CUSTOMERS TAKE CONTROL - PWC
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pwc.com/multichannelsurvey
Customers
take control
How the multi-channel
shopper is changing the
global retail landscape
December 2011
Understanding how online shoppers are reshaping
the retail experience
Rarely a day passes by that one of us their response. Our findings have both There’s much more inside this report
doesn’t have a conversation with a surprised us – for example, many more and please also visit our website,
colleague or client about multi-channel global online shoppers are following www.pwc.com/multichannelsurvey.
retailing. The specific discussions run brands using social media that we
Thanks for reading, and we hope you
the gamut from the prosaic, such as would have thought – and confirmed
the find report highlights insightful.
the tax ramifications of selling online much of the anecdotal evidence our
across borders, to the hypothetical, teams have been seeing across the Best regards,
such as what the retail store of the eight markets covered by the survey.
future will look like.
One of the biggest overall conclusions
John G. Maxwell
But we always end up focused on is that consumers are leading the
global consumers’ online behaviour. way in multi-channel shopping, with Global Retail
and Consumer
Consumers have amazing options at many retailers lagging behind in terms
Leader
their fingertips: information, services, of meeting their needs. Today’s global
and – not least – the ability to shop retailers have a huge opportunity
from anywhere via any number of to enhance the the mechanisms
personal technology devices. necessary to keep up with shoppers
who are demanding more
The question for retailers over the
customisation in terms of delivery and Mark Hudson
next three-to-five years is how online
returns, product choice, and number
shopping behaviour will continue UK Consulting
of channels from which to choose.
to evolve. Retailers can glean some Retail and
valuable information from their To increase the value of this paper for Consumer Leader
own customer data, but that doesn’t our clients, we’ve taken the liberty of
shed light on how millions of other leveraging the insights from our data to
shoppers are behaving. make several observations about how
retailers can better support their online
That’s why we undertook this effort
customers – and attract new ones.
to study the habits and preferences of
For instance, we note that retailers need
online shoppers from eight different
to become far more innovative with
markets, including the U.S, China,
their online presences; reboot their
Hong Kong, Germany, France, the
physical formats to emphasize quality
UK., Switzerland, and the Netherlands.
and customer enjoyment, not price and
If we can help our consumer and retail
selection (which is typically researched
clients spot burgeoning trends in the
online); and align themselves with how
data, they will have a better chance
the growing middle classes in emerging
of identifying patterns and planning
markets research and shop for products.
Contents Introduction 4 What we discovered 6 The Holy Grail for retailers – most-favoured status 11 The implications for retailers 16 Global retail in 2020 20
Introduction
Our findings are based on the most their products, run their stores, where shoppers least shop this way –
comprehensive research of global and manage their supply chains. Hong Kong – the percentage registered
multi-channel retailing that PwC has The successful business model of the at 45%.
carried out. Some of the results have future will be different from that of
The third kind of multi-channel
surprised us and some have confirmed the past. The winners will be those
shopping is using a range of different
much of the anecdotal evidence our who have recognised these trends
channels to make a single purchase.
teams are seeing across the eight and are building agile organisations
An example of this kind of transaction
markets covered by the study. capable of delivering a consistent
is researching a product online and
This report is based on both the data profitable proposition in a multi-
then buying it in-store. In fact, more
we have collected through our survey, channel, multinational way. It’s no
than 80% of all respondents research
and our deep experience supporting place for the faint-hearted.
online before they buy electronics,
clients in the market.
Defining multi-channel shopping computers and books, music, and
It’s clear that multi-channel shopping What exactly do we mean by multi- movies. Fully 60% research online
is not just here, but here to stay. channel shopping? There are, in fact, when buying clothing and footwear,
The single biggest conclusion from three different types of activities toys, and health and beauty products.
our study is that consumers are that multi-channel shoppers typically In other words, online research
leading and shaping this trend, with engage in. The first and most doesn’t just lead to online purchases,
retailers lagging behind. There is a common type is spreading shopping it’s also critical in driving traffic to
remarkable consistency in consumer across a number of different channels, physical stores.
behaviour across regions and choosing the one that works best
Our starting point
demographics, as well as between for a particular occasion or type
In conducting our first global study
developed and developing markets. of purchase. A huge 86% of our
of online shoppers, we wanted to
The global consumer is becoming respondents are already shopping
discover how certain markets around
increasingly sophisticated and retailers across at least two channels, and
the world were experiencing the
cannot adapt their operating models 25% are using four or five.
migration from single to multi-
at the same pace.
