the peaks of shopping - creating a rollercoaster of emotions
TRANSCRIPT
The peaks of shopping:Creating a rollercoaster of emotions
FITCH
The pea
ks of shopp
ing
Connecting the power
of memories to revenue
at retail
Global retail and brand consultancy FITCH and global payments leader Worldpay have teamed up to
unpick the complexities of modern retail. Surveying over 2500 UK
consumers, we’ve looked at how retailers can use the ‘peak end rule’ to help generate greater
experiences in-store.
Contents .
04 The omnichannel landscape
.
06 Finding focus with peak end rule
.
12 The PEAK of the experience
. 18
The END of the experience .
24 Key take-outs
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02—03
The pea
ks of shopp
ing
Is your customer
journey flat?Creating
memorable in-store
experiences with the peak end
rule
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The pea
ks of shopp
ing
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04—05
The omnichannellandscape
It’s a jungle out there —We are rapidly losing focus as retailers. Omnichannel retail has created a myriad of touch-points to manage. Delighting audiences at every moment simply isn’t practical. Where and how do we find focus for retail budgets?
Our gaze has shifted online —Over the past 15 years, digital channels have accounted for two thirds of retail sales growth and this year online sales are expected to top £60bn1,2. This has had a major impact on physical retail, with footfall in 2015 down an average of 10% compared with 20143.
We also face the task of digitising the store, streamlining everything from product exploration to pick-up and payment. More than 50% of retailers expect to spend more on technology in 2016, be it online or in-store4.
1 PWC, 2015, Retail Trends, www.strategyand.pwc.com 2 eMarketer, 2015, UK Retail Ecommerce Sales to Reach £60 Billion This Year, eMarketer.com3 Pymnts, 2015, Why a Decline in Foot Traffic Has Retailers Looking Up, www.pymnts.com4 Ecommerce Week, 2016, Retailers to Spend More on Technology This Year, www.ecommerceweek.co.uk5 L2inc, 2016, Dealth of Pure Play Retail, www.L2inc.com6 Euromonitor, 2015, How Retailers and Brands Should Prepare for Gen Z, www.blog.euromonitor.com
The pea
ks of shopp
ing
But physical retail isn’t dead —Physical shopping will continue to reign. Despite the continued growth of ecommerce, it is projected that 80% of retail sales will still take place offline in 20192.
Similarly, brand behaviour in the US suggests ‘pure-play’ business models may be a thing of the past. Online retailers (including Amazon) are opening stores in a bid to lower online acquisition and delivery costs. A network of ‘experience’ stores has helped US fashion brand Bonobos reduce digital marketing costs from 25% to 4% of net sales, whilst maintaining site traffic and conversion5.
The challenge is finding focus —Rather than shifting entirely from the High Street to the web, consumers will be driven by a seamless interplay of both, with mobile facilitating the blurring of channels. We need a means of defining how and where to focus investment in both physical and digital channels.
Finding focus is especially difficult when targeting the next generation of shopper, or Gen Z (14-20 year olds), who have equally high expectations of both digital and physical channels6.
— 2014
£52.72 £60.36 £67.00 £73.70 £80.33 £80.96
— 2015
— 2016
— 2017
— 2018
— 2019
UK Retail Ecommerce Sales 2014-2019. Billions of pounds, percentage change and percentage of total retail sales.
Note: Includes products or services ordered using the internet via any device, regardless of the method of payment or fulfilment, excludes traveland event tickets. — Source: eMarketer, September 2015
17.1%
13.0%
14.5%
14.5%
15.7%
11.0%
17.0%
10.0%
18.1%
9.0%
19.3%
13.3%
Retail Ecommerce sales
% change
% of total retail sales
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The pace of ecommerce growth is slowing.
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ks of shopp
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06—07
Find focus withthe peak end rule
Peak End
Pleasure
Time
What is the peak end rule? —The peak end rule is a psychological theory developed byDaniel Kahneman and Barbara Fredrickson, which challenges the way we judge past experiences. The theory proposesthat we judge an experience largely on our feelings at the peak (the most emotionally intense point) and the end, rather than the sum of every moment. This is a result of our brains trying to ease the decision-making process and avoid hard work. As a consequence, having a highly positive peak and ending will drive perceptions of the customer experience as a whole. Similarly, it will help to keep the brand top of mind, driving repeat visits both online and in-store.
