2012 shopper study

x x C O G N I Z A N T S H O P P E R E x P E R I E N C E S T U D Y J U N E 2 0 1 2

®

Inside 6 Research: Sharpen the Message 9 Shop: Align Bricks & Clicks 14 Transact: Make It Easy 17 Post-Sale: Build Shopper Profiles

Enabling REtailWithout bounDaRiES

T h i r d A n n u A l

EXPERIENCE STUDYA S u p p l e m e n T T o R I S N E W S m A g A z i n e

2012 SHOPPER

Cog_ShopperStudy_0612.indd 1 5/23/12 12:40 PM

Group Editor-in-ChiefJoe Skorupa [email protected]

Executive Editor Adam Blair [email protected]

Associate Editor Nicole Giannopoulos [email protected]

Chief Analyst Steven Skinner, [email protected]

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The term “Moneyball” quickly became a buzzword after the book and subsequent movie became huge successes. The term stands for using the power of analytics to improve outcomes, even in something as unpredictable as baseball.

But the subtitle of the book, although lesser known, is equally compelling: “The art of winning an unfair game.” Winning, of course, is on every retailer’s mind and all too often it feels unfair

because the pace of change is so fast and competition so fierce. The only way to win in retail is to align strategy with (or stay ahead of) the pace of

change, and the only way to do this is to make targeted investment decisions using market-based analytics, especially research that comes directly from shoppers.

And this is exactly what is featured in the third annual RIS/Cognizant Shopper Experience Study. Chief analyst for the study is Steven Skinner, vice president of Cognizant’s retail, hospitality and consumer goods practice, and he has involved a top-notch team of analysts (including the editors of RIS) to identify key takeaways from 2,122 shoppers in the U.S. and Canada.

A large portion of the research appears in the following pages, but not all. The full scope of the research not only includes many more charts and breakouts, but also includes in-depth analysis of such global markets as China, Hong Kong, Australia and the United Kingdom.

The best way to use this study is to combine insights with other RIS reports and close the gap that exists between bottom-up (consumer based) and top-down (technology focused) research. If you want to find out more details about the North

American market, which is reported here, or about other global markets that are not reported, either contact me at [email protected], or visit the Cognizant website at www.cognizant.com.

True, sustainable success comes from executing smart, data-driven decisions in both baseball and retail. “Moneyball” calls this an art, but smart retailers know it is a science.

2 R I S / C O G N I Z A N T S H O P P E R E x P E R I E N C E S T U D Y J U N E 2 0 1 2

Joe SkorupaGroup Editor-in-Chief

Winning an Unfair Game

E D I T o r ’ s N o T E


EXPERIENCE STUDY2012 SHOPPER

True, sustainable success comes from executing smart strategies based on analytical findings and insights, especially those that come directly from shoppers.


This year’s shopper preference study surveyed 2,122 shoppers in the U.S. and Canada via an online survey conducted in April 2012. Following the precedent established in the two previous

surveys, the respondent pool is designed to be a close match to a shopper profile that most closely resembles the customers of the average retailer, in terms of gender, age and household income before taxes.

For gender breakdown, the respondent pool was 70% female and 30% male, a deliberate overweighting that makes sense for most retailers. The bias toward female shoppers is reflective of numerous industry studies showing that 70% of buying decisions are either made by females or are influenced by them. (See Figure 1.)

The age category breakdown is intended to represent the average shopper profile in the overall marketplace today. The age group breakdown is as follows: Gen Y (ages 18-33), 30%; Gen X (ages 34-45), 20%; Baby Boomers (46-64), 29%; Emerging Elders (65 or older), 20%.

A similar effort was made to ensure that the respondent pool’s income categories mirrored that of the shopping public. The breakdown for annual household income before taxes was as follows:

l Under $25,000: 15%l $25,000 to $74,000: 50%l $75,000 to $149,000: 23%l More than $150,000: 5%The remaining 7% of respondents

preferred not to provide their household income data. n

J U N E 2 0 1 2 R I S / C O G N I Z A N T S H O P P E R E x P E R I E N C E S T U D Y 3

F I G U R E 1

Study Methodology: Who Responded

F I G U R E 2

F I G U R E 3

Gender

Income

Age Group

30%Male

70%Female

15%Under $25,000

50%$25,000 - $74,000

7%N/A

23%$75,000 - $149,000

5%Over $150,000

30%18-33 (Gen Y)

20%65+

(Emerging Elders)

20%34-45 ( Gen X)

29%46-64

(Baby Boomers)

M E T H o D o L o G Y




ThE TRUTh Is shoppERs lIkE To shop In sToREs. Despite the growth of e-commerce, shoppers still need and often enjoy the in-store experience. But they want shopping experiences to be attentive and efficient. To meet that challenge, retailers need to reshape their approach to selling and to traditional store concepts.

“Showrooming” is the number-one risk facing retailers today, and the third annual RIS/Cognizant Shopper Experience study reveals consumers’ suggestions for how stores can avoid it: shoppers overwhelmingly desire personalized in-store experiences. By capitalizing on shoppers’ interests, retailers gain the opportunity to close sales that might otherwise go to online sites.