Another variant of multi-channel channel retailing. Current research
Closing the gap requires a significant shopping is buying goods from the and forward-looking forecasts on the
increase in agility and flexibility by same retailer but doing it across more subject suggest that this dynamic has
retailers, driven by deeper understanding than one channel. Seventy-six percent been in place for some time and is set
of their customers. This requires of our respondents have done this in to continue. According to Forrester
changes to the ways they track and the UK, over 70% in Germany and the Research, more than 40% percent of
measure consumer behaviour, market Netherlands, and even in the market the population in Western Europe
1. Online research was chosen to enable PwC to carry out a wider study than would have been achievable by a telephone methodology, with more robust numbers to provide a solid foundation
for analysis of consumer multi-channel shopping behaviour in different territories. The online panels used are localised and in local language to ensure broad reach to those that are more
inaccessible. The panels are used for research only and checks and balances are put in place to ensure that respondents are who they say they are, that they are demographically
representative (by age, gender, region, etc), and that respondents are appropriate for the purposes of the study. The research was carried out under the MRS code of conduct, as well as
equivalents in each other territory internationally. The caveat of conducting the research using this methodology is that those respondents who respond are more likely to be digitally-savvy,
in their shopping and other behaviours. However this is a constant across all the territories in which research was conducted. Results are likely to have inflated the figures for familiarity and
expertise with online shopping.
2. For the purposes of this report, we have considered Hong Kong as a separate market within China. We have identified some points specifically for Hong Kong where the results have
particularly stood out.
3. Forrester Research Inc.
4 Customers take control
Figure 1. Sample size in each market
UK
1,000
Germany
Switzerland
1,000
US
1,000 1,000
Netherlands China
France
1,000 1,000 1005
purchase goods online. Germany, was twofold: what’s the picture in Product categories
Switzerland and France all report other key geographic regions, and
Grocery
figures showing more than 50% of how should both global and domestic
consumers do so. Moreover, this trend retailers in those countries respond? DIY
is set to continue, with the European Jewellery/watches
In this report we outline key trends
average set to rise to 49% by 2015.3 Furniture and homeware
from our study and ways in which
Markets such as the UK and the
retailers can address these strategically. Sports equipment/ outdoor
Netherlands are likely to see figures
approaching 70%. Methodology Toys
PwC commissioned 7,005 online Health and beauty
PwC has been conducting surveys
surveys1 across three continents Clothing and footwear
of online shopping in the UK since
covering eight markets2 in August and
2007, and it’s clear that online has Computer
September 2011. Respondents in each
now become an integral part of most Electricals and electronics
market were chosen to reflect the
British consumers’ day-to-day
national profiles in terms of age, gender, Books/music/movies
behaviour. The question we posed to
employment status, and region.
ourselves in conducting this research
Changing the retail landscape 5
What we discovered
A world rife with online experts As we’ll see, this online savvy comes
who purchase across all with increased demands for faster
product categories service, more selection, and more
One of the findings that stand out transparent information in the
– and one heavy with implications for shipping and tracking of goods.
retailers – was the self-described
Staying with this theme of online
sophistication of the online shoppers
customer expertise, one area where
we surveyed. Many of our respondents
there was a striking consistency was
considered themselves to be highly
the great breadth of consumers’ online
capable in terms of researching and
shopping: 40% said they shopped
purchasing via the Internet. In fact,
online in all 11 categories we studied
69% of our respondents consider
(see page 5). This figure was broadly
themselves to be either ‘confident’ or
the same across all the developed
‘experts’ in this regard. In China, for
markets, but once again consumers
example, the proportion of these
in China were the most committed
‘expert’ shoppers was highest, at 86%
online shoppers, with 62% of those
Why is this so relevant for retailers?
questioned shopping across the
whole range.
Fig 2. 86% of the Chinese sample consider themselves accomplished online shoppers
China UK US
1 0 1 2 1 2
2 3 2 6 2 6
3 11 3 23 3 21
4 62 4 51 4 47
5 24 5 19 5 25
0 50 % 0 50 % 0 50 %
Experience level: (Beginner) 1– 5 (Expert)
Q3. How sophisticated an online shopper do you think you are?
Base: 7,005
Source: All charts are from PwC primary consumer research 2011 unless otherwise indicated.
