WO31 Online Disrupters - September 2018 (Issue 31)

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We show you how to turn shoppers into buyers

Online Disrupters

Brought to you by

www.shoppercentric.com

ISSUE31 SEPT2018

This report is based on: 1001 online interviews among UK adults (18+) who shop online for their household products.

Research was conducted June 2018 In conjunction with

ISSUE ISSUE

3131

PUBLISHED BY: Shoppercentric EDITOR: Lisa Hutchinson DESIGN: Mike Higgs

e: mikehiggs@mac.com We welcome ideas for future articles and reports. Guidelines on our preferred format and style are available from Lisa Hutchinson: e: Lisa.Hutchinson@shoppercentric.com

Š Shoppercentric 2018 All copyright is vested in Shoppercentric unless expressly stated otherwise. No permission is granted for reproduction, use or adaptation of the material, save as to provide for under Statute, and any such use must be accompanied by the appropriate accreditation.

We show you how to turn shoppers into buyers.

Trends Research...

Danielle Pinnington,

Founder & Owner, Shoppercentric

Welcome to our latest edition of WindowOn, our shopper trends report. This time we have decided to take a look at how the shopping list is fragmenting across the plethora of retail options available today.

Digital is a huge topic for us all to consider, both in terms of how our own businesses function, but also in terms of how we market our services or products.

Yet perhaps the biggest impact digital is having is on shopping habits. Within the general news around online retailers and Amazon in particular, there is an interesting angle which we have started to capture in our client work – the impact of subscription services.

Increasingly online shoppers are rejecting one size fits all, and separating their household shopping across a range of digital and physical retailers.

This fragmentation has considerable implications for both brands and retailers, so we hope the learnings we share with you here give you food for thought in terms how to deliver to shopper needs in the future.

As always, we are here if you have any questions!

Decision Delegation – The biggest threat to traditional retail?

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Need it now?

It’s only a click away…

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There is more to life than simply increasing its speed.

Shopping gets personal

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Online shoppers have told us traditional retailing still fulfils an important role.

Will Amazon really be king of the jungle?

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Amazon clearly means business with its relentless drive to satisfy more and more of our shopping requirements.

THOUGHT PIECE

14 Why Shopping Insight Matters What happens in the store, or on-line is making the difference between successful and failed businesses.

Regular Features...

The BIG Picture...

Shopper Talk...

Out & About...

8 16 17

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Decision Delegation – The biggest threat to traditional retail?

Written by

Danielle Pinnington danielle.pinnington@shoppercentric.com

In this omnipresent world of modern retailing, business strategies understandably start with a focus on different channels and their ability to meet shoppers’ needs, either individually or together. We talk about the fragmentation of shopping and the interplay of clicks and bricks on the path to a purchase, like signals on a rail track. What we are less likely to do is consider that the absolute fundamentals of shopper decision-making will change beyond all recognition in the wake of distributer innovation such as smart subscription services. The traditional grocery ‘shopping lists’, encompassing all household category needs, may well become a relic of the past.

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The ability to siphon off category purchasing through regular, automated replenishment is a game changer – and doesn’t Amazon know it.

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Awareness and usage of online shopping services Research based on any shopping needs - All grocery shoppers (n=1001)

Which of these types of websites or internet shopping options have you...

Heard of?

Ever used?

Used at least twice in the last 3 months?

Online Grocers

% 87 66 54

Prime

% 83 55 43

Same day delivery

% 62 21 11

Decision Delegation – The biggest threat to traditional retail?

The ability to siphon off category purchasing through regular, automated replenishment is a game changer – and doesn’t Amazon know it. In a complex world full of constant multi-media stimulation, shoppers’ brains crave some down-time, when they can shift into auto-pilot mode and not direct precious processing capacity towards shopping for loo rolls and laundry powder. And Amazon’s ‘subscribe and save’ service is there to oblige, allowing repeat purchases to be triggered at required intervals without a moment’s thought. Our research shows that a third of Amazon subscribers are motivated by not having to plan their top up shopping – a whole new perspective on ease of shop.