Shoppers’ prescriptions for retail change percolate throughout the results of the April 2012 study. We surveyed 2,100 shoppers from North America and 1,750 in the United Kingdom, Australia, China and Hong Kong. We focused on gaining insights into their likes, dislikes and preferences based on gender, age, income and type of shopping.

The survey underscores that one retail execution strategy does not fit all customers. Shoppers’ technology preferences and their criteria for positive store experiences vary dramatically by gender, age, income and product type. More than ever, retailers must carefully define their target customers before investing their technology dollars.

Where we see unanimity, however, is in shoppers’ assertiveness. Armed with unprecedented amounts of information and the tools to access data at any moment, shoppers are poised to buy – and they want retailers to be ready for them. They expect retailers to get it right on store fundamentals – product assortment, product information, price, efficiency, and service – and they are annoyed when they do not. The basics are especially important to older shoppers.

To shoppers, stores sell products and answers. In response, retailers need to begin viewing themselves as providers of solutions, not just products. This expansion will result in a more complex business model, potentially encompassing services, third-party partnerships, and other elements not part of traditional retailing. But the evolution is critical for stores to remain relevant to shoppers, and it’s an endeavor that they must undertake.

The 2012 survey findings reinforce the fact that shoppers continue to make the majority of purchases in retail stores. Online shopping ranks a distant second. Even further behind, although close to each other in volume, are call centers, mobile, tablets, and kiosks.

Stores still reign, but it’s never been more critical for retailers to recognize that integrating digital opportunities into the shopping experience is important to all shoppers, and especially to the coveted young and affluent segments.

Here are five key takeaways that retailers can use to refine their strategies and create thriving retail stores that generate profitable bottom lines.

1 It’s all about price: Competitive pricing and promotions still hold the greatest sway with shoppers, exerting the most influence on purchase decisions across all demographic

segments, including the wealthiest. Shoppers’ sharp eye on price makes showrooming the number-one risk facing retailers today, and it demands a solution for transparent and consistent pricing and promotions across channels as well as a more informed and empowered workforce.

But price isn’t the only factor for shoppers, and the other influences they report point to important opportunities for retailers. Not surprisingly, the Internet’s influence on purchasing


THE 2012 SHOPPER EXPERIENCE STUDy OffERS NEW INSIGHTS INTO CUSTOMERS AND HOW RETAILERS CAN RESHAPE THEIR STRATEGIES TO PROVIDE PERSONALIZED IN-STORE EXPERIENCES THAT WILL KEEP SHOPPERS COMING BACK

Retail Gets Personal: How to Create the Stores Shoppers Want

E X E C U T I V E s U M M A r Y




decisions is on the rise while TV’s is declining. But both lag behind in-store signage and product packaging when it comes to influencing shoppers. Social media’s power continues to grow but is not predominant.

2Exceptional in-store execution is the cost of entry to shoppers’ wallets: Four out of five purchases are still made in bricks-and-mortar stores. To keep shoppers coming

back, retailers need to put a fresh spin on the in-store experience, recasting stores as places for discovery and interaction with products, where associates can assist in the decision-making process and shoppers enjoy instant gratification.

Each year since 2010, our shopper study has underscored consumers’ expectations that stores master the basics of retail execution: robust product assortments; effectively merchandised stores; clear information about products, prices and promotions; knowledgeable associates willing to provide assistance; and efficient checkout.

What’s more, shoppers anticipate similar proficiency in retail fundamentals from online stores. Shoppers identify the top four influences on cyber-shopping as returns handling; competitive price and promotions; product selection; and fast checkout.

Sales associates continue to play a pivotal role. When unable to find what they want in stores, most shoppers say they are inclined to first ask store associates for help. That desire to connect with associates is good news for retailers because it presents a touchpoint for deepening customer relationships.

The second most prominent response, however, is to buy the product elsewhere. This situation presents a large risk of lost sales that could be partially mitigated through better integration of online and in-store experiences. Men, younger shoppers, and high-income shoppers are among the small but growing percentage of

customers who report turning to their mobile devices most often when unable to locate goods.

3Ease and efficiency are keys to making shoppers happy during checkout: Unlike their Internet counterparts, who often appreciate subtle, suggestive selling as they

near checkout, store shoppers want to proceed through checkout quickly and smoothly. No fuss, and especially no cross-selling. They prefer attentive associates who are focused on the task at hand and do not attempt to gather information or sell additional products.

4To differentiate, reach beyond the basics: Today’s shoppers have high expectations. Specialized store treatment based on loyalty status is the top request in our

survey. Interestingly, personalized experiences carry more weight with in-store shoppers than with their online counterparts.

Shoppers want personalized, attentive in-store experiences, and the more affluent and younger shoppers expect retailers to seamlessly integrate personalization across channels. Because few retailers offer this tier of service, this finding points to a huge opportunity for fast movers. Shoppers want tailored experiences – but with boundaries. They are resistant to divulging information they deem to be personal in exchange for more personalized experiences. Instead, they prefer that retailers use more neutral sources such as their own loyalty programs.