Most favoured experience
Least favoured experience
Comparing two experiences
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ks of shopp
ing
Brands should
focus effort on the
journey’speak
and end
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Think like a film director
What does this mean for retailers?
08—09
Avoid the logic trap —Retailers often fall into the logic trap of trying to make every touch-point marginally more pleasant than competitors, evenly distributing budget, with no peak and a forgotten ending. While a host of design commentators are talking about the peak end rule, we see few retailers applying the theory explicitly. Take a movie maker’s approach —Imagine a peak scene from Rocky.For most of us, that’ll be the moment he runs up the steps and holds his arms up in victory. Filmmakers use the emotional response in signature scenes to drive the overall opinion of the movie/experience. To stand out in the category, retailers need to think like film directors and invest a disproportionate amount of their budget in an emotional spike and finale.
The pea
ks of shopp
ing
Rocky
—Rocky racing up the
Philadelphia steps
and the concluding
battle against A
pollo.
James B
ond —T
he dram
atic opening a
nd closing scenes w
ith Jam
es B
ond at their core.
Pretty Wom
an —T
he Beverly H
ills shopping scenes and R
ichard Gere
traversing up the fire escape.
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ks of shopp
ing
10—11Exploring the peak end rule in an omnichannelworld
The pea
ks of shopp
ing
TV Print
Radio
DM
Social
SiteRetail
Screen Search
Mobile CC
Customer
In light of the growing rangeof connected channels…
— Where can brands create the most emotionally intense peak?
— How does the consumer journey end?
Two key questions
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ks of shopp
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12—13
The PEAK ofthe experience
Where can brands create the most emotionally intense peak?
Triggering the rightemotions is key —The key to creating a memorable peak is to trigger intense emotion through surprise and delight, because intense emotion activates the brain for memory encoding and recall7. This means mildly positive emotions such as contentment or relaxation are less likely to make an event memorable than intensely positive emotions such as surprise, amusement or excitement.
7 Lewis et al, 2010, Handbook of Emotion8 Schall, 2015, The Future of UX Research: Uncovering the True Emotions of Our Users. User Experience Magazine, 15(2)
Activating emotions
Pleasant
Unpleasant
Deactivating emotions
The emotional spectrum
A
lert
Exci
ted
Elated
Happy
Contented
Serene
Relaxed
C
alm
Bore
d
Depres
sed
Sad
Upset
Stressed
Nervous
Tense
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Activating emotions such as excitement can make an event more memorable than neutral emotions like satisfaction.
The emotional specturm is based on Arousal/valence model developed by James Russell & Lisa Feldman Barrett8
Emotional spectrum
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The pea
ks of shopp
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14—15
The possibilitiesfor emotionalengagement are greater in-store
Opportunities for emotional distinctiveness —In a bid to explore the sources of emotional intensity in an omnichannel world, Worldpay and FITCH asked 2500 UK consumers about the sources of fun and excitement in shopping across the end-to-end shopping experience.
Shoppers who considered online shopping fun and exciting largely focused on what is removed from the experience, be it cost, time or effort. These are areas that offer limited long-term standout against competitors. Shoppers who considered in-store shopping fun and exciting largely cited what is added to the experience, be it socialising, atmospherics, product engagement, discovery or novelty. These traits offer far greater freedom for brand expression and distinction from competitor experiences. The opportunity for attracting Gen Z (16-20 year olds in our study) is particularly strong in-store, with 58% of this age group stating greater loyalty to the brands shopped for in-store compared with brands shopped for online (higher than any other age group).
The top sources of in-store shopping fun and excitement: —
The top sources of online shopping fun and excitement: —
Being able to try products
Browsing on a whim
Socialising with friends
The store atmosphere
Discovering something new and novel
— 51%
— 46%
— 30%
Shopping from the comfort of home
Accessing wider choice
Uncovering great deals
Sourcing products quickly
— 73%
— 55%
— 49%
— 27%
— 25%
— 23%
(48% for Gen Z)
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The pea
ks of shopp
ing
16—17
What does this mean for retailers?
