The 2015 Reality of Retail Report

April 2015

RealityofRetailThe

Report

2© 2015 InReality. All rights reserved.

The Reality of Retail Report: April 2015

It’s no secret that retail is being disrupted. And, with over 94% of all U.S. retail sales ($4.4T) spent in store last year, InReality wanted to uncover the reality of what’s happening in retail. Our study highlighted a definite tug of war between traditional and digital touch points in store. And, although there was a high use of mobile in store, elements of traditional retail still proved to have sway on shoppers—even the younger generation. However, one thing was clear, if brands and retailers are to stay relevant to shoppers, they must start rethinking certain elements of the in-store experience.

Throughout the report we provide the findings of our survey along with recommendations brands and retailers can take note of—today—to start turning retail disruption into opportunity. These recommendations can be found in the Summary of Key Considerations section of this report.

KEY FINDINGS:

Contrary to popular belief, the store is actually the preferred destination for researching/ gathering product information. But, is this trend different among the younger generation? Find out in the Product Research section of this report.

Many Shoppers Are Researching In Store, Not Online.

Without a doubt, most shoppers are using mobile in store. However, the surprising find was that shoppers aren’t just gathering product information and price shopping via their mobile—some are actually purchasing via their mobile while in store. See the full breakdown of shopper use of mobile in store in the Mobile Trends section of this report.

1/4 of Shoppers Are Using their Mobile to Purchase In Store.

With all the buzz around loyalty programs, it was surprising to find that most shoppers do not yet consider these programs to be an important factor in influencing their purchase. Check out the Loyalty Programs section of this report to learn who is using loyalty programs and its role in driving today’s shopper to purchase.

Mobile Loyalty Programs May Not Be Driving Loyalty.

Shoppers haven’t turned into cyborgs just yet. Shoppers still ranked traditional in-store marketing such as advertising and packaging as important in their decision to purchase. However, there were some areas that definitely needed improvement. In the In-Store Marketing section of this report, we dive into what’s working and what’s not working for shoppers inside brick-and-mortar.

Traditional In-Store Marketing is Still Important to Consumers.

Executive Summary



A total of 1,361 survey responses were collected from 461 respondents across 34 states representing each region of the Contiguous United States.

RESPONDENT DEMOGRAPHICS:

A total of 1,361 survey responses were collected across 11 retail categories, with a minimum of 100 responses for each of the 11 categories.

RETAIL CATEGORIES EVALUATED:

• Apparel/Footwear

• Auto Parts & Accessories

• Consumer Electronics/Computers/Mobile Devices

• Health & Beauty

• Home Appliances

• Home Furnishings & Bedding

• Food/Perishable Items

• Kitchen/Bath/Plumbing Supplies

• Outdoor/Recreation/Sporting Goods

• Office Supplies

• Tools/Paint/Garden/Building Supplies

About The Survey

Gender Breakdown:Female: 54% | Male 46%

Age Breakdown:18-24 year olds | 9% of overall, 54% Female, 46% Male

25-35 year olds | 34% of overall, 60% Female, 40% Male



The first Reality of Retail survey was conducted between December 3-8, 2014. Sponsored by InReality, the survey invited 461 respondents to share their shopping experiences, within the last 6 months, along with the importance and effectiveness of various touch points along their path to purchase. A total of 1,361 survey responses were collected across 11 retail categories, with a minimum of 100 responses for each of the 11 categories. For the total survey of n=461 statistical confidence is 95% ±5. And, for each vertical category where n=100 minimum, confidence is 90% ±5.

METHODOLOGY:



Inside The Report

Product Research 5

Mobile Trends 6

Loyalty Programs 9

In-Store Marketing 11

Key Considerations 13

Table of Contents



Shoppers Aren’t Just Researching Online, then Buying In Store.

• Shoppers are researching products both online and in store, thus entering the store at differing stages of the buy cycle. In-store marketing should therefore target shoppers based on where they are in the buy cycle (pre-purchase, purchase, post-purchase).

• There also appears to be a difference in shopper buying preferences, i.e. those looking to browse versus those looking to get in and out. This might explain why the time-pressed 25-35 year olds with young kids and early careers prefer researching online. The in-store experience should also cater to these different preferences.

BRANDS & RETAILERS MAY WANT TO CONSIDER:

Product Research

But, is there a Difference By Age?

Both men and women preferred researching products in store equally.

Surprisingly, the 18-24 year old age group was only surpassed by the 50-65 year old age group in their preference for researching products in store. And, it was shoppers ages 25-35 that preferred to research online.