5shoppers’ expectations vary when it comes to specialty vs. consumable products: Increased options and focus on experience is more important to shoppers of

specialty products than to those buying consumables. Consumers are more inclined to do research and comparison-shop for specialty products. Inconsistent experiences across channels irritate them, and stores that won’t match competitors’ prices are especially bothersome to younger and more affluent customers. On the other hand, the greatest influence on purchases of consumables? Printed materials, information on product packaging, shelf signs and interactive product displays.


Steven Skinner is vice president of Cognizant’s retail, hospitality and consumer goods practice, and this study’s principal research analyst.

By Steven Skinner

Shoppers want personalized, attentive in-store experiences, and the more affluent and younger shoppers expect retailers to seamlessly integrate personalization across channels.



Sharpen the MessageRETAILERS SHOULD USE ALL THE TOOLS AT THEIR DISPOSAL TO CONVEy PRODUCT INfORMATION BUT PRIORITIZE EffORTS ON THE TOP METHODS THAT SHOPPERS PREfER

Each stage offers retailers the opportunity to deploy services and touchpoints that, if executed smartly, can exert a measure of influence over purchasing.

The research stage is the first step on the journey. It occurs when the shopper begins the process of satisfying a want or a need. During the research stage shop-pers gather information either formally or ad hoc by searching online, reading printed content, or talking to friends and family.

Retailers spend a lot of time de-veloping strategies to influence the shopper’s path to purchase, a four-stage scenario that execu-tives use to shape business mod-

els. The four stages, which are covered in detail throughout this report, are: research, shop, transact and post-sale.

Viewing the shopper journey this way enables retailers to devise tactics and as-sign technologies that help them deliver what shoppers want when they want them.

r E s E A r C H

pRIcE and convEnIEncEWhen we asked shoppers to name the fac-tors that most influenced their online pur-chase decisions we found that price is the top preference. On a rating scale of one to five, where one stands for least influence and five for most influence, the option la-beled “competitive price, markdowns, dis-counts and promotions” scored a 4.3 rating and topped the list. (Figure 1.) So, sharp pricing is a key retail element in the initial stage of the shopper journey.

4.3Competitive price, markdowns,discounts and promotions

4.2

3.9

3.9

3.7

3.4

3.4

3.3

3.0

Right product selection

Ease of returning products

Fast, easy, checkout

Ease of accessing customer service

Consistent experiences and informationonline, on mobile devices and in the store

Other customers’ onlineratings and reviews

Compelling loyalty program

Personalized experiences

Shoppers expect an easy returns process

Price is thesignificant factorinfluencing onlineshopping

Which factors most influence your online purchase decisions? (1 = least influence, 5 = most influence)

F I G U R E 1





By Joe Skorupa

#1Right product selection ties with competitive

pricing at top of list for influencing online decisions

#2Ease of returns is the second highest rated

factor influencing online decisions

<1Times per month shoppers use store

tablet or mobile apps to help make informed purchase decisions

>2Times per month shoppers use store

website to help make informed decisions

>3Times per month 18-33 year olds use non-store

websites and searches to make informed decisions

3.5 Times per month shoppers use

print materials for consumables versus 2.4 for specialtyR E S E A R C H

This is not exactly breaking news, but it is important to place in context. Price sen-sitivity does not mean retailers should join in a race to the bottom. What it means is that while it is necessary to be responsive to competitive pricing it is not enough to simply set low prices across the board. A smarter plan is to strategically add new elements to shopping experiences that can be a hedge against training shoppers to wait for deep discounts. Some of these elements include featuring exclusive products, special ser-vices, convenience, limited-time offers, and personalized shopping experiences

The second big takeaway from the top online influencers question is that shop-pers prefer quick and easy services. Among the top rated factors on the list are ease of returning products, fast and easy checkout, and ease of accessing customer service. Convenience is just as important to shop-pers as low prices.

soURcEs oF InFoRMaTIonWhen we asked shoppers to tell us their preferences for gathering information prior to making a purchase we split the ques-tion into two shopping categories: specialty and consumables. Specialty included such products as clothing, electronics, house-wares and office supplies. Consumables included groceries, health and beauty, and household supplies. (Figure 2.)

When looking at the combined results (as opposed to splitting into the specialty and consumable categories), we find the top sources of information chosen by shoppers are product packaging, print materials, and shelf signs or interactive product displays. At first glance this is pretty basic stuff.

However, when we split the responses into the product categories we see clear preferences emerge. When shopping for specialty products shoppers have three sources of information they rate higher

than when they shop for consumables. They are store website searches, other online searches, and social media. When shopping for consumables shoppers have three different sources of information they rate higher than when they shop for spe-cialty items. They are product packaging, print materials and shelf signs or interac-tive displays, the traditional methods that scored highest when the two categories were combined.

