Adapting Omni-Channel Strategies to Modern Consumer Behaviour
1. The NPD Group, Inc. | Proprietary and Confidential
Adapting Omni-Channel Strategies
to Modern Consumer Behaviour
Presented by: Sandy Silva, Fashion Industry Analyst
The NPD Group
Sponsored by MasterCard for Retail Council of Canada
June 3, 2014
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The image should fill up the entire space of the gray box, no gray should be seen
The NPD Group, Inc. | Proprietary and Confidential
2005St. Peter’s Square
Change
3. The NPD Group, Inc. | Proprietary and Confidential
The image should fill up the entire space of the gray box, no gray should be seen
The NPD Group, Inc. | Proprietary and Confidential
2013St. Peter’s Square
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EV LUTION OF RETAIL
1900s
Corner Stores
Limited choice
People walked
1900-1940s
Department Stores
Automobile: travel farther
In-home refrigeration: stock
more
1950-1970s
Malls
Time of the true mall
1990-2013
Ecommerce
1970-1990
Big Box Stores
Driving smaller merchants
out of business
5. The NPD Group, Inc. | Proprietary and ConfidentialThe NPD Group, Inc. | Proprietary and Confidential
Retailers offer products,
hoping consumers buy them.
5
What’s changed is how we talk to
them before they get to the store.
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Conversion
300
75
Conversion Rate
25%
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Touch points
7
www.
STORE
www.
BRAND
IN-STORE
displays, product info,
store associates
RETAIL
FLYERS
STORE
WEBSITES
WORD OF
MOUTH
BRAND
WEBSITES
PRODUCT
REVIEWS
ONLINE STORES/
AUCTION SITES
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Bought a brand
Among first considered
74%of purchases
are planned
18 Dayspassed between first thought
of buying product and making purchase
52
Bought at Retailer
among first considered
73
1.4
2.2
Brands in mind
Retailers in mind
% %
Snapshot of Path to
Winter Apparel Purchase
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24%
Touch points Usage
Canadians still rely on in-store to make their
winter apparel purchase decisions
42% 24% 20%
PC electronics
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Identified
additional brands
Ruled out
brands
Didn’t learn
anything new
Impact on Brand Consideration
Word of Mouth information impacts brand consideration.
Consumers use online brand/product reviews to rule
brands out.
56
43
39
30
40
30
30
31
41
%
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Impact on Retail Consideration
Word of Mouth also impacts stores and websites
consideration.
Identified additional
stores/websites
Ruled out
stores/websites
Didn’t learn
anything new%
48
41
18
25
33
24
35
36
62
12. The NPD Group, Inc. | Proprietary and ConfidentialThe NPD Group, Inc. | Proprietary and Confidential
How many days on average
did it take to make a
purchase?
Are you wondering why?
12
18days
Remember this?
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Among the 42% who rely on
in-store information, their in-store
visit was not always the final step in
the path to purchase!
In-Store Visit
PRE IN-STORE POST IN-STORE
16
17
7
7
8
5
42%
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How Can Retailers Convert More Shoppers?
Good news: most consumers only consider two
retailers. If you have the right strategy, you should be able
to convert consumers…
14
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1900s
Corner Stores
1900-1940s
Department Stores
1950-1970s
Malls
1990-2013
Ecommerce
1970-1990
Big Box Stores
Take It Back to Basics:
WORD
OF MOUTH!
01
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Word of Mouth Usage
Family, friends, and coworkers are the
most important followed by Facebook.
01
93
18
10
8
8
2
1
3
88
23
8
5
4
4
3
9
Talked to friend,
family or coworkers
Facebook
Pinterest
Professional Blogs
Personal Blogs
Twitter
Discussion Forums
All Other Sources
Talked to friend,
family or coworkers
Facebook
Personal Blogs
Discussion Forums
Professional Blogs
Twitter
Pinterest
All Other Sources
WINTER APPAREL PC ELECTRONICS
Total Digital
Touch points
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Provide access to interactive
digital displays in the store
to allow shoppers to learn more
about the brands and products
17
Optimizing Time In-Store
02
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Interactive
Display
Order from
Store Website
73
69
66
76
78
% of Yes
Winter Apparel
(698)
Personal Accessory
(555)
Beauty
(699)
PC/ Electronics
(793)
Beverage DA
(592)
53
58
52
66
71
Optimizing Time In-Store
02
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79
64
52
48
41
Prices, sales,
promotions
Product information
Availability
User reviews
Brand information
67
54
50
48
32
79
55
47
44
33
Prices, sales,
promotions
Shipping costs
Product information
User Reviews
Brand information
%
Product information
Prices, sales,
promotions
User reviews
Brand information
Availability
Types of Information Sought After (Top 3)
03
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METHODOLOGY:
Online survey fielded from Jan. 23 to Feb. 7, 2014 to a Canadian
representative sample of 3,337 panelists aged 18-64, representing
Canadian adult demographics.