Identify your brand essence and bring it to life with intensity —Define the type of ‘movie’ you’re making. What do you want to be remembered for and when? Is it action or romance? Identify your brand’s essence and use emotionally intense moments to make desirable traits memorable.
Hamleys: Worlds of play —Hamleys is a brand associated with play on a grand scale. FITCH developed immersive worlds of playto create a toy destination in theheart of Moscow. Tree houses and secret pathways captivate the entire family as they are led on a journey through motor city, a safari zone, an enchanted forest and more.
PIRCH: Heightened sensations —PIRCH stores offer customers the opportunity to test products and enjoy using them before purchasing, including an in-store spa with a range of over 30 high-end showerheads for customers to use. ‘Try before you buy’ becomes something new and powerful.
McLaren: Obsessive engineering —A story of engineering obsession,where every decision exists for a reason. FITCH brought this to life in-store by replicating the heightened precision of the car and making the McLaren F1 the hero. FITC
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ks of shopp
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18—19
The END ofthe experience
The forgotten end of the customer experience —In most cases, the final step of the customer journey is payment and it has a significant role to play in the end-to-end experience. Yet payment has largely been neglected or deprioritised as an area where retailers can add a positive end ‘emotion’. To understand the importance of payment in modern retail, you only have to look at the biggest pain point for consumers today - queuing. Almost 40% of consumers surveyed thought that the ‘Queuing and payment process’ was the most frustrating part of the entire in-store shopping experience, more than any other factor. Consumers won’t tolerate a long payment process, with 79% prepared to wait no more than 5 minutes to pay before they will leave. —The question is: why ruin a great in-store journey with a poor payment experience?
Approach payment strategically —It’s time to start looking at payment as the strategic end in the customerjourney - redefining the what, whereand when of payment, to ensure a delightful ending. With queuing such a pain point for consumers, why should they have to queue up at the till? Why do they even need to pay at any specific location or indeed have the payment facilitated by a sales assistant?
How does the customer journey end?
— 39%
— 22%
— 17%
— 10%
— 10%
Queuing and payment process
Finding a product
Comparing products
Understanding or trying a product
Staff assistance
Top five frustrations of in-store shopping experience
End the experience
with a payment
high
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ks of shopp
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20—21
Pay anywhere —Nearly half (48%) of consumerswould find it more convenient topay anywhere in-store, not justat a traditional checkout (i.e. if staff could take payment with a mobile device connected to a card reader).
Despite a clear appetite for a moreflexible and convenient experience,only 27% of consumers had experienced this – leaving a huge opportunity for many retailers to redefine their in-store journey. Pay through self-serve —This opens up opportunities for retailers to enhance the customer experience. An incredible 76% of consumers were interested or very interested in being able to self-scan and pay for an item in-store via their mobile phone, never getting their card out, never visitingthe checkout.
This in-store journey has yet tobe realised, but it does highlight the consumer appetite for a frictionless payment experience, one that can ultimately help contribute to thatend ‘peak’.
Pay via smartphone —Mobile is not only driving greaterpersonalisation both in-store andonline, but it’s also opening up new ways for consumers to pay, whether that’s an online wallet or through NFC contactless payments (e.g. Apple Pay).In fact, more than half (54%)of consumers believe that withinfive years their phone will replacetheir card as the main method of payment.
Key opportunities for payment innovation
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Payment connected with other services —For Gen Z shoppers in particular, our research shows that consumers expect retailers to embrace technology to help them in-store. Making mobile part of a more connected in-store journey could pay dividends, whether it’s helping in-store navigation, assisting with purchase decisions, or helping staff engage with customers. Payment can and should be a delightful end to all of these features.
Payment for a connected generation
62% would like to leave home without their wallet, instead paying for everything with their smartphone. 57% are interested in biometric payment and using a fingerprint, palm or iris scanner to pay. Only 35% have ever had a sales assistant help them find and pay for an item with a mobile payment device. Those that had, 61% found it very personal and engaging.
Technology for a connected generation
81% of Gen Z would like to see retailers make better use of technology in-store to help with their shopping experience. 49% have used click and collect in the past three months. When doing so, 50% have ended up purchasing an additional item when collecting in-store.
