new retail day'14 - 6. maj - lee petersen, wd partners

amazon can’t do THATLee PetersonEVP, Creative ServicesWD Partners

wdpartners.com

amazoncan’t dothat

agendaOur sponsor

agendaOur sponsorWhy?

agendaOur sponsorWhy?Amazon

agendaOur sponsorWhy?AmazonStudy Vitals

agendaOur sponsorWhy?AmazonStudy VitalsFindings & Results

agendaOur sponsorWhy?AmazonStudy VitalsFindings & ResultsBE the Store of the Future Video

agendaOur sponsorWhy?AmazonStudy VitalsFindings & ResultsBE the Store of the Future VideoConclusion

WD is a customer experience expert for global food and retail brands.

Our mission is to deliver innovative solutions that will drive and shape the future of retail.

46 years 10 offices worldwide 350+ people

What We Do

insights & strategy design & brand digital services

operations engineering architecture & engineering program management

Thought Leadership

Wiring the Customer ExperienceHow Consumers Are Embracing Fast-Emerging Digital Technologies

Retail's Next GenerationHow Millennials Will Change Shopping

The New Killer App: StoresYou Have Stores, Use Them!

The Continuum of CoolHow Successful Brands Stay Relevant Crossing the Generations

Supermarket ShowdownLeaders and Laggards in the Battle for Consumer Preferences in Physical and Digital Grocery Experiences

The Fundamentals of Aisle AttractionIncreasing Center-Store Traffic How In-Aisle Merchandising Attracts

Our PartnersBIG BOXCPG CONVENIENCEGROCERY SPECIALTY RETAILFOOD SERVICE

why?

nce upon a time...O

Retail was simple.

There was a customer, a list and a store.

So we opened stores.

And then we opened a lot of stores.

And a lot more stores.

Buy online ’96

BUY!

Until one day it changed...

MILLIONS OF STORES

But we kept opening stores.

Until someone had an even better idea.

So what once looked like this only a short time ago...

Now looks like this.

What does this mean for retail?

It means...

Customers can buy anywhere.

Anytime...

THEY ARE ALWAYS SHOPPING!

WE ARE ALWAYS SHOPPING!

And a lot of it is being done like this...

And less and less through these.

More and more through these guys...

the 900pound gorilla

Number 9 retailer in the US

2nd fastest growth retailer of the top 50 in the US

Source: Stores.org, 2013 Top 100 Retailers

Over the past year:

180 million customers, bought 3.5 billion items

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

Over the past year:

$75+ billion salesin 2013

Source: The New York Times

Over the past year:

Added about 25,000 employees

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

Over the past year:

Built several new warehouses across US & world

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

Over the past year:

Hired 75,000+ part-timers for the holiday season

Source: The Wallstreet Journal

Over the past year:

Integrated with Proctor & Gamble

Source: The Wallstreet Journal, October 2013

Over the past year:

Sunday delivery with USPS

Source: The New York Times, November 2013

Over the past year:

Planning a new 3.3 million-sq-ft headquarters Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

Over the past year:

Near downtown Seattle, with biospheresSource: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

salesAmazon has reached a point where they surf a feedback loop of dominance.

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

sales

profit

Amazon has reached a point where they surf a feedback loop of dominance.

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

sales

profit

investment

Amazon has reached a point where they surf a feedback loop of dominance.

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

Amazon has reached a point where they surf a feedback loop of dominance.

sales

profitexpansion

investment

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

Source: fool.com, How Long Can Amazon.com Defy Gravity?

2005 2006 2007 2008 2009 2010 2011 20120%

10%

20%

30% 29.66%29.34%27.15%

4.19%

0.99%

Apple Profit Margin

Microsoft Corporation Profit Margin

Google Profit Margin

Wal-Mart Stores Profit Margin

Amazon.com Profit Margin

40%

The very concept of online shopping has become synonymous with Amazon.

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

Harris Interactive2013 Brand Equity Poll

2013 Brand Equity poll:

Measured brand familiarity, quality perception and how likely consumers will buy

Polled more than 38,000 US residentsSource: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

The results put Amazon on top:

Achieved the highest overall score in the survey’s 25-year history

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

The results put Amazon on top:

More than half said Amazon was the first site they went to when shopping online

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

The results put Amazon on top:

Nearly half said they were likely to have orders delivered to Amazon branded lockers

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

2/3 among younger respondents Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

Amazon topped the Harris Interactive poll for companies that Americans trusted most.