The takeaway is that if a retailer is in the consumables segment, then retailers should prioritize investments in traditional sources of information because they are likely to deliver the best return. However, for specialty retailers investing in online and social media are more aligned with shop-per preferences.

One big takeaway that has appeared consistently over the last three years of this study is the low rating given by shoppers

By Joe Skorupa


r E s E A r C H


to mobile apps. Although it is still early in the game for mobile commerce, it is worth noting that the low rating given by shoppers has not shown signs of growth over a multi-year period. An inescapable conclusion is that mobile apps, despite their ultimate potential, have not yet bro-ken through as a significant resource for shoppers who are moving down the path to purchase.

Shoppers always begin their journey

2.2Television

Shelf signs or interactiveproduct displays

Information providedon product packaging

Print materials

Social media

Friends and family

Store associates

Other Internet searchesand websites

Store’s tablet

Store’s mobilesmartphone app

Store’s website

2.3

2.62.1

0.6

0.70.6

2.42.0

1.31.4

2.0

1.31.4

3.5

2.3

3.32.0

2.4

4.2 Specialty

Consumables

Mobile apps are not a significant part of shopping research

What resources do you use to make informed purchase decisions?(1 = least used, 5 = most used)

in the research stage, but it is a mistake to think they follow a path to purchase in a linear way. In fact, it is a non-linear jour-ney with new entry points emerging every day. Some shoppers might begin and end their path to purchase in just a few clicks or they might go in and out of a half doz-en touchpoints, including physical stores, multiple times. Some might do all of their clicking and searching in social media lo-cations or members-only websites.

The clear message is that shoppers want retailers to create a fully synchro-nized, consistent, multi-channel experi-ence that delivers great prices and great convenience. They also want it all to op-erate seamlessly and invisibly behind the curtain.

And who can blame them? They are smart shoppers using all the smart new tools at their disposal. Welcome to the new normal. n

F I G U R E 2





s H o P

Bricks and ClicksTHE STORE REMAINS THE HEART Of RETAILING, BUT IT NEEDS TO EVOLVE TO CONTINUE BEING RELEVANT TO TODAy’S SHOPPERS

At an advanced phase in the path to purchase, the shopper wants to get closer to the product, to see it, feel it, compare it side by side with similar products, and

maybe ask questions to an on-site expert,

otherwise known as a sales associate. This means going to a physical store.

Even in the age of Amazon and digital commerce, the numbers bear out that shoppers do the vast amount of their purchasing in stores. One widely reported

figure comes from the U.S. Department of Commerce, which says that 95% of retail sales come through the brick-and-mortar channel.

The numbers from the shopper preference study show just how critical

By Joe Skorupa

3.6Visibility andaccessibility of product

Compelling loyalty program

Ease of returning products

Comments onsocial media sites

Other customers’ onlineratings and reviews

Quality of customer service

Fast, easy checkout

Competitive price,promos, etc.

Right product selection

3.23.3

4.03.5

4.14.2

4.4

3.93.7

3.73.9

2.73.3

2.62.3

Social media is the lowest ratedinfluencer

Competitivepricing, promosare still powerfulpurchasinginfluencers

Specialty

Consumables

How much do these factors influence your in-store purchases?(1 = least influence, 5 = most influence)

F I G U R E 1




s H o P

1 0 R I S / C O G N I Z A N T S H O P P E R E x P E R I E N C E S T U D Y J U N E 2 0 1 2

purchase decisions we found the top item is competitive pricing, a theme that appears throughout the study. Retailers have always been rigorous when setting the initial price and subsequent mark- down prices, but this task is more important now than ever. (Figure 1.)

This is true for two reasons: 1. Price elasticity has become more rigid thanks to the length and depth of the recent recession; and 2. With price transparency just a click away, retailers are feeling the pinch on margins as discounters drive prices down.

Pricing strategy has always played a critical role in retail, but findings throughout this study indicate shoppers consider pricing to be so decisive that it has taken on increasing urgency.

Other top-rated factors that influence purchase decisions in stores include right product selection, fast and easy checkout, quality of customer service, and visibility and accessibility of product.

When we break out findings about store influences when shopping for consumables and shopping for specialty products, we find that several factors differ by product

the physical store is to consumers, but it is worth noting that while there are strengths that retailers can build on there are also elements of the store that shoppers dislike and require remediation.

sToRE InFlUEncE FacToRsSmart retailers use all the weapons in their arsenals to convert stores into a dynamic shopping experience. But are they focusing on the right elements to appeal to todays’ shoppers?

When we asked shoppers to tell us which factors influence their in-store

3.7Payment method youlike is not available

Store associates noteasily accessible

No order online,pickup in store

Store doesn’t matchcompetitors’ prices

In-store, online and mobileexperiences are inconsistent

Prices/promos/discountsare not clearly marked

A better selection of productsis available online

The product you wantis out of stock

Difficulty findingthe product you want

3.6

4.03.9

3.12.8

3.7

3.73.5

4.1

3.33.1

4.2

4.04.1

In-store execution is still most important toshoppers

Specialty

Consumables

Which of the following experiences do you dislike most when shopping in a store?