6 Customers take control
Taken overall, more than 90% of more often than their peer groups in
90 %
online shoppers buy books, music other countries. In China, around
and films, and clothing and footwear 70% of our survey respondents shop
online. Even the categories at the online at least once a week, compared
bottom end of the scale, such as with around 40% in the US and UK,
of online shoppers buy books, jewellery, watches, sports equipment and around 20% for the Netherlands,
music and films, and clothing and outdoor goods, attract over France and Switzerland. Figure 4
and footwear online. 60% of online shoppers. shows how online shoppers in China,
in particular, dwarf those in other
While generally our findings show
countries in terms of how often they
that there is a great deal of consistency
shop online on average per month.
in online shopping behaviour around
the world, online shoppers in China
are unique in several ways, most
noticeably in that they shop online
Fig 3. Number of categories shopped online in last 12 months
120
7.7 8.0 8.1 8.1 8.1 8.3 8.4 9.5 8.3
100
10+
% of online shoppers
7-9
80 42 47 43 47 46 42
48 48
70 4-6
60 1-3
22
18 27 23 25 32
40 26 24
25 21
21 17 19 16
20 20 19 19
10
12 14 11
9 12 6 7 4 9
0%
ce
ng
s
y
S
na
l
nd
K
nd
Al
an
U
U
an
Ko
hi
la
rla
m
C
Fr
er
er
g
he
itz
on
G
et
Sw
H
N
Categories: Grocery, DIY, Jewellery/watches, Furniture and homeware, Sports equipment/outdoor, Toys, Health and beauty,
Clothing and footwear, Computer, Electricals and electronics, books/music/movies
Changing the retail landscape 722 %
of online shoppers
made their first online
purchases within the
past year.
While Internet shopping may have Fig 4. Chinese consumers are shopping online nearly 4 times as often as their
gone mainstream, plenty of online European counterparts
shoppers are relative newcomers.
Across the world, 22% of our sample
China 8.4
of online shoppers made their first
online purchase within the past year. Hong Kong 5.5
In the UK, this category of online 5.2
US
shopper almost doubled from 2010,
to 14%. The still fast-growing rate of UK 4.3
online shoppers around the world is Germany 2.9
one of our more surprising findings,
Netherlands 2.6
and indicates plenty of room for
online retailing growth as more and France 2.6
more consumers around the world Switzerland 2.3
get connected.
0 2 4 6 8 10
Average number of purchases per month
Q1. How often do you shop online?
Base: 7,005
8 Customers take controlThe popularity of online shopping
is rooted in many factors
our survey respondents. Interestingly,
however, the top factor given is 24/7
24/7
access is the most
What is it that is so attractive about access to shopping, cited by 28% of important factor that
online shopping, regardless of the online shoppers we surveyed. attracts online shoppers
nationality or geography? There’s a Online shopping, it seems, is all about
great deal of global consistency in the freedom, being able to shop wherever
top five factors cited. The conventional and whenever you want. As for
wisdom has settled on price as the selecting a specific online outlet, the
driving force for the growth of online key factors are reasonable pricing, free
shopping, and, indeed, it does feature and fast delivery, and a wide range of
among the top three reasons cited by products from which to choose.
Fig 5. When it comes to online shopping the convenience factor rules
I can shop whenever I want 28
Low prices / better offer 25
Quicker than visiting shops 18
Easier than visiting shops 11
Easier to compare products and offers 7
Better variety 4
To buy products unavailable elsewhere 4
Easy home delivery for big / heavy items 2
Better product information 1
Easier to find favourite brands 1
0% 5 10 15 20 25 30
Percentage of online shoppers
Q4. What is the most important factor that attracts you to shopping online? Top mention
Base: 7,005
Changing the retail landscape 9The desired multi-channel Fig 6. The customer purchase journey – online shopping has increased
purchase “journey” is consistent the options
from market to market
Online shopping has opened up huge Research Compare Transact Receive Aftersales
new choice for consumers, not just in
terms of what they buy, but how they Store
buy it. The Internet has empowered
the consumer in three ways: during Catalogue
the decision-making process leading
to the purchase; at the actual moment Mobile
of purchase; and throughout the
product ownership period, which Website
might include product delivery,
maintenance, and return.
