAB Immigration numbers by country, 2012 (cc) epSos.de Source: Daily Mail Online, August 2013 Demographics Shoppers are getting more multi-cultural

9. FUTURELAB Aging Divorce Choice Career Demographics Shoppers live in ever smaller households (cc) arileu

10. FUTURELAB Ageing Immigration Non-traditional households © Galina Barskaya (cc) augapfel (c)Getty Images Store format – Merchandise selection – Staff behaviour & know how - … Influence on retail Are you really taking their needs seriously?

11. FUTURELAB Remarkable practice Catering to a specific age group

12. FUTURELAB Metropolitan restaurants Halal food at McDonald’s Korea: Lavendel Halal, Rice-based Skincare Remarkable practice Catering to different cultural values

13. FUTURELAB Slunch Factory (Korea) Single household lunch box Supermarket dating Help singles meet Remarkable practice Catering to singles

14. Key shopper trends and how they affect retail Demographics Technology Mindset • • • (cc) nggalai FUTURELAB

15. FUTURELAB Internet access by age group Lithuania, Q1-2012 98.1 90 Books 80.5 Cars 64 35.9 3.7 Holidays Insurances 16-24 25-34 35-44 45-54 55-64 65-74 What isn’t in Lithuania today, will come. Source: Statistics Lithuania, August 2012 Digital Reality The internet ―has‖ changed the way we buy

16. FUTURELAB In-store smartphone usage per category US, 2013 ―On an average day, more than 100,000 unique customers access Nordstrom on a mobile device, with nearly twice that amount during the holidays,‖ In 2012, sales from a mobile device accounted for over 20%—more than $260 million—of the company’s total direct (digital) sales. Compared to less than 4% in 2010.‖ Source: Internet retailer, February 2013 Source: Google Shopper Marketing Council, August 2013 Digital Reality Mobile ―is‖ part of the shopping experience

17. FUTURELAB % of population purchasing online Image: (cc) Clive Darra 60 53 43 36 42% of UK electronic goods buyers will look at products in store before buying online from a different retailer. Lithuania 2011 Lithuania 2012 Denmark UK Source: The Consumer Decision Journey, Microsoft, 2013 Sources: The Baltic Course, May 2013 - OECD, 2012 Digital Reality Ecommerce is part of life for every retailer

18. FUTURELAB Quality Price Coming soon to Europe: Digital Reality Digital Transparency Rules

19. FUTURELAB International competition Always on transparency Showrooming Image: (cc) Clive Darra Influence on retail Are you ready for the omnichannel reality?

20. FUTURELAB Panty Subscription Service (CA) From store to house in minutes (UK) Fastest delivery … Remarkable practices Make shopping easy

21. FUTURELAB Apple stores John Lewis Exeter About 60% of our customers buy both online and in shops so the approach is to make it absolutely seamless for them to move from one to the other. Remarkable practices Is it a store or a showroom?

22. FUTURELAB Remarkable practices Hybrid Shopping

23. FUTURELAB Brisbane, Australia, 2013 Remarkable practices An unusual approach

24. Key shopper trends and how they affect retail Demographics Technology Mindset • • • (cc) nggalai FUTURELAB

25. FUTURELAB Money Time Life gets busier Time scarcity = more efficient shopping Desire for work-life balance = shopping is a chore Desire for one-stop service & product shopping Decreasing disposable income More planned buying Growth in private label Shrinking share of wallet for everyone Mindset Scarcity

26. FUTURELAB Make it beautiful (Design matters) Entertain me Mindset Indulgence

27. Health World FUTURELAB Health and wellness is becoming a priority but consumers find it difficult to decode product labeling and nutritional claims. 84% percent of millenials (18-32 yrs) in Europe, Asia and US believe it is their generation’s duty to change the world Source: Bord Bia’s 2010 Periscope study Source: The Guardian, April 2013 The cat is out of the bag Out of 5,296 products, 95% made at least one false claim Source: Terrachoice, 2012 Mindset Conscience (& scepticism)

28. FUTURELAB Health and environment Efficiency with time & money Design and entertainment Image: (cc) PhotoAtelier Image: (c) Mike Powell Influence on retail Are you ready for changing consumer mindset?