(1 = dislike least, 5 = dislike most)

F I G U R E 2




J U N E 2 0 1 2 R I S / C O G N I Z A N T S H O P P E R E x P E R I E N C E S T U D Y 1 1

category. The biggest delta occurs in the influence of online ratings and reviews. Shoppers for specialty products care significantly more about ratings and reviews than shoppers for consumables. Another significant delta occurs in ease of returning products: shoppers for specialty products care far more about returning products than shoppers for consumables.

As expected, differences also emerge when we examine store influences by age groups. Ages 45 and younger care far more about online ratings and reviews than older age groups. The same is true for comments found on social media sites.

When we break out findings by income we find a few interesting deltas of difference. It turns out the group with household income greater than $150,000

35% Of shoppers would most like to see

improved customer service skills among store associates

2XTwice as many in 18-33 and 34-45 age groups

want better product knowledge enabled by technology than 46-65 and 65+

#9Social media comments ranked

last of all factors influencing store purchases for all shoppers

#1 Social media comments ranked first among the

18-33 and 34-45 age groupsS H O P

49% Will ask an associate to

locate the right item when it can’t be found

#2Ease of returns is the second highest rated

factor influencing online decisions

is more distinctive than all the rest. This group rates the following in-store influence factors sharply higher than the other income groups: visibility and accessibility of product, compelling loyalty program, ease of returning products, comments on social media sites, online ratings and reviews, and quality of customer service.

A professional football coach after a big loss was asked what he thought about his team’s execution? He replied, “I am all for it.” The point is, if you don’t get execution right, everything else is irrelevant, in football and in retailing.

The top three dislikes when shopping in a store amplify this point and are: the product is out of stock, prices and promos are not clearly marked, and there is difficulty in finding the product. These may

be considered simple things with simple fixes, but they will kill store performance every time. (Figure 2.)

One interesting gender finding is that female shoppers across the board have a higher sense of dislike to every item on the list compared to males. Why? Or more to the point, why ask why? Females are the largest purchasers or influencers of purchased items on the planet, and if they are unhappy about something, then it is a clear sign it needs to be fixed.

sToREs as WEbsITEsOne way for retailers to respond to the digital revolution is to begin thinking about stores as websites, if not literally then in new ways that support and enable the shopper’s love for using consumer


s H o P


electronics as a lifestyle choice.When we asked shoppers to tell us

how important it is for stores to work with digital partners, a hybrid approach sometimes called click and mortar, we found that member discounts and group buying are the top two options that provide a better shopping experience.

When we break out this question into demographic groups we find an interesting pattern emerges that links female shoppers, people less than 45 years old and high income shoppers with household incomes greater than $150,000. All three groups are leaders in the preference for retailers to add digital functions inside stores.

So, if one of your key demographics is women with household income greater than $150,000 who are less than 45 years old, then adding digital capabilities to stores

should be at the top of your to-do list. No study of consumer preferences

would be complete without examining the influence of social networks in the shopping process, and the big finding here is that Facebook is the clear preference. It leads the pack by a wide margin over MySpace, Pinterest, blogs and Twitter.

Male shoppers tend to be more enthusiastic about social network sites in general, while females are more discriminating and clearly prefer Facebook.

When we break out this finding we see those between 35 and 45 years of age and those with household income greater than $150,000 consider social networks to be most important.

kEy TakEaWaysTo dig deeply into customer preferences in the shopping phase we probed such areas

3.4Special treatment in thestore based on loyalty

Offers delivered in a storethat are personalized

Acknowledgement of status as ahighly valued customer while in the store

Website recommendations basedon other products you searched for

E-mails with personalized messages

Website recommendations based onproducts others have searched for

Personal greeting in the store

Offers delivered via a mobilephone that are personalized 2.3

2.7

2.8

3.2

2.9

2.9

3.2

Despite a plethora of‘engagement channels’customers still seekpreferred treatmentin store

Which personalization techniques do you prefer when shopping for specialty products?

(1 = like least, 5 = like most)

as personalization preferences, customer services, managing out of stocks and onine shopper dislikes. Here are some key takeaways in these areas:

• The top method chosen to personalize the in-store shopping experience is to deliver special treatment on loyalty.

• Shoppers younger than age 45 show a preference for digital methods of personalizing the shopping experience, while older shoppers do not care as much for online personalization and instead prefer it to be store-based.

• High income shoppers want a personalized shopping experience in every channel and using every method.

• When shopping assistance is needed three segments are most open to digital methods of communication: men, younger age groups (less than 45), and high incomes. But all segments prefer

F I G U R E 3





3.8Go to in-store customer service desk

3.1

2.3

2.0

1.9

1.8

1.7

Call customer service #

Online chat

Social media page

Mobile text message

Mobile chat

Video chat

Despite digital informationavailable across channels,shoppers prefer real-time interaction

Which customer service options do you prefer most while shopping?(1 = prefer least, 5 = prefer most)

fact-to-face interaction.• The top two functions shoppers

would like to see improved in stores are customer service skills and ability of store associates to match competitive prices.