As figure 6 shows, understanding
multi-channel is about breaking Certain geographic markets have Keeping up with multi-channel
shopping down into a journey that widely disparate online retail shoppers is getting more complex
starts with research and comparison, presences in certain categories. Take the clothing category. Almost a
crystallises at the moment of purchase, For example, more than 60% of third of our respondents said they
and is followed by delivery and the online shoppers we surveyed prefer to research and purchase
after-sales. At each stage, consumers in China say they research and clothing online, but this puts an onus
can now choose from a range of purchase clothing and footwear on the retailer to manage the returns
different channels, from conventional online, compared to just 23% of process. If items don’t fit they get
stores to online with home delivery to our Dutch respondents. sent back, so the retailer needs a
online with store-pick-up. Moreover, model that can handle this kind of
online shopping offers its own suite of This data gives retailers insight that
transaction in a seamless manner,
sub-channels, from the iPad to the can be used in making decisions
particularly if it involves returning
mobile phone to the PC. about where to consider investing,
goods to another country. In short,
and what kinds of returns they can
Multi-channel shopping behaviour consumers want simplicity, but that’s
reasonably expect. Is a physical store
may be very consistent across age, translating into far greater complexity
valued by my customers and why?
demographic and nationality, but for retailers. Most consumers are not
Do those attitudes differ from
when it comes to product category, wedded to any one channel, but most
country-to-country?
distinctive patterns emerge. In some retailers certainly are.
categories, consumers still prefer The challenge – at least for some
to shop via a single channel, either retailers – is that consumers are
wholly online, or wholly in-store. starting to behave in far more
For example, 49% of multi-channel sophisticated ways, whether they’re
More than
60
buying expensive items or weekly
%
shoppers prefer to shop for groceries
in-store, while at the other end of groceries. Because most retailers
the scale, 59% research and buy haven’t been quick enough to create
their books, music and films online. efficient multi-channel models,
Category data also illustrates that consumers are working it out
of Chinese consumers
for some categories, consumers shop for themselves, using different
channels in ways that best suit them. research and
across multiple channels, the most
In essence, consumers are creating purchase clothing
notable being electronics and
furniture/homeware. their own multi-channel experiences and footwear online
by leveraging multiple retailers compared to just 23%
across a single category or product. of the Dutch.
10 Customers take controlThe Holy Grail for retailers –
most-favoured status
Multi-channel consumers This seamless experience is vital, For example, according to our data,
are consolidating their because our study indicates that for 86% of our global sample shopped
shopping destinations many consumers, multi-channel across multiple channels with five
It’s clear from our study that there is shopping is leading to the development retailers or fewer. By country, online
no magic formula for a successful of personal portfolios of favourite shoppers in China and the UK have the
multi-channel operation. Those stores, which attract a higher largest retail portfolios, shopping with
retailers getting it right are doing proportion of that individual’s spend. 3.2 multi-channel retailers, compared
so in a variety of different ways, to 2.5 for all respondents. While
It’s achieving this ‘most-favoured
but one factor unites them: a deep delivering a seamless experience
retailer’ status that will be a key
understanding of their customers. The requires discipline and investment on
success factor in the future. This is
leading multi-channel players in the the part of retailers, those who do not
because consumers are clearly
different geographic markets are those make the necessary changes to their
consolidating spending amongst these
that truly understand their consumer business models run a very real risk of
preferred retailers, who tend to be the
appeal, and can then replicate that losing market share, as this process of
ones that are managing their business
consumer experience across all their consolidation spend could accelerate
in a genuinely integrated way.
channels, backing it up by seamless very quickly.
behind-the-scenes execution.
Fig 7. Multi-channel shoppers develop trusted favourites
80
70 86%
60
50
40
61
30
20
25
10
14 2.3
0%
0 - 1 channels 2 - 3 channels 4 - 5 channels
Q11a. For each of the following categories, what methods do you use for BUYING your
selected items? Please tick all that apply.
Base: 7,005
Changing the retail landscape 11It’s achieving this most-favoured
retailer status that will be a key
success factor in the future.
How retailers try to set media, even though this trend has
themselves apart absorbed a lot of the big retailers’ time
Looking at the data as to why certain and mind-space over the last few years.
stores become customer favourites,
For individual retailers, though, a
the reasons given are strikingly
much more varied pattern emerges
conventional. The top reasons cited by
from our survey, one that gives
our sample are product (63%) and
significant clues as to how the
trust (59%), factors which are core to
successful players are making
any retail operation, online or in-store.
multi-channel work for them.