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

AMAZON ISN’T A COMPANY YOU WANT TO HUG; IT’S A COMPANY THAT DOES EXACTLY WHAT IT SAYS IT WILL DO–EVERY TIME.

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

Since shopping has changed so much...

Source: WIRED Magazine, The Only Thing Amazon Has to Fear Is Amazon Itself

Is Amazon the store of the future?

Is Amazon the company of the future?

studyvitals

Surveyed 1,700 consumers using a nationally syndicated panel

Seven in-depth focus groups with three generations of shoppers: Millennials, Gen-X and Boomer

Quantitative & qualitative shopper research

4%Mature

24%Millenial

31%Gen X

41%Boomer

Hispanic

17%

Caucasian

62%

African-American

12%Asian

6%Other

3%Female

53%Male

47%

Rankings based on the top two boxes, appeal and influence on purchase behavior.

store strengths vs. online strengthsThis study isolates twelve experience attributes of shopping online vs. in-store as defined by consumers and redefined by us.

ExperienceattributesExclusive to online shopping

One-click shopping

Price comparison

Suggestive selling

Unlimited options

Online reviews &recommendations

online attributes

One-click shopping

Price comparison

Suggestive selling

Unlimited options

Online reviews &recommendations

online attributes

One-click shopping

Price comparison

Suggestive selling

Unlimited options

Online reviews &recommendations

online attributes

One-click shopping

Price comparison

Suggestive selling

Unlimited options

Online reviews &recommendations

online attributes

One-click shopping

Price comparison

Suggestive selling

Unlimited options

Online reviews &recommendations

online attributes

ExperienceattributesExclusive to in-store shopping

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

in-store attributes

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

in-store attributes

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

in-store attributes

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

in-store attributes

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

in-store attributes

ExperienceattributesShared online and in-store

Ideas & inspiration

Exclusive products& bargains

shared attributes

Ideas & inspiration

Exclusive products& bargains

shared attributes

findings& results

Stores arewinning

The top 2 features for physical shopping beat all online features.

79%

75%68%

69%

Appeal Influenceon purchase

Instant ownership

Touch & feel

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experienceAggregated all consumers across three generations.

i’ve been excited online, it’s just not the same thing as shopping in the store.– Millenial male

Amazon still can’t compete with... I can just get in my car and get it...

Amazon still can’t compete with: I can just get in my car and get it...Now.

AppealRankings for online vs. in-store features

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

One-click shopping

Price comparison

Suggestive selling

Unlimited options

Online reviews &recommendations

79% 59%

No. 1 in-store feature No. 1 online feature

Rated reviews as very/ extremely appealing

Rated instant ownershipas very/extremely appealing

Instant ownership

Touch & feel

Excl. products/bargains

Reviews

Price comparison

Experience

Unlimited options

One-click shopping

With friends

Ideas & inspiration

Associates

Suggestive selling

79%75%65%59%57%55%48%47%42%40%31%27%

Appeal rankings

In-store features are in orange. Online features are in blue. Shared features are in gray.

Influence onpurchaseRankings for online vs. in-store features

69% 53%

No. 1 in-store feature No. 1 online feature

Rated reviews as very/ extremely influential for purchase

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

One-click shopping

Price comparison

Suggestive selling

Unlimited options

Online reviews &recommendations

Rated touch and feel as very/extremely influential for purchase

Touch & feel

Instant ownership

Excl. products/bargains

Reviews

Price comparison

Experience

Unlimited options

With friends

Ideas & inspiration

One-click shopping

Associates

Suggestive selling

69%68%57%53%48%46%36%34%32%31%24%20%

Influence on purchase rankings

In-store features are in orange. Online features are in blue. Shared features are in gray.

well, i don’t find anything exciting about shopping online. I just do it because i like to comparison shop. I like to find the best price, but it’s really not thrilling or exciting. it is very informative though. i like that part.– gen-x shopper

for now,emotional benefitstrump functional.

But not for longThe Millennial erosion

millenials aredifferent.

Shopping anytime, anywhere, for anything they want is the cost of entry.

I like the convenience of online shopping; you don’t have to get dressed. you don’t have to be social. i can still have my crazy kids running around and get just what i need while i’m multi-tasking.– millennial female

You feel powerful. you feel like you can get anything you want. you feel like you can get any brand at any time. when you’re shopping in store, you feel like you have to settle for that brand because they don’t have anything else. – millennial male

Most appealing to Millennials Rankings for online vs. in-store features

Unlimited options

Customer reviews

Instant ownership

Price comparison

Touch & feel

Excl. products/bargains

One-click shopping

Shop w/friends & family

Suggestive selling

Experience

Inspiration & ideas

Store associates

1 4

7 7

4 3

10 8

2 5

8 9

5 1

11 10

3 2

9 12

6 6

12 11

MillennialsMost Appealing

BoomersMost Appealing

Millennials are more comfortable with mobile shopping overall.More than 3x more likely to buy than Boomers.