50-6536-4925-35

18-24

—AND—Of all shoppers surveyed, 53% preferred researching products in store.

Generally, Shoppers Prefer to Research In Store.

Mobile Trends



Mobile In Store—It’s Happening Alright.

Both men and women used mobile in store almost equally, with women taking only a slight lead with 76% usage versus men with 74% usage.

And, as expected, the younger generation (ages 18-35) led the charge in use of mobile in store.

But, Who Uses It More?


• In recent years a huge focus has been placed on ecommerce. However, we know that over 94% of all U.S. retail sales take place in brick-and-mortar, calling for an even larger focus on this channel. And, given the extremely high adoption rate of mobile use in store (75%), developing an in-store mobile strategy to help shoppers buy should be a key area for immediate focus. Some ways to integrate mobile include mobile apps, real-time messages and offers through beacons and digital displays that interact with mobile devices.

• Stores should also ensure that they are making WIFI not only available throughout the store, but easy to access and supporting this marketing effort with more effective, mobile-friendly web-sites containing valuable content that helps shoppers buy.



Mobile Trends

And, Social May Be Helping to Drive the Sale.

BRANDS & RETAILERS MAY WANT TO CONSIDER:• While in store, shoppers are using their mobile devices to get price comparisons, get product

information and access social media, so why not facilitate this? Shoppers will go looking regard-less, why not help them buy and control what they see and how they digest information?

• Social media appears to be helping to cement the sale via mobile. However, it can be used more intentionally to drive sales in store. For example, establishing online social sites (branded Face-book pages or specific twitter handles) that speak specifically to buyers in store, or integrating social into in-store marketing, thus allowing shoppers to share/get opinions with friends and family or find products they may have “liked” on their social media pages.

—BUT— 45%

25%

Shoppers Are Using Mobile In Store For More than Just Gathering Product Information.

Of all shoppers, 25% used their mobile device to make a purchase

45% of shoppers who used their mobile device for social media also used it for making a purchase

Of the 75% of Shoppers Who Admitted to Using Mobile In Store:

Mobile Trends



Mobile was used heavily in store across all categories, but interestingly the highest usage appeared in Outdoor/Recreation/Sporting Goods (86%) and the lowest usage appeared in Health & Beauty (62%).

Mobile Usage In Store Differs Based on What Shoppers are Buying.


• Again, with such a large percentage of shoppers using their mobile across categories, there’s no question that mobile needs to become a main part of in-store marketing strategies.

• More complex or higher-ticket prod-ucts also appear to have the highest use of mobile in store. Categories that fit here therefore need to start acting as quickly as possible to offer shoppers a better in-store experience supported with mobile access to whatever information shoppers need before these sales move largely on-line—as we’ve already seen happen with consumer electronics.

Shoppers Aren’t Just Researching Online, then Buying In Store.

Percentage of Shoppers Who Admitted to Using Their Mobile Device While Shopping Per Category:

Loyalty Programs



Loyalty Programs



Mobile Loyalty Programs May Be Attracting Deal Seekers Not Advocates.


71% of shoppers who used loyalty programs on their mobile devices still used it for price comparisons.

Only 55% of shoppers who did not use loyalty programs used their mobile

device for price comparisons.

—WHILE—

• Mobile loyalty programs still appear to be in their infancy, but they have a huge potential to provide more value to shoppers. Today, most shoppers that use mobile loyalty programs seem to be mostly price-conscious shoppers looking for a deal, not loyal advocates. As such, most of these shoppers are also doing price comparisons on their mobile devices. To increase the value of these programs and subsequent impact and pickup, brands and retailers need to increase the benefits of these programs by catering to specific demographics and offering additional advantages such as early access to new merchandise, private showings and more.

Loyalty Programs



Loyalty Programs



Mobile Loyalty Programs Might Not Be Meeting Shopper Needs.

And, as far as the age groups, use of loyalty programs was low across the board, with the highest usage only hitting 39% (shoppers ages 25-25), and the lowest usage scraping 6% (shoppers ages 18-24).

Of shoppers who cited adoption of mobile loyalty programs, 61% were women while only 40% were men.

• Mobile loyalty programs are not yet enticing the majority of shoppers to enroll. And of those shoppers that do enroll, only 46% view them as important in their decision to purchase. Done right, however, loyalty programs can provide shoppers with great value and really “stick” with shoppers, as we’ve seen today with programs such as Sephora and REI.