It’s only at reasons three and five that
For example, Apple has built its
specific multi-channel factors come
success on innovative products and
into play: a user-friendly website at
marketing, and our survey shows
53%, and efficient delivery at 48%.
that its loyal shoppers are much
Intriguingly enough, there are no
less influenced by price.
factors on the list relating to social
Fig 8. T
raditional retail factors for success are also critical for multi-channel retailing success
I like the products they offer 63
I trust them 59
Easy to use website 53
I know they're always cheap / reasonably priced 51
Fast / reliable delivery 48
I like the store 44
They always have the items I want in stock 39
Good returns policy 37
I can return items to store 36
Website stores my address and personal information 30
They do free returns 25
I can reserve or purchase items for in-store collection 25
I get points / rewards 24
I like the staff 23
They have innovative products 23
0% 10 20 30 40 50 60 70 80
Multi-channel factors Retail factors
Q15. What attracts you to your favourite multi-channel retailer?
Base: 3,906 – all who selected at least one top retailer
12 Customers take controlApple has built its success
on innovative products
and marketing.
In the UK, Argos still has a genuine Figure 9 below shows how Marks & online shopping. Both 3 Suisses and
competitive advantage in its reserve Spencer scores highly on intangible La Redoute benefit from an appealing
and collect operation, and shoppers qualities like trust, as well as website, and efficient delivery and
like its prices. But it is clear that its operational factors like ease of returns returns. The number four retailer,
product range, quality of physical and quality of both stores and staff. Yves Rocher, a health & beauty
stores and delivery are not as The key point here, though, is how retailer, has built its success on a
attractive to shoppers. Tesco attracts little Marks & Spencer shoppers broad range of positive factors
loyal customers with its prices and its focus on price. It is the brand that including price, delivery and
reward points programme, but again consumers identify with and trust. availability, all supported by its unique
is not attracting customers with its product. Returns policies are much
In France, Fnac gets high marks on
product range. The company has less important to its customers, as the
trust, product range and the quality
huge numbers of loyal customers who consumer need for returns is far lower
of its stores from our respondents,
want to consolidate their spending in cosmetics than in other categories
despite a reputation for high prices.
with Tesco, and would probably such as clothing & footwear. But in
Interestingly, two of the other four top
buy more with a more compelling the cosmetics sector this is far less
multi-channel operators in France are
product offerings. significant than in a category such
former catalogue operators that have
as clothing and footwear.
successfully made the transition to
Fig 9. Marks & Spencer scores above average on many factors
All UK shoppers % M&S shoppers above/below average
I like the products they offer 72 12
Easy to use website 61 -1
I trust them 60 10
Always cheap / resonably priced 54 -32
I like the store 52 18
Fast / reliable delivery 49 -2
I can return items to store 44 22
Good returns policy 42 15
In-store collection 35 9
Always in stock 33 -4
I like the staff 25 12
I get points / rewards 25 -3
Website stores my address and personal information 24 2
They do free returns 23 10
They have innovative products 18 -3
0 10 20 30 40 50 60 70 80 -40 -30 -20 -10 0 10 20 30
Q17: what attracts you to your favourite multi-channel retailer?
Base: Those who stated M&S is one of their favourite multichannel retailers. M&S shopper sample size = 102
Changing the retail landscape 13Fig 10. Tchibo scores above average in specific characteristics important to customers, resulting in its position as
favourite in Germany
All German multi-channel shoppers % Tchibo shoppers above/below average
I like the products they offer 72 60 12 19
I trust them 59 12
Fast / reliable delivery 54 8
I know they're always cheap / reasonably priced 50 10
Good returns policy 41 0
Easy to use website 40 5
Always in stock 40 -4
They do free returns 36 -2
I like the store 35 2
I can return items to store 28 -1
Website stores my address and personal information 24 -11
I get early or exclusive access to sales / products 23 -11
They have innovative products 21 4
Collect in store 18 -6
I get points / rewards 16 1
0 10 20 30 40 50 60 -40 -30 -20 -10 0 10 20 30
Q17.What attracts you to your favourite multi-channel retailer?
Base: Those who stated Tchibo is one of their favourite multichannel retailers. Tchibo shopper sample size = 92
It is interesting to note that in the Customers in different markets Achieving ‘most-favoured’ retailer
results for Germany, as compared So what are we to deduce from these status, regardless of which country
to other countries, department results? It’s evident that the online a retailer is located in, is all about
stores don’t feature in the top ten shoppers in almost every country we knowing what customers value and
multi-channel retailers. This might surveyed go through a similar purchase delivering that experience effectively
be because neither Kaufhof nor journey, using the same multiple and seamlessly across all channels.