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22—23
Shopping with a happy ending
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Monsoon: Enhancing critical touchpoints —Mobile payments that minimisecustomer frustration. Monsoon cantake orders anywhere in-store witha mobile reader and tablet, helpingreduce missed sales as out of stockcan be ordered, paid for anddelivered to a location of their choice.87% of Monsoon customers say it is an excellent experience. Harris & Hoole: Delight through simplicity —Creating a seamless, invisible payment experience that could be leveraged by retailers. The Harris & Hoole app lets users load their payment card so that payment becomes truly invisible. After thecard is loaded, the customer simply checks in, walks into one of the coffee chain’s stores and orders. They are then asked, “do you want to pay with the app?” They say yes. Done. World Duty Free: Driving speed and convenience —A slick payment journey when timeis paramount. The mobile paymentsolution has reduced queues fortravellers in a rush, empowered staff so customers can pay anywhere on the shop floor, and also allows overseas shoppers to pay in their own currency. As a result, the average transaction value has jumped 44% on the mobile devices compared with the main tills.
We’ve helped brands enhance the experience at the final step, using a range of solutions to create seamless payment experiences:
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ks of shopp
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Key take-outs
The peak —Retailers can create a more distinctive and intense emotional peak by harnessing the sensory and socialnature of physical retail. Identify your essence and what your brand needs to be famous for and bring it to life with novel experiences. At the same time, use digital to remove the ‘lows’ in the journey, creating a greater sense of speed, accessibility and simplicity. The end —Retailers can combat the two most frustrating parts of the entire shopping experience, as identifiedin this research, in one seamless piece of customer service. An added-value experience, where sales assistants can help consumers find the product they are looking for and allow them to pay for it on the spot without queuing. A seamless and invisible payment experience is the key to a happy ending. The outcome —A highly positive peak and ending will drive perceptions of the customer experience as a whole. Adopting the peak end is an more efficient means of keeping brands top of mind, driving repeat visits both online and in-store.
So as a retailer, ask yourself this… Is my customer journey flat? Or does it have a peak and an ending to remember?
References: PWC, 2015, Retail Trends, www.strategyand.pwc.com
eMarketer, 2015, UK Retail Ecommerce Sales to Reach £60 Billion This Year, eMarketer.com
Pymnts, 2015, Why a Decline in Foot Traffic Has Retailers Looking Up, www.pymnts.com
Ecommerce Week, 2016, Retailers to Spend More on Technology This Year, www.ecommerceweek.co.uk
L2inc, 2016, Dealth of Pure Play Retail, www.L2inc.com
Euromonitor, 2015, How Retailers and Brands Should Prepare for Gen Z, www.blog.euromonitor.com
Lewis et al, 2010, Handbook of Emotion
Schall, 2015, The Future of UX Research: Uncovering the True Emotions of Our Users. User Experience Magazine, 15(2)
Worldpay Research, 2,503 UK Consumers, March 2016
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About Worldpay
Worldpay is a leading payments company with global reach. We provide an extensive range of
technology-led payment products and services to over 400,000
customers, enabling theirbusinesses to grow and prosper.
We manage the increasing complexity of the payments landscape for our customers,
allowing them to accept the widest range of payment types around
the world. Using our network and technology, we are able to process
payments from geographies covering 99% of global GDP, across
146 countries and 126 currencies. We help our customers to accept more than 300 different payment
types. Worldpay UK has a 42% market share in the UK and helps businesses of all sizes sell more to
their customers by acceptingcard payments in-store, online, via mail or telephone, and on
the move.
www.worldpay.com/uk
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About FITCH
Designing the future. FITCH transforms consumer experience and accelerates business success. We deliver seamless solutions by combining the physical, human and digital elements of a brand
to create unique experience signatures.
FITCH is a leading global retail and brand consultancy with
an integrated offer of strategy, design and implementation,which enables us to deliver
across alltouchpoints. We do this for clients that include adidas,
Dell, Hamleys, H&M, Lego, McLaren and Mars Retail Group. FITCH is a WPP company (NYSE).
www.fitch.com +44(0) 207 479 0900
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