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One in ten online grocery shoppers have already tried Amazon’s subscription service, and its likely continued growth threatens to create a generation of blinkered category shoppers who rarely deviate from habitual choices. This will of course present huge challenges for brand activation.

But the trend towards online subscription is not just about ‘mindless’ replenishment of commodity items. Quite the opposite.

Category enthusiasts can join likeminded shoppers in signing up for curated subscription services that offer an inside track for those in the gang. This new way of shopping delegates product selections to experts, whilst offering a sense of belonging to a club. Whether boxes of seasonal fruit and veg, healthy nuts and grains or real ale,

WO Issue 31 | September 2018

Amazon Fresh

Pantry

2 hour delivery

Subscribe & Save

Subscription %

%

Recipe boxes

Tea/Coffee

%

45

57

40

8

13

14

3

6

8

%

Cheese/Choc/Snacks

%

Makeup/Beauty

%

42

52

34

11

18

12

5

8

6

%

Food boxes

%

Toiletries/babycare

%

41

46

34

9

12

10

4

6

7

%

Alcohol

%

Petfood

%

38

46

27

11

15

9

6

8

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subscribers are handing over the reins to trusted suppliers who make individual product decisions for them. Products that don’t make the grade won’t make the basket, but in this scenario, brands need to convince the middle men not the end shopper.

Taking Recipe Boxes as an example, half of subscribers are looking for the service to introduce them to new and different products and ideas. Using these third party agents to provide inspiration will doubtless dilute shoppers’ desire to make their own discoveries in store – and this presents another serious challenge for NPD showcasing in traditional retail channels.

And then, there’s the impact of subscription services on value judgements, as shoppers

sign up simply to save. Being assured of consistent discounts from the likes of Amazon Prime can relieve the need to put effort into finding the best deal, neutralising competitor pricing activity. So even the most hard-wired bargain hunting efforts are in danger of being placed in the hands of a trusted online agent.

Leaving more traditional retailers even less able to lure shoppers in.

Through a process of elimination, shoppers will be left driving the decisions that matter most to them and delegating the rest, creating a forcefield around established brand loyalties. Smart retailers will evolve from predators to partners. Trust, whether in efficiency, value or expertise, will become the new currency for success.

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Need it now?

It’s only a click away...

Written by

Kristen Davis kristen.davis@shoppercentric.com

As the online attack marches on, the ability to offer instant gratification or a quick fix has been a key line of defence for traditional retail. Indeed 63% of online grocery shoppers still most associate physical stores with being able to ‘get what I need now’.

But rapid deliveries and click and collect convenience are challenging what we mean by ‘now’ and redefining short-term fulfilment.

When shoppers need something quickly, they no longer have to drop everything and head to the shops. Amazon same day or next day delivery services can take the strain and provide a guaranteed speedy solution at the click of an order button. More than six in ten users of these services tell us that being in a hurry is exactly why they buy this way. Add to this the fact that 57% of online grocery shoppers most associate online with saving

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time, and 62% with saving effort, and it’s little surprise that ecommerce is such a threat to bricks and mortar retailing, offering ease and efficiency without delay.

As one Amazon shopper puts it: “It’s so convenient, I don’t need to leave the house. I can think of something at 9am and have it by 12.”

As delivery services become more responsive, shoppers’ expectations shift and they learn that with just a little forward planning they can meet pressing needs without leaving the house. Just as fashion rode the impulse wave by ensuring that delivery services offered speedy enough gratification, grocery is reeducating shoppers to lean on online services when fulfilling ‘emergency’ as well as highly planned, habitual missions.

That said, the desire to visit shops appears to remain alive and well, even among online

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Here are some reasons other people have given for choosing where to shop for groceries / household items. For each statement please indicate whether it describes your feelings towards online shopping, in-store shopping, both or neither.