Karstadt – two of the leading channels across product categories. But But that’s not enough on its own.
department stores – have offered it is notable that the reasons for using Retailers also need to get the basics
a truly integrated multi-channel the channels differ between countries. right across the whole value chain:
online service. The implication for retailers wanting to Brand, product, price, and delivery.
expand to new markets is that they The same factors that make retailers
Tchibo, one of Germany’s largest
need a value proposition that is broad successful in stores make them
retailers, and top-rated by Germany’s
and deep enough to meet the customer successful across multiple channels.
online shoppers we surveyed, wins
needs in those different markets.
over its customers with a good
selection of affordable products, fast
delivery and an easy-to-use website.
14 Customers take controlBecoming a favoured retailer is one
route to multi-channel success, but it’s Multi-channel marketing
only part of the picture. The players demands a deep
who will win in a multi-channel world
reconsideration of existing
will be those who inspire their
existing customers to spend more
channels and costs
with them, and know how to use their
website/app/TV channel not only as
a sales channel, but to drive traffic to
the physical stores.
Multi-channel management
Managing the online side of a
multi-channel business is still a real strategy linking brand advertising, can have all the information when they
challenge for many traditional search engine optimisation, pay-per- make what could be very expensive
retailers. Unlike a bricks and mortar click electronic and email promotions, decisions. For example, pay-per-click
shop, you can’t just open an online and good old-fashioned word of advertising may look good in theory,
site – however appealing – and expect mouth. The fact remains, however, but it can be very expensive for certain
traffic. There is no Fifth Avenue, that many traditional retailers are popular key words, and can even end
High Street, Champs-Elysees, or not organised to link these activities, up generating a loss. The key point
Nanjing Road to attract shoppers. and lack the vision and digital talent here is that e-commerce is driven by
Online customers arrive at a web required to do this effectively. direct marketing, and there’s often
site from numerous different routes, a dearth of the right skills and
Multi-channel marketing demands
and managing these possible paths experience in traditional store-focused
a reconsideration of existing
to an online retail site is a Herculean marketing teams.
channels and costs, so retailers
challenge requiring an integrated
Social media is here to stay
The results of our survey are Fig 11. Percentage of online shoppers following brands through social media
particularly interesting when it comes
to how consumers are using social HK 44
media. Overall, more than one in
China 40
three of our respondents were using
some form of social media every day, US 32
be that Twitter, Facebook, or some 20
UK
similar site. While only a very small
minority have used these networks to Switzerland 16
shop (3%), the story is a bit different Germany 15
when it comes to following brands and
Netherlands 10
individual retailers via social media,
particularly in the US and China, France 8
including Hong Kong. In Hong Kong, 0 10 20 30 40 50
44% of our survey sample followed
Q24. Do you interact with brands online through social media?
specific brands or retailers. In China Base: 7005
that figure was 40%, and in the US
32%. So while online shoppers aren’t
quite yet ready to purchase items
through a social media site, they are
clearly using the medium to research
and follow brands they love.
Changing the retail landscape 15The implications for retailers
Even reasonably competent
multi-channel retailers
are still managing their
web operations solely as
sales outlets.
Focus on the consumer Even some retailers with an extensive Other website best practices for
It’s clear from our study that retailers online presence face some of the retailers include personalised
are lagging, not leading, the multi- same challenges, because they’re recommendations, augmented
channel trend. Some are more still running their online and in-store product information and product
advanced than others, certainly, but operations as separate silos. In extreme reviews, and rapid checkout.
there are still some businesses that cases this can lead to inconsistent
This consumer-facing activity needs
define ‘customers’ as people who are product ranges or prices throughout
to be supported by an organisational
in their physical stores. A consumer a retailer’s different channels,
structure that integrates the two
brand like Apple, by contrast, is focused undermining the web’s role in allowing
different operations and forces them
ruthlessly on the consumer. They don’t customers to research prior to visiting
to work collaboratively together.
mind which route consumers take, the store. Even reasonably competent
Likewise, budget and incentives need
as long as they arrive. multi-channel retailers are still
to be allocated to the online outlet
managing their web operations solely
Some retailers, particularly those that based not only on sales, but on the
as sales outlets, and failing to capture
started life with bricks and mortar, have traffic it drives to the physical store.
or measure their role in driving traffic
inherited business models and cultures Some retailers appoint ‘multi-channel
to the physical stores.