To qualify, respondents indicated a planned purchase of one of the
following products in the past month:
i. Winter Apparel n=698 (Winter coat or jacket n=362, Winter boots n=336)
ii. Personal Accessory n=555 (Watch n=409, Handbag, purse or satchel n=146)
iii. Beauty n=699 (Face or beauty cream n=699)
iv. PC/ Electronics n=793 (Headphones n=403, Tablet computer n=212,
Notebook/ laptop/ desktop computer n=179)
v. Beverage Domestic Appliance (DA) n=592 (Single serve coffee machine
n=340, Juicer/ Juice extractor n=108, Espresso machine n=76, Soda maker
n=69)
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The image should fill up the entire space of the gray box,
no gray should be seen
The NPD Group, Inc. | Proprietary and Confidential 21
Early Retail…
EV LUTION OF RETAIL
22. The NPD Group, Inc. | Proprietary and Confidential
The image should fill up the entire space of the gray box,
no gray should be seen
The NPD Group, Inc. | Proprietary and Confidential 22
EV LUTION OF RETAIL
Change
Are you ready?
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Contact us
Sandy Silva
Director, Client Development – Fashion and Prestige Beauty
The NPD Group
sandy.silva@npd.com
647.723.7760
Silvia Xoyon
Director, Business Development – Fashion and Prestige Beauty
The NPD Group
silvia.xoyon@npd.com
647.723.7765
Editor's Notes
We’re going to talk about a word that everyone is familiar with regardless of industry - change. The pace of change is incredibly fast. It’s important to keep your finger on the pulse of the only constant – change.
St. Peter’s Square in 2005 when Pope Benedict first greeted the public.
in 2013, when Pope Francis first greeted the public. What a difference 8 years makes.
What’s the next era going to be? Multichannel commerce? Mobile commerce? Connected Commerce?
Change in retail is inevitable, one thing remains important: conversion.
We started by talking about change
Has retailing changed?
Retail conversion measures the proportion of visitors to a retail outlet who make a purchase. If 300 people visit your store in a day, but only 75 buy something, the conversion rate is 25 percent. To measure retail conversion, you must measure numbers of visitors and understand how to interpret the data. You can use the retail conversion rate to assess the affect of other marketing or operational actions, such as changing store layout, employing more staff, increasing stock levels or running promotions. If a store layout change results in an improved conversion rate of 35 percent, the change represents a successful strategy.
In-Store Touchpoints generally dominate although Store Websites for PC/Electronics and Word of Mouth sources for Beverage Domestic Appliances are relied on more often.
Beauty customers are the least likely to utilize information sources to inform their purchase decision.
ZZ
In no product segment is touchpoint usage less than in Beauty. At 25%, In-store information sources are the most utilized.
At 35%, Store Websites appear to be the most utilized touchpoint among customer of PC/Electronics. Usage levels for the remaining touchpoints are all within 10% of one another.
How are retailers using word of mouth in their strats
How many retailers do you think customers have in mind when making one of the previously mentioned purchases on average?
Among those who rely on in-store information, many do not make a final purchase decision at their store visit and go on to explore other touch points.
This may be one of the biggest leakages (opportunity)
What’s the next era going to be? Multichannel commerce? Mobile commerce? Connected Commerce?
Change in retail is inevitable, one thing remains important: conversion.
Customers want to learn more about the brand/retailer in the store. 53% winter apparel consumers said they wanted an interactive display in store that educates them on what they’re about to purchase.
Remember we said it takes 18 days? How can you decrease that time – interactive displays, accessibility to store website in-store. How do you make sure consumers complete their path to purchase in store?
Brands should play support role to retailers wrt interactive displays
Another strategy is to allow shoppers to purchase products from a store’s website if the product, model, size or colour was not available I
Varying by category, two-thirds or more would like to be able to purchase products from a store’s website as part of their in-store transaction
Information on Price indexes high as a reason for touchpoint utilization among users of Store Websites, Online Stores w/o Store Location and In-Store touchpoints. Product information indexes high with users of Brand and Manufacturing Websites and Online Brand and Product Reviews.
Brand information should highlight performance on key purchase selection criteria, establish brand differentiation while guiding consumers to specific products that fit their willingness to spend
Converting consumers to purchase a brand can be a little more challenging…
Some categories revealed a tremendous opportunity for brands to enter the consideration set and rise above the competitors
For example, conversion rates were only 52% in Winter Apparel and 60% in Personal Accessories
It is not enough to simply drive brand awareness and earn initial consideration
Online, 3000+, big
Run through categories so people know what “winter apparel” is
Local culture – the Corner Store: 1900sIf you start back from the 1900s, local corner stores dominated retail. There were some catalogs, but the overwhelming shopping experience was at the corner store. People walked to the store to get the basics. Choice was limited. In some of the bigger cities, you could find more but you were basically limited by what you could carry back to your home.
Local culture – the Corner Store: 1900sIf you start back from the 1900s, local corner stores dominated retail. There were some catalogs, but the overwhelming shopping experience was at the corner store. People walked to the store to get the basics. Choice was limited. In some of the bigger cities, you could find more but you were basically limited by what you could carry back to your home.
We will be exhibiting and hosting a panel of high-profile retailers.