• Women shoppers significantly prefer customer service skills and price matching over male shoppers.

• Male shoppers are more open to the

idea of equipping associates with technology tools to improve service.

• All segments of shoppers prefer to seek out a sales associate for help when they can’t find a product they want. Therefore, when associates are equipped with product and inventory lookup capabilities a method opens up for them to save the sale.

• When it comes to dislikes during

Pricing strategy has always played a critical role in retail, but findings throughout this study indicate shoppers consider pricing to be so decisive that it has taken on increasing urgency.

online shopping the top choices are: product information is difficult to find, purchase price is not communicated clearly, and search navigation is not helpful in finding products.

Understanding store-based shopper preferences gives retailers guideposts to create a strategic roadmap that enables stores to evolve and remain relevant. n

F I G U R E 4


T r A N s A C T

Progressive retailers are rethinking every aspect of the store shopping experience, exploring gesture-based digital technology, gamification, arming store associates with

multi-functional tablets and sending targeted, location-based messages to shoppers’ smart mobile devices. These technologies show varying degrees of promise, but while they try them out, retailers would also do well to make sure


Make It EasySHOPPERS STILL SEEK SPEED, SIMPLICITy AND CONVENIENCE WHEN IT IS TIME TO CHECK OUT

they are maintaining strong service levels with their existing store technology — in particular with their transaction processes.

This year’s survey reveals that shoppers still place a high value on checkouts that are fast, convenient, accurate and hassle-free. While these results will not be a surprise to experienced retailers, they do point up the critical need to keep a close eye on the basics of store operations no matter how radically the shopping experience is transformed.

Some of these basics are related to ensuring that POS technology remains fast, easy to use and reliable, with minimal downtime — particularly in high-volume environments such as supermarkets (or in any type of retail store during the busy holiday season). But reliable technology is only part of the equation. Retailers also need to ensure that their hiring, training and workforce/labor management systems place alert, capable cashiers on the floor.

4.2

4.2

3.9

3.8

3.6

3.6

3.6

2.5

Checkout process is inefficient or inaccurate

Cashier not available or distracted

Discount/credits not quickly processed

Cashier tries to sell me more products

Personal information requested beforecompleting transaction

Cashiers can’t make customer service decision

Waiting in line

Self-checkout is not available

Self-checkoutnot a big draw

A smooth, hassle-free checkout experience executed by an attentive cashier is very crucial.

Which aspects of the store checkout process do you dislike most?(1 = dislike least, 5 = dislike most)

F I G U R E 1





By Adam Blair

#1 Dislikes at checkout are tied: process is

inefficient or inaccurate and cashier not available or distracted

2XTwice as many $150K+ income shoppers would

use a digital wallet via mobile phone than those in less than $25K income group

#1Tied at top of the list for payment

methods are bank issued credit cards and cash

#1 Debit cards are top choice for 18-33

year oldsT R A N S A C T

#1 PayPal tops the list of preferred digital wallet solutions

#8Self-checkout is last on dislike list when paying

and not a big factor

Asked which aspects of the checkout process they dislike the most, shoppers identified several relating to interactions with POS personnel. Tied with “checkout process is inefficient and inaccurate” was “cashier not available or distracted,” both rated 4.2 on a scale of 5. Shoppers also disliked cashiers trying to sell them additional products and requesting personal information during the checkout process, ranked at 3.8 and 3.6 respectively. (Figure 1.)

However, shoppers also expressed a 3.6 level of dissatisfaction regarding cashiers who couldn’t make a customer service decision, either because they weren’t authorized to do so or didn’t have sufficient data or execution capabilities. “Discount/credits not quickly processed” was disliked even more, at 3.9. Shoppers want and expect to complete all aspects of their transaction at a single location in the

store, with minimal delays and maximum convenience.

POS solutions, whether traditional fixed terminals or newer mobile POS options, should provide the ability to access back-office and corporate systems involved in handling the most common customer service issues. Ideally, these systems should also send real-time alerts to managers’ mobile devices, bringing them to the store’s front end to handle issues that are above the “pay grade” of cashiers.

Somewhat surprisingly considering the ongoing consumerization of technology, the lack of a self-checkout option ranked lowest on the list of surveyed shoppers’ dislikes, at 2.5 on a scale of 5. It should be noted, though, that not missing the presence of a technology doesn’t mean shoppers won’t use it if it’s available – particularly if it suits their need for convenience.

FInancIal consERvaTIvEsShoppers surveyed about payment methods revealed strong preferences for the familiar. Three tried-and-true tendering methods — cash, bank-issued credit cards and debit cards — still hold sway over newer options such as smartphone-enabled mobile wallets. (Figure 2.)

In fact, using digital wallets via a personal mobile device was the least popular payment option among surveyed shoppers, ranking just 1.7 on a scale of 5. Consumers may be enamored of their smart mobile devices, but they are not yet top-of-mind when it comes to monetary transactions.