focusing entirely on running an directors’ in response to these
efficient shop operation, and may Ikea is one retailer that understands challenges, but in our view that misses
not be as flexible when the need arises this. The company’s website is perfectly the point. Multi-channel embraces the
to accommodate new consumer geared to push people to their local whole business – it is the business – so
demands. For example, many retailers store, providing detailed information if anyone’s running it, it should be the
lack a central database for managing on what’s available, on a unit by unit CEO. By contrast, some of the savvier
customer information across channels. basis. Other retailers could learn operators are now devising roles
Change is hard, not just in operational from this by designing websites that with titles like digital director, with
and commercial terms, but because actively encourage quick and efficient responsibility not just for e-commerce,
it requires new organisational online research, and making it easy but for marketing and social media.
structures, new governance systems, to translate that research into either
and new incentives. an online or local store purchase.
Features like wish-lists or the ability to
book an appointment to view an item
in-store can help build the same bridge.
16 Customers take controlMulti-channel embraces
the whole business –
it is the business.
In many cases this is not just a major So for China and other markets, smaller outlets, as is the case for the
commercial shift, but a significant retailers should consider the roles of ultra-convenience end of the grocery
cultural change, and that degree of their stores now and in the future. category. Of course, the degree to
transformation cannot be achieved Are they flagships for the brand, as which this dynamic plays out will also
either cheaply or overnight. Getting Apple stores are? Are they showrooms depend on geographic market and
multi-channel right has the potential for product range, as is increasingly other factors. As we’ve already seen,
to be both a significant differentiator the case with white goods? Chinese online shoppers already have
and a major competitive advantage for less of a connection to physical stores
The most likely scenario is that stores
those retailers who can achieve it. But than their Western counterparts.
will serve two distinct purposes.
that means having the business model,
The first is as a showroom, where The degree to which physical stores
the data, and the consumer insight to
customers come for inspiration, to become more tangential to retailers
target the right consumers, in the right
browse and to physically interact with has ramifications for systems,
way, through the right channel.
the products. The second is as a warehousing and distribution.
The role of the physical store convenient transaction and collection Depending on the category, retailers
is changing point, where customers come to may need to stock less in-store and
A key issue for all retailers with complete a journey started on the web. maintain larger depots with smarter
large numbers of physical stores is In this second case, whether the allocation systems. Whatever a
the role those stores should be playing customers’ online research included retailer’s product range, there’s a need
in a multi-channel world, and how click and collect or not, the point is that for greater transparency and more
that differs by country. Chinese online they enter the store knowing what they accurate real-time data, which has
shoppers, for example, embrace the want and what price they expect to pay. major IT and systems implications.
online medium more quickly than They are using the store simply as a There’s no question that the costs and
shoppers from other countries. Even way of completing the transaction. complexities of delivering a state-of-
though online shoppers in China are the-art multi-channel operation are
relative newcomers in terms of average Recognition of these two distinct store significant, but the stakes are high.
number of years since their first roles will cause many retailers to Achieving such a state not only means
online purchase, they have the segment their estates. There will be survival, but the taking of market
highest level of perceived expertise some flagship stores focused on the share from weaker competitors. Failing
and shop more frequently than our showroom function and, most likely, in the effort means losing market share
other surveyed markets. a larger number of strategically-placed to more savvy competitors.
Changing the retail landscape 17The world is getting smaller: players expand their offerings to more to replicate this success elsewhere,
Local players beware customers internationally, these local which could make these companies a
Our survey results show that within retailers could find themselves facing significant competitive threat in their
individual markets there exists a strong stiff competition. If these companies overseas markets.
bias towards the most well-known face increased risk, others have a
Multi-channel clearly offers significant
retailers based in those respective significant new opportunity.
risks and new opportunities for the
countries (see figure 12). For example, There are whole markets that are ripe
retail sector as a whole, both for the
the survey shows that the top ten for expansion, including Australia,
pure online players like Amazon, and
retailers shopped across channels in Russia and China, and we’re already
the more traditional retailers that also
the last 12 months include Walmart in seeing international revenues growing
have a substantial online presence. The
the US (41% of local online shoppers) significantly for some of the leading
former may prove to be the winners in
Argos (39%) and Tesco (30%) in the US and UK players, such as Amazon,
categories which can use an existing
UK, and Taobao in China (34%). Asos, JDSports, New Look, Next and
distribution network (like books
Marks & Spencer.