Key:

Online only %

Online & In-store 10

20

30

40

In-store only 50

60

70

80

Neither 90 100

Good for bulky items Cheaper Saves time Avoid temptation / spend less Takes stress out of shopping Keep track of my spending When it’s not urgent Better deals / exclusives Better range of choices Easier to see new / different Fits round my routines See before I buy Better, personal service Get what I need now What I want, when I need it - avoiding waste To enjoy shopping To use other services Takes the effort out of shopping

grocery converts. When these shoppers are asked about their last five grocery shopping trips, on average only one has been completed online, with one in three trips still being made to a large supermarket and one in five to a convenience multiple. As well as immediacy, the store experience seems to offer an important sense of control, as many shoppers associate it with the ability to see and judge products for themselves, including what’s new and different. So clearly delivery waiting time is not the only gap that the online channel needs to close in order to get a greater share of wallet and pre-empt more store trips. Shoppers also need to feel close enough to products on screen to achieve their own sense of quality control and discovery here.

This becomes even more important when we realise how discerning shoppers are becoming about what they buy where, using a variety of retailers and channels to tick items off their ‘list’. One in four of our online grocery shoppers tell us that they split their shopping across different stores and websites, buying different things in different places because they know the best places for each.

Until online grocery sets out its stall in a way that showcases range and innovation, as well as availability and efficiency, stores that are smart about curating category ranges and providing a place for shopper-empowered choice will still offer strong competition. As Gandhi of all people reminded us, “There is more to life than simply increasing its speed.”

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thebigpicture

By Lisa Hutchinson

Eat17 Enjoying a visit to @EAT_17 - a c-store designed to challenge the grab and go mindset!

Eat17 - Not Your Average Store Innovative food retail brand Eat17 is expanding its multi-award winning chain of grocery stores with new locations opening in 2018.

Eat17 combines elements of a convenience store with a dining scene and has achieved rapid growth, enjoying annual turnover of around £10m.

The brand’s unique concept, strapline: Not Your Average Store, allows independent local retailers to share the same aisles as Eat17’s own branded products ensuring every store is different. Each location also offers a dining experience with menus focusing on locally sourced fresh produce and tastes from around the world.

Ref. press release 2018

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As shoppers increasingly combine on and offline channels to meet their variety of grocery requirements, they also seem to be balancing heart and head in the retail choices they make.

Written by

Iona Carter iona.carter@shoppercentric.com

If we boil grocery shopping down to simply sourcing what you want, when you want it, at a price that appeals, you might wonder why anyone would bother to go to shops at all in the future. If online retailers can earn trust in their ranging, their picking and their speedy and accurate delivery, the Utopian vision of hassle free shopping, without aisles, checkouts and (worst of all) other shoppers, could well turn into reality. But wait. Is that really the stuff of dreams, or would the bricks and mortar experience be sorely missed by many?

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From what online shoppers have told us traditional retailing still fulfils an important role, not least because of the personalised service experience it can provide. More than half of online grocery shoppers associate shops, not online, with a ‘better personal service’. And more of these shoppers associate enjoyment with shops (68%) than with sites (48%).

In this era of algorithms and bots, it appears that shoppers still value the human touch and the chance to experience individual, interpersonal service from real people.

Online certainly lightens the load, with 8 in 10 feeling that it takes the effort out of shopping. But its clinical efficiency can evidently also offer a somewhat dehumanised experience that does not satisfy more emotional shopper needs.

As shoppers increasingly combine on and offline channels to meet their variety of grocery requirements, they also seem to be balancing heart and head in the retail choices they make. Hard-headed online grocery shopping is most associated with controlling spending (70%), avoiding temptation (60%) and managing bulky items (80%). It is practical, sensible and

focused, offering a disciplined experience for those who don’t want to be distracted or diverted. Offline shopping in contrast offers a more individualised experience that allows shoppers to make more intuitive judgements in the moment, engaging with what catches their eye and more easily spotting the new and the different. (74% associate this with shops vs 53% with online). Moreover, store-based shopping habits are most associated with shopping ‘to size’, that is only buying what’s needed in order to avoid unnecessary waste (73% associate this with shops vs 41% with online). So traditional channels offer a more tailored experience in which shoppers are appropriately cutting their cloth accordingly.