Source: 2012 WD Partners study, Wiring the Customer Experience

Millennials are more comfortable with mobile shopping overall.More likely than a Boomer or Gen-Xer to have made a purchase on Amazon.

Source: 2012 WD Partners study, Wiring the Customer Experience

Millennials are more comfortable with mobile shopping overall.2x more likely as Boomers to make purchases on Amazon 2-3 times a month.

Source: 2012 WD Partners study, Wiring the Customer Experience

the vastness of just everythingis right at your fingertips. youcan look at macy’s. you can look at walmart. you can look at target. you can look at amazon. you can look at all your stores at once.– millennial female

70%

Millenial Gen-X Boomer

64%

68%

60%

54%

45%

Ranking online customer reviews as most appealing

Ranking online customer reviews as influential forpurchase

Millennials value peer reviews and seek information from trusted sources before making purchases.

One-click shopping

Price comparison

Suggestive selling

Unlimited options

Online reviews &recommendations

sometimes getting things in themail is like christmas or something, it is exciting waiting for things to arrive at your door when you could go to the store and get it.– millennial female

Millennials grew up with this

the window of opportunity for retailers is closing fast, especially for retailers eager to capture the loyalty of millennials.

So what was at the bottom?

Store associatesranked 11th out of 12 features.

Instant ownership

Touch & feel

Exclusive products & bargains

Shopping with friends

Inspiration & ideas

Associates

79%

75%

65%

42%

40%

31%

68%

69%

57%

34%

32%

24%Ideas & inspiration

Exclusive products& bargains

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

AppealInfluence

on purchase

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

Ideas & inspiration

Exclusive products& bargains

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

Instant ownership

Touch & feel

Shopping with friends

Store associates

Store experience

I try to avoid stores because the customer service is so bad.– gen-x male

in the past, store associates were knowledgeable about things but i think that’s gone away. most of the time you go into a store and they don’t know anything about anything.– boomer female

retail crimeof the century

Invest inpeople Opportunity

Customer service, customer focused 86%

Factors that consumers consider of high importance when choosing small businesses

Source: Web.com and Toluna, Consumer and Small Business Perception Survey, Sep 10, 2013

Customer service, customer focused

Personal, intimate,human, face-to-face86% 84%

Factors that consumers consider of high importance when choosing small businesses

Source: Web.com and Toluna, Consumer and Small Business Perception Survey, Sep 10, 2013

Reinvent the role of your store employee.

Think of...

Think of...

Think of...

Think of...

Think of...

Think of...

invest in the one asset online can never trump:

invest in the one asset online can never trump:

people.

The emotional connectivity that a store associate brings is the ultimate differentiator between shopping online and shopping in-store.

Summary (so far)

1 Stores are winning

12

Stores are winning

But not for long

123

Stores are winning

But not for long

Employee status to consumer is deplorable

store ofthe future

stores must evolveand actually be something more in the minds of shoppers

Be... The Store of the Future

Be social

Be open

Be captivating

Don’t be... The Store of the Past

Don’t be... loud

Don’t be... contained

Don’t be... boring

Don’t be... dis-engaged

Don’t be... warehousesque

Don’t be... cluttered

Don’t be... horizontal

Don’t be... littered with random technology

Don’t be... terrifying

Don’t be... conservative

Don’t be... old-school

Source: businessinsider.com, 7 Retailers That Are Closing A Ton Of Stores

Barnes & Noble

226

To close between 2011-2021

To close by end of 2015

Closed in 2013 Closed in

2012 and 2013To close by 2015 To close between

2014 - 2019

To close by May 2014

225

200185

180 175

33

Staples GameStop The Gap Aeropostale JCPennyAbercrombie & Fitch

0

50

100

150

200

250

Hundreds of Retail Stores Are ClosingUS Retail Store Closings

conclusion

Our findings reflect a deep truth:

Human beings are, and will always be, socially driven.

however...

Stores must invest to retain cultural relevance and gain next-generation loyalty.

the closer you are to a physical amazon (warehouse), the more vulnerable you are to getting destroyed by...

it’s easy to compete with us, just do what we don’t do.– SAM WALTON

wdpartners.comHow to get this study:

he nd.

Thank you...

T E