29. FUTURELAB Remarkable practices Tesco Homeplus Korea (by now a ―classic‖) 19/03/2014 29.

30. FUTURELAB Korean supermarket let’s consumers store 2-for-1 promotions in a ―virtual refrigorator‖ Brand Utility Examples Disarming detractors No one can do this on his own GS 25 Virtual fridge

31. Remarkable practices Italian food shopping … redefined FUTURELAB

32. FUTURELAB HEB Supermarkets (Texs) 11% growth in men’s care products within 1 year Remarkable practices Disarming detractors No one can do this on his own It doesn’t have to be so elaborate

33. FUTURELAB Remarkable practices Disarming detractors No one can do this on his own Just be honest

34. PART ONE Key shopper trends and how they affect retail PART TWO How to prepare for the changing retail reality. PART THREE A few words on payment FUTURELAB

35. Preparing for the changing retail reality Secure the basics Offer complete and relevant experiences Focus technology on the customer • • • 19/03/2014 (cc) Andreas Kollmorgen FUTURELAB

36. FUTURELAB Secure the basics Disarming detractors No one can do this on his own Yesterday, mistakes could be forgiven … no more.

37. FUTURELAB Fast website Easy shopping Mobile availability Online security Quality home delivery Variety in payment options Social integration … Secure the basics Disarming detractors No one can do this on his own Digital Basics

38. FUTURELAB (cc) Jason Rosenberg Secure the basics Disarming detractors No one can do this on his own Retail basics Opening hours - Retail standards Staffing - Merchandise availability - Store design

39. FUTURELAB What is the % of helpdesk questions that “never get answered” (Insites Consulting, 2010 – n=500 senior marketers in Benelux, France, Germany, UK) 11-28% depending on the channel Secure the basics Tactically responding to customer queries

40. FUTURELAB 90% DEBATE WHERE IS YOUR BUSINESS? 50% 30% Source: Bupa International, 2009 10% 5% Inform customers of change Make decisions using insights Alert Staff to Findings Deploy improve Collect Customer Feedback Secure the basics Disarming detractors No one can do this on his own Structurally acting on customer feedback

41. FUTURELAB There’s more Leave the bank with your card Have a coffee next door if you need to wait (with alerts) Friendly & smiling recruitment policy Remarkable practice: Applying common sense to basics can take you far Metro Bank

42. FUTURELAB Minimum Standards Brilliant Basics Remarkable practice: Applying common sense to basics can take you far Disarming detractors No one can do this on his own Own experiences

43. Preparing for the changing retail reality Secure the basics Offer complete and relevant experiences Focus technology on the customer • • • 19/03/2014 (cc) Andreas Kollmorgen FUTURELAB

44. FUTURELAB When I talk about experiences I’m not talking about. “Let’s spread love & hug” “Let’s be like Disneyland” “Let’s go WOOOOOWW!!” Complete & relevant experiences To avoid misunderstandings

45. FUTURELAB I am talking about “really connecting” with your customers Complete & relevant experiences To avoid misunderstandings

46. FUTURELAB The biggest CX challenge Most companies wear blinders on customer experience (cc) Emilio Labrador

47. FUTURELAB 1. I dream of going on holiday 2. I research my holiday 3. I plan my holiday 4. I select my holiday 5. I purchase my holiday 6. I receive travel documents & tickets 7. I anticipate departure 8. I prepare my trip 9. I travel to my destination 10. I discover my destination 11. I experience my destination 12. I record my memories 13. I share my experience 14. I travel back home 15. I share my memories Travel company Which are the customer steps when going on a holiday 47

48. FUTURELAB 1. I dream of going on holiday 2. I research my holiday 3. I plan my holiday 4. I select my holiday 5. I purchase my holiday 6. I receive travel documents & tickets 7. I anticipate departure 8. I prepare my trip 9. I travel to my destination 10. I discover my destination 11. I experience my destination 12. I record my memories 13. I share my experience 14. I travel back home 15. I share my memories Ask yourself Which steps in the journey do travelco’s manage? 48

49. The Shoppers Journey Shop Exit Journey Remember Returns Departure Journey Arrival Decompression Planning Dwell Buy 49. Remarkable practice CEE Mall: Different customers, different experiences

50. FUTURELAB 1. Map your customer’s TRUE journey (think ―beyond‖ your store) 2. Identify key choice and loyalty drivers for each shopper archetype you target 3. Develop experiences which match these drivers at EVERY journey step Deliver relevant experiences Three steps 19/03/2014 50.