What’s clear is that there is demand for both types of shopping as even online grocery converts make extensive use of store-based options. The smart retailer will ensure its omnichannel strategy focuses on the right hooks in the right channels, ensuring that they each play to their strengths, rather than trying to flatten out the differences. That way, shoppers’ natural desire to get the best of both worlds will be realised.

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Written by

Penny Ericson penny.ericson@shoppercentric.com

Will Amazon really be king of the jungle?

We’re led to believe that UK supermarkets are quaking in their boots about Amazon muscling in on their territory. This online giant, with its logistical superpowers, is seemingly poised and ready for grocery domination. Attacking on multiple fronts with Pantry, Fresh and Subscribe and Save, Amazon clearly means business with its relentless drive to satisfy more and more of our shopping requirements. But shoppers on these shores can be an awkward bunch, so will they oblige and enact the trends that are so widely predicted?

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Here are some statements other shoppers have used to describe why they stopped using particular websites / web services.

47% Haven’t needed an order recently

21% Found somewhere cheaper

18% Delivery charges

16% Found somewhere better

11% Inconvenient time slots

9% Poor substitutions

5% Poor quality fresh produce

4% Other Amazon n-179

Young urban parents are most likely to lead the march, with the highest penetration of current Amazon grocery usage being seen among the 25-34 age bracket and those with kids. 12% of 25-34 year olds currently use Amazon Subscribe and Save, whilst closer to 7% are using Amazon Fresh or Amazon Pantry. Yet these same groups of shoppers are more likely to subscribe to a coffee pod service than any of these Amazon ones, providing a useful reminder of the importance of maintaining perspective.

Furthermore, given our aging population a good deal of consideration must also be given to those older shoppers who appear to be largely out of the Amazon grocery loop.

Despite four in ten online grocery shoppers aged 55+ currently using Amazon Prime, less than 2% use Amazon Pantry, suggesting there is far more work to be done to convert these more traditional Amazon customers from music to muesli.

It is also worth remembering that Amazon can expect no more loyalty from grocery shoppers than any other retailer in the marketplace, as shoppers increasingly please themselves and their pockets. Among the most commonly cited reasons for shoppers lapsing in their Amazon usage are finding ‘cheaper’ (21%) or ‘better’ (16%) elsewhere.

So while Amazon is grabbing the headlines now, how long before it too falls foul of a new kid on the grocery block who can tick all the right boxes? With globalisation in its sights, Alibaba could well curtail Amazon’s ambitions with its aggressive pricing and state of the art delivery infrastructure, redrawing the UK grocery battle-lines yet again.

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THOUGHT PIECE Written by Danielle Pinnington

Why Shopping One of the first things I learnt when moving from consumer to shopping insight was the need to really interrogate data. The days of a nice easy preference measure between the red pack and the blue pack, or 99p vs £1.09 were long gone. Instead I entered a minefield of trying to get under the skin of behaviour vs attitude, and when to spot habit as learnt behaviour vs a conscious decision on the part of the shopper.

That is what has made this area of research so stimulating for us as researchers, but also so challenging for clients more familiar with consumer insight. And it’s a crucial issue today, because what happens in the store, or online is making the difference between successful and failed businesses. Consumers cannot consume or use what hasn’t been bought. So much time is spent exploring what consumers want or like, or don’t yet know they need, and so little time is spent really understanding the purchase journey.

What role does the category play in the household, so what mindset is the shopper in when buying in-store?

Who is the category being purchased for, so what factors is the shopper keeping in mind, or how much control do they even have over the choice made at fixture?

How long does shopper take to make their decision, or how much do they care about the category to invest Are they time in considering stocking up the options? or buying for a specific occasion?

Here are just some of the questions worth asking yourself to test how much you know about shopping habits in your categories:

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Is it a destination category or a convenience?

Insight Matters How familiar are they with this retail environment, and therefore how much of what they do is learnt behaviour e.g. referencing gondola ends, aisle avoidance etc?