• It is also clear that mobile loyalty programs may not be having the desired effect, appealing to mainly women and the most budget squeezed age groups—ages 25-49 juggling early careers and young kids. Consequently, these programs need to start catering to specific demographics differently, so that they are offering the majority of shoppers a unique value.

-VS-


Only 46% of shoppers who use loyalty programs via their mobile ranked it as an important in their decision to purchase.

Of shoppers surveyed, 40% used loyalty programs via their mobile while shopping in store.

—BUT—

And, Who Is Using These Programs?



Traditional in-store marketing still matters.

In-Store Marketing

Only 12% of shoppers cited the sales associates as an important factor in their decision to purchase in store.

But, Some Traditional Elements Aren’t Impressing Shoppers...

Even more surprising, only 9% of shoppers cited interactive digital displays as an important factor in their decision to purchase in store.

Percentage of Shoppers Who Rank Traditional In-Store Marketing Tactics As Important in a Decision to Purchase:

• The traditional role of the sales associate doesn’t appear to be hitting the mark. Shoppers have become more self-sufficient with accessing product information, and so their interest in what a sales associate offers has changed. The sales associate is now more valuable to the shopper later in the buy cycle—maybe at the point of decision. In this respect sales associates need to change their tactics to become more consultative and knowledgeable to be helpful to shoppers.

• If done well, use of digital in store has the potential to really elevate a brand/store and drive sales. However, given that only 9% of shoppers cited digital displays as important in their decision to purchase, it seems that digital iterations in store are failing shoppers and have yet to be used in valuable ways to really help the shopper buy. Digital for digital’s sake is never a good solution. Digital in store should always support the shopper’s path to purchase and add unique value to the experience.




In-Store MarketingThe Most Important In-Store Marketing Tactic Varies By Age.Across all age groups, promos/discounts proved to be the most important factor in helping shoppers make a purchase decision. However, rankings for the remaining tactics varied by age. It is also important to note that mobile use in store did not significantly alter the importance of these tactics to shoppers.


• Traditional in-store marketing still seems to hold value among shoppers in their decision to purchase, regardless of whether shoppers used their mobile in store or not. Brands and retailers therefore need to focus on not only mobile interactions, but on traditional in-store marketing tac-tics as well. The in-store experience should be treated holistically to create a compelling experi-ence for the shopper.



The Reality of Retail Report highlighted several shopper trends and raised many questions that retailers and brands might want consider:

Summary of Key Considerations

• Shoppers are gathering information both online and in store, thus entering the store at differing stages of the buy cycle. How can marketing give shoppers the information they need based on where they are in the buy cycle?

• Shoppers also have differing buying preferences. For example, those looking to browse and those looking to get in and out quickly. How can marketing better cater to these preferences both in store and online?

IT’S NOT ABOUT ONLINE VERSUS IN STORE. IT’S ABOUT THE SHOPPER.

• Shoppers across the board are using mobile—including, men and women of all ages—primarily to gather and share information. There’s been a huge push for ecommerce, but perhaps a large focus also needs to be placed on incorporating mobile in store to help consumers buy?

• Shoppers aren’t using mobile in the same ways for the various product categories. Things such as product complexity, level of familiarity and price point all appear to impact how mobile is used. For your particular product category, what types of mobile capabilities make sense and might help close the sale?

• Social is also helping to cement the sale. Can it be used more intentionally in store to drive sales?

MOBILE PRESENTS A HUGE OPPORTUNITY FOR THE STORE.

• Generally, loyalty program use was low, used mainly by the age groups most squeezed budget wise. And, for those that did use these programs, the majority also did price comparisons. But, there is a large opportunity for brands and retailers to rethink loyalty. How can loyalty be better inte-grated into the shopper experience as more than just another discount outlet? And, should brands look into integrating other functions into loyalty apps, such as, social sharing, etc?

LOYALTY PROGRAMS AREN’T DRIVING LOYALTY.

• Traditional marketing, such as, demos/trials, POP displays, advertising and packaging are still important to shoppers. However, it is clear that some touch points, such as the sales associate and digital displays need to start evolving to bring more value to shoppers. Perhaps it’s time to start rethinking how these touch points are used in store?

TRADITIONAL MARKETING ISN’T DEAD TO SHOPPERS YET.

InReality transforms how consumers experience brands and retailers, turning consumer in-sights into innovative in-store solutions for the reality of 21st century retail. For almost 20 years, we’ve worked with clients like The Coca-Cola Company, Tempur Sealy, and The Home Depot to build stronger, more enduring customer relationships, while creating measurable, meaningful results.

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