Several factors contribute to digital wallets’ lack of traction. In North America, competition among players new to the in-store payment arena, such as Google and PayPal, has created different sets of


3.7Bank issued credit card Traditional cash/card methods still rule over new tendering methods

3.7

3.6

2.6

2.2

2.0

1.7

Cash

Debit card

Store issued credit card

PayPal or Bill Me Later

Store installment payment plan

A digital wallet via a personal mobile device


T r A N s A C T

Which payment methods do you prefer for in-store purchases?(1 = prefer least, 5 = prefer most)

technological standards and limited the utility of individual mobile wallet solutions. In contrast, Asian and European countries with government-mandated standards have created a more fertile environment for mobile payments overall.

There’s also a bit of a Catch-22 at work: many retailers are waiting for consumer demand for these payment options to rise before investing in the technology required to offer them. However, the current lack of retail outlets accepting mobile wallet payments is one of the main reasons consumer awareness levels and shopper demand remain low.

Among the subset of shoppers who are aware of these solutions, PayPal is the most preferred option, ranking 4.1 on a scale of 5. (Figure 3.) PayPal, a subsidiary of eBay, has high name recognition due to its strong position as an online payment method. PayPal’s closest competitors also have strong corporate names attached: Visa Wallet, at 3.8, and tied at 3.7, Google Wallet and Apple iTunes. n

4.1PayPal

3.5

3.7

3.7

3.8Visa Wallet

Google Wallet

Apple iTunes

ISIS (i.e. Verizon Wallet)

If available, which digital wallet solutions are you most likely to use?(1 = least likely, 5 = most likely)

Shoppers want and expect to complete all aspects of their transaction at a single location in the store, with minimal delays and maximum convenience

F I G U R E 2

F I G U R E 3





Know your customers” is good advice for retailers at any time, and in many ways today is a golden age for gathering customer data. Many millions of people willingly share

information about themselves, their opinions and their preferences on a variety of social networks — and they carry mobile devices that can (with their permission) provide their location in real time.

But knowing your customers also includes knowing their comfort level with various data-gathering techniques. Tracking by loyalty program number was the most popular choice among shoppers overall, scoring 2.9 on a scale of one to five. (Figure 1.) Not only is this an established, familiar data-gathering technique, but these shoppers’ membership in a retailer loyalty program means they already perceive the value they receive in exchange for sharing information about themselves.

Digging deeper into responses to this question reveals sharp differences along generational lines. As might be expected, shoppers 45 and younger are consistently more amenable than their elders to making personal data available via any method, as well as to being tracked by location.

Household income also affects shoppers’ attitudes. Those making $150,000 or more are the most willing to share data about themselves, perhaps driven by the desire to get a more personalized retail experience.

coMplaInT channElsWhen today’s shoppers take action after receiving poor service, they have a number

Building the Shopper ProfileAGE AND INCOME ARE KEy fACTORS IN SHOPPERS’ COMfORT LEVELS WITH DATA SHARING

By Adam Blair

P o s T- s A L E

Younger customersare more receptive tosharing informationthan older customers

1.3Locations you are at tracked

using geolocation serviceon your phone

1.6

2.2

2.32.7

3.33.2

1.41.6

2.1

2.5

2.9

1.92.1

2.12.4

1.31.7

2.22.1

2.22.6

3.02.9

Information trackedby loyalty number

Information trackedby credit card number

Phone numbercollected at POS

E-mail collected at POS

Have cookies placed on yourcomputer to allow tracking

Name, address, e-mailfor web account

65 and over 46-64 34-45 18-33

What information are you willing to share in order to have a more personalized shopping experience?

(1 = least willing, 5 = most willing)

“F I G U R E 1





#1 Loyalty account informa-tion tops list of options

shoppers will share to get a person-alized experience.

#1Shoppers with income of $150K+ are more

willing to share information to get a personalized experience than all other income groups

#1Shoppers with income of $150K+ are more likely to comment about

problems on personal or retail social network sites than all other income groups

2X Shoppers younger than 45 are twice as likely to comment about prob-

lems on personal or retail social network sites than older shoppersP O S T - S A L E

#2Name, address and e-mail for logging in are second on

the list of options shoppers will share to get a personalized experience

#3E-mail collected at checkout is third on list of options shoppers will share

to get a personalized experience

P o s T- s A L E

Shoppers 45 and younger are consistently more amenable than their elders to making personal data available via any method, as well as to being tracked by location

of new options for bringing it to the retailer’s attention, including public “venting” on social networks. However, shoppers’ most preferred action is a face-to-face interaction: telling the associate who helped them or asking to speak to the store manager each received a 3.5 score.

For retailers, this points up the fact that part of providing good customer service in the store is having procedures in place to handle problems and complaints. Ideally, every store associate should be trained — and consistently reminded — about the retailer’s established procedures for dealing with dissatisfied customers, including the right point at which to bring in a manager or other supervisor.

Not everyone will raise an issue in person, however, so it’s also critical to

keep other channels open: responding to an online survey or to one printed on a receipt was nearly as popular as in-person interactions, each scoring 3.4 out of five.

