Future Shopper: Changing attitudes reshape retail

Much has been written about the convergence of technology and the act of shopping — a behavior that dates back some 10,000 years to the ancient Persian empire.

And while no one has a crystal ball to clearly see the future, most analysts agree changes in the shopping landscape have barely reached the tipping point as technology collides head-on with the brick and mortar world.

The Futures Company and Kantar Retail recently released a study that examined how technology and changing shopper attitudes are reshaping retail across the planet. The first observation was commerce is everywhere in today’s connected world. This is a stark difference from the traditional single-focus habits from past generations where consumers progressed in a beeline from awareness to purchase.

With the explosion of social technology consumers have many more touch points and opportunities to glean information and testimonials from their friends that can impact shopping behavior. And mobile technology allows for price comparisons and digital couponing from anywhere there is connectivity. These two changes have morphed the historical shopping behavior from the simple see and purchase into a broader, more complex purchase dynamic.

Kantar analysts said it is mistake to think this phenomenon is restricted to richer, affluent markets because cheaper mobile technology has turned retail in emerging markets on its head.

GLOBAL CONNECTIVITY
Some 140 million Chinese have made purchases through online channels. In Brazil, a courier company Direct Express makes 40% of its deliveries in non-affluent areas, according to the report.

Wal-Mart Stores Inc. continues to invest in e-commerce around the world and released the several stats during last week’s earnings call that help support the study findings.

“We are excited about the global capabilities of our e-commerce businesses abroad. We are strengthening and expanding in the key markets of the U.K., Brazil and China,” said Doug McMillon, CEO of Walmart International.

He said during the recent quarter Asda in the U.K. completed the rollout of Wi-Fi across its stores to enable a better smart device shopping experience. In addition, Asda added its grocery (Click and Collect) offer in approximately 100 stores. Asda also significantly expanded grocery home shopping capacity by opening a third dedicated online fulfillment center in Nottingham, providing increased accuracy, efficiency and delivery options. Customers can tap into 20,000 additional delivery slots per week.

McMillon said Asda’s continued focus on offering a convenient shopping experience for customers drove strong online sales – up 16% – in the first part of 2013, a bright spot in an otherwise tepid economic climate.

He said in the recent quarter Brazil showed strong e-commerce growth, as total online sales rose 40%, helping to propel the walmart.com.br site to the heaviest traffic e-commerce site in country.

One of the more exciting opportunities for Walmart International is the recent acquisition of Yihaodian, one of the fast-growing ecommerce businesses in China.

“We now have a platform to compete in a market with broadband penetration that has exceeded the U.S. Yihaodian provides consumer goods on a same-day basis in Tier 1 cities: Shanghai, Beijing, and Guangzhou. … We grew market share already this year in e-commerce in the U.K., Brazil and China, and the integration of technology into our business is a key for future growth. We will expand our successes and learnings from the U.K., Brazil and China into other markets such Mexico, Japan and Canada,” McMillon said.

SHOPPER PERCEPTION
The study revealed consumers are more value-conscious, seeking quality as they are often squeezed for money and time.

In this age of transparency consumers want superior products, made responsibly at the lowest possible prices. They want the option of home delivery or pick-up the same day at little, to no added costs, which creates quite the challenge for big retailers.

Kantar notes some of these demands drive down margins and reduce basket sales. This means it’s imperative for big box and other retail operators to find imaginative ways to match shoppers’ desires for value, assurance and quality. 

“Simply put, retailers will have to be more clever,” the study notes.

RETAIL OPPORTUNITIES
The Kantar report spotlighted several ways brick and mortar retailers can leverage their real estate assets and benefit from the changing shopper demographics.

Keeping an eye on changing demographics is a must for retailers. While that certainly requires a lot of energy and investment for future generations, one German supermarket chain, Kaiser’s, has opened a branch in Berlin that is specially adapted for older shoppers. The report notes Kaiser’s has brighter lighting, non-slip floors, steps to access shelves and magnifying glasses for reading labels.

Another convenience store chain in South Korea is wooing females with its magenta and pink stations and elaborate powder rooms.

Kantar analysts said as digital technology is tearing down the walls of a store, successful retailers will have to tear down the walls of traditional retail mindsets that go well beyond the best price on any given day.

CLEVer TAKEAWAYS
The study breaks down the bare essentials for retailers in the future into four musts: Convenience, loyalty, experience and value (CLEV).

Reinventing convenience is already happening as brick and mortar stores and e-commerce push the boundaries for same-day or next-day delivery options.

The convenience store is no longer just a certain segment of the retail world because all retailers are being held to the high convenience standards that must include: quick service, free pick-up for online orders, competitive prices for in-store and ability to get products delivered same-day or next day if it’s out-of-stock.

Wal-Mart offers site-to-store, which means consumers can order online and pick up at the nearest store, often same-day or next-day.

In France, the “Drive” model is popular that allows shoppers to order groceries online and then pick up the boxed order at a “Drive” location. According to Kantar Worldpanel, some 2.3 million French households visited a Drive location last year, which is expected to reach 4.5 million by 2015.

Redefining loyalty in a way that is personal will be key for retailers going forward, according to the report.

This means retailers will need to have shopper-centric frame of mind, which is possible with the use of big data to target shopper attitudes, preferences and motivations.

Target does a good job building loyalty with its “Redcard” incentives, according to Kantar analyst Leon Nicholas, who recently said these types of loyalty programs defend against price competition with other big boxes like Wal-Mart.

He said when a Target shopper goes into a store to buy apparel, but also steps across the aisle to buy food or some other consumable, they won’t necessarily look at the published price, because that is not what they are paying as Redcard member.

Re-imagining experience has software technology geeks salivating at the possibilities for ways to make shopping trips memorable. This can be in-store mobile applications that direct shoppers to the items they want. Or it could be digital coupons hitting consumer email boxes when a price comparison is made in-store.

Kantar warns that retailers will need for these applications to be flawless in execution, which means lots of testing is necessary.

Lastly, repositioning value is key for retailers in the future as shoppers will look beyond the price of an item, as they want to know they have made a “smart decision." Kantar said smart equals price, service and quality.

The study notes Safeway is well on it's way to helping shoppers find that "smart" mindset. Safeway's “Just for You” pricing actually leverages online and mobile applications to take pricing out of the pubic domain and tailor it privately to the individual shoppers based on their profile and purchase history, the study states.

Safeway went one-step further to link “Just for You” to its clubcard program that give discounts to regular customers. The grocer estimates these savings to range between 10% and 20%. Since the program launched in 2012, more than 5.4 million households have signed up. “Just for You” represents 45% of Safeway’s sales base.