What is their perception of this particular retailer / retail environment and how does that impact on their perceptions of your category?

What are the visual cues they associate with the category or the brand?

How do they navigate the store and the category?

What are the factors that help them choose what goes in their basket? Are these the same as the factors that make your product appealing to your consumers?

What are the opportunities to positively influence along the path to purchase?

And it isn’t all about the first moment of truth either. Of course, that point of potential interaction is hugely important – fail here and your brand is sunk. The often quoted figure of 95% of new products failing in their first 12 months is shown to be true every single day in retail as products are delisted. But each failure may have begun before the shopper even reached the fixture, which demonstrates the complexity that is the purchase journey.

I appreciate that for many FMCG marketeers, what happens in the store or online is left to the trade, category or sales teams. But as the pressure on consumer spending and on retail environments increases, you are missing a massive opportunity by not immersing yourself in the gap between delivering your NPD to the business, and it being placed in a shopping bag. That gap can feel enormous with many pitfalls because all your efforts at producing a great product count for nothing if it can’t make its way into those homes you have designed it for.

What are the points of frustration that could block a purchase?

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Out & About Real words from the high street.

Brought to you by the keen ears of the Shoppercentric team...

Amazon Subscribe & Save has crept into our repertoire (yes, I have grudgingly stopped my boycott). I have deliveries from Amazon every 6 weeks of a shampoo and chocolate that otherwise I can only buy in Waitrose.

I used to go to Waitrose every few weeks to buy these specific things (ie in theory spending less c£10), then would end up blowing c£100 on indulgent food, sushi, homewares etc etc – you know what it’s like when you go to Waitrose.

It saves me time, money and petrol so a complete no-brainer

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We’ve been blogging...

Have you missed our two monthly blogs? We regularly contribute to the FMCG blog and our own LinkedIn Blog. Follow us on the links below: www.fmcgnews.co.uk www.linkedin.com/company/ shoppercentric-ltd?trk=mini-profile

We tweeted...

There’s been a sharp increase in the proportion of UK households having to make major changes to spending because of the economy – 26% in May 2018 vs 17% in December 2017. This will directly impact on shopper needs – are you ready for that?

WO Issue 31 | September 2018

We spoke at...

On May 2nd Danielle spoke at The Retail Design Expo about ‘Getting under the skin of GenZ’

On June the 6th Danielle was on the advisory board and Co-chair of the day at Esomar, the Shopping Experience Seminar held in Amsterdam.

This conference covered key issues that are affecting the retail sector: l The changing nature of retail, with

the stellar growth in online shopping, and the opportunities that digital developments are opening up

l Shopper marketing has now

become a recognised part of the marketing mix, and the line that marketing was either above or below has been erased

On May 24th Susie talked with Innocent about one of our favourite projects of last year. www.insight-intelligence.com/ market-research-summit-Zone

l Shoppers themselves are

taking advantage of a world of unconstrained 24/7 shopping,

l The once linear path to purchase

has become a web of interactions and touchpoints www.esomar.org/events/2018/ shopper-seminar-2018

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thelastword...

We thought we’d let our clients have the last word by telling you what they think of us...

Thanks again for a super useful and engaging session!

Lead Shopper Marketing Manager Manufacturer

Thank you as you proved a very popular addition to our speaker line up and we were much complimented on your content and style.

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Retail Design Expo

Thanks for this report and for the toplines on Monday which were really useful to get us thinking.

Insight Manager Manufacturer

On behalf of the team I’d just like to say a big thank you for the past few weeks that you’ve put into: recruiting excellent articulate participants in the exact demographic we requested, pulling together a great method and discussion guide and the focus group and VR sessions which have provided so many eye openers, we could never have anticipated such richness and the huge impact a brand delivery and voice can have on these opinions.

Insight Manager Manufacturer

PO Box 435 Harpenden Hertfordshire AL5 2WX

01582 468047 info@shoppercentric.com www.shoppercentric.com