Among shoppers overall, sharing their dissatisfaction via a social network is a less likely option, with an average 2.2 score. However, there are splits along generational and income level lines that are similar to those seen in the data sharing area. Gen X and Gen Y shoppers are twice as likely as Baby Boomers and Emerging Elders to use social networks as their forum for commenting on service issues. Those in the highest income bracket, making $150,000 or more annually, are also more likely to use social networks in these cases than all other income groups. n





M E G A T R E N D S

NEW MEGATRENDS SHAPING RETAIL

1 The store at Risk of becoming a showroom. Price continues to be the most influential factor determining purchase decisions.

Mobile devices increase transparency while shoppers are in the store putting previously guaranteed sales in jeopardy. Although today relatively few shoppers go to their mobile phones first when they can’t find what they are looking for, that number will grow rapidly.

2 shoppers desire personalized store Experiences. Shoppers expect and appreciate personalized greetings and offers and

suggestive selling online, but what they really want is more personalized in-store experiences. Although generally resistant to sharing information they consider private, they are willing to share enough information to ensure they have the best possible in-store shopping experience.

MEGATRENDS THAT CONTINUE TO HAVE TRACTION

3Taking the store to the shopper. Retailers continue to invest in the online experience through traditional websites and increasingly

through dedicated mobile sites and third-party partnerships. Although the majority of shopping will continue to occur in stores, digital and physical experiences are converging, with shoppers expecting cohesive, interactive, value-added experiences anytime, anywhere and through any channel.

4 shoppers demand consistent cross-channel Experiences. Consumers check multiple resources when shopping and are quick

to notice discrepancies across channels. Products, prices, and policies on your website don’t match what are in stores? You’ll hear about it in a request for a price match. Shoppers are beefing up their expectations – and creating a challenge for retailers to stay ahead of the curve.

5 distributed order Management Integrates the Retailer. One of shoppers’ greatest irritants is when a product is out of

stock or they cannot find what they are looking for. Integrating order

2012 Retail MegaTrendsKEEPING fOCUSED ON THE BIG PICTURE TO SPOT TOMORROW’S OPPORTUNITIES

By Steven Skinner

management across the retail chain and introducing more fulfillment options will enable retailers to convert potentially disappointing shopping experiences into sales and enable associates to provide better service.

6 death of the Task Worker. Shoppers increasingly demand accessible and empowered store associates, and they expect

them to have access to the same technology and information that they have. More retailers are equipping their staffs with technology solutions that provide information and enable workers to take on new responsibilities. The bar has been raised for store associates, and the stakes are higher.

MEGATRENDS TAKING HOLD MORE SLOWLY THAN EXPECTED

7 sales and product Information via Mobile phone. Although smartphones and tablets are changing the way people manage

their lives, their impact on the shopping experience is mixed. Shoppers are hungry for solutions that make shopping easier, more convenient and more fun. Most retailers’ mobile solutions haven’t delivered.

8Mobile shopping comes of age. Although still a small piece of the pie, some segments (APAC, younger, and more affluent

shoppers) are using smartphones to shop, suggesting rapid growth will continue. The screen size and portability of smartphones will naturally lead them to be in-store shopper aids, whereas tablets will take over traditional online sessions due to the improved browsing experience they offer.

9 death of pos becomes a possibility. While there have been notable rollouts of mobile POS solutions, retailers continue to

maintain their substantial POS investments. Most shoppers are not clamoring specifically for mobile POS, but they do want better access to associates throughout the store, and mobile POS makes that a possibility.

We introduced our Retail MegaTrends with the first Shop-per Experience Study in 2010. In addition to newly emerging megatrends, this year’s list includes trends that are growing in influence. What is clear is that the definition of a posi-

tive shopping experience depends on who you ask. Shop-pers across all segments are consistent in their desire to experience “retail without boundaries” that caters to their individual wants and needs.

M E G AT r E N D s




x x C O G N I Z A N T S H O P P E R E x P E R I E N C E S T U D Y J U N E 2 0 1 2

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aboUT coGnIzanT’s RETaIl pRacTIcECognizant’s Retail practice, which works with 12 of the top 30 global retailers, leverages its deep domain, consulting, and enterprise architecture expertise to deliver competitive advantage to supermarkets, department stores, specialty premium retailers, and large mass-merchandise discounters across the grocery, general merchandise, apparel, home and office, and consumer electronics segments. The practice provides comprehensive business solutions in the areas of supply chain, merchandising, stores, e-commerce, and retail analytics to enable retailers to transform their businesses, drive innovation, and cater to the rapidly changing shopping needs, preferences, and methods of retail customers. The practice is enabling retailers to embrace the future of shopping with innovative platforms such as IntellipeakTM, which helps manage peak/holiday season sales, and intelliSTORESM, which leverages technologies around mobility, cloud, social media, and analytics to deliver a superior in-store customer experience.

aboUT coGnIzanTCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process outsourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 140,500 employees as of March 31, 2012, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.


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2012 shopper study