But as it gets easier to buy across delivered by post), while the latter
borders, and as some of the top Likewise, once a retailer has worked have real, if under-utilised, advantages
multi-channel and online-only out how to do multi-channel well in in their store estate, if they can only
their home market, it’s relatively easy work out the right way to use them.
Fig 12. The online shoppers we surveyed overwhelmingly favour well-known domestic brands
UK Germany Netherlands
50 50 50
40 40 40
30 30 30
20 39 20 20
30
10 10 10
16 15 13 14 12 15 13
11 10 9 10 10 10
0 0 0
Argos Tesco Marks & Asda Boots Tchibo Weltbild Schlecker Lidl Aldi HEMA H&M Blokker Kruidvat Albert
Spencer Heijn
Base: 632 Base: 495 Base: 414
France US China/Hong Kong
50 50 50
40 40 40
30 30 30
20 20 41 20
34
10 21 10 24 20 10 24
16 16 20 20 16
15 15 12 13
0 0 0
Fnac 3 Suisses La Yves Carrefour Walmart Target Best JC Kohl’s Taobao Suning Gome Joyo 360 Buy
Redoute Rocher Buy Penney Amazon
Base: 584 Base: 525 Base: 607
Switzerland
50
40
30
20
10 24 22
14 13 11
0
Migros Coop Apple Nespresso Inter-
discount
Base: 649
Q14. Of those you have chosen [purchased with through multiple channels], what are your favourite multi-channel retailers/brands?
Base: All consumers who selected at least one favourite retailer
18 Customers take controlGlobal retail in 2020
Customisation, innovation
and efficiency
The global nature of this year’s Social media will influence a larger The multi-channel grocer:
study allows us to make some broader proportion of sales, driven both by convenience, range, efficiency
forecasts for the future. Let’s start consumers, who will become much In 2020, big grocery chains like Tesco,
with the implications for the way more active in sharing their buying Carrefour, Auchan, and Walmart
retail works. preferences among their friends, will have established a commanding
and by retailers that will have become position, not only in food but in
Customised retail
much cleverer at exploiting and many other categories such as
By 2020 retailers will use all the
targeting their followers and fans and electronics and toys, where the specialist
resources of graphics, video,
using that interaction to drive sales. As competitors are all but extinct.
interactivity, and personalisation to
the different forms of media converge,
enhance the consumer experience. The business model will be based on a
it will be possible to target marketing
They may well be more collaborative combination of small ultra-convenient
and advertising far more precisely.
too, working with compatible associate outlets throughout each market, as
brands – or even competitor brands Transformed supply chains well as larger mega-stores in large
– to create virtual shopping malls. At the back end, supply chains population hubs. Home delivery in
will have undergone a complete one-hour slots will be a key aspect of
As online evolves, so too will mobile,
transformation. More products will the operation, with an even wider
with new tools designed to support
likely be delivered to homes, and range of both food and non-food
the consumer’s purchase journey,
online ordering and in-store pickup online than in-store, and click and
from research, to store navigation,
will also gain in popularity, enabling collect available for both at the local
to in-store ordering, and a richer,
streamlined and free returns. convenience stores on a 24/7 basis.
fuller integration with social networks.
The customer-facing website will be
In addition, the hard work of
Online retailers will become much slick, efficient and highly trusted,
consolidating stock will happen far
more sophisticated in how they help selling not just products but services
more often at warehouses, rather
customers navigate increasingly too like insurance, travel and photo
than stores. For retailers this will
large assortments. Allowing the processing, that consumers will be
mean less stock and less working
customer to move easily from viewing compelled to buy in order to gain
capital, leading to greater efficiency
a category assortment of perhaps reward points. Companies will be
and higher profitability.
200 products, to identifying the three effectively mining and analysing – in
most suitable for them, will become And what about the different real-time – the flow of customer data.
a key differentiator for the successful retail formats? Let’s look at a
multi-channel retailer. few possibilities.
Changing the retail landscape 19The inspirational brand: The next-generation department The showroom itself will be deliberately
loyalty, excitement, innovation store: service, quality, enjoyment designed as a destination in its own
Brands like Apple and Abercrombie In 2020 the conventional department right, with live demonstrations,
& Fitch will still be flourishing in store will have evolved into an expert advisors, and personal shoppers
2020, building enormous followings operation fronted by a small number available. The website will support
of loyal customers. Their model is of strategically-placed showrooms. customers in between store visits in a
grounded in a small number of Around half of all sales will be variety of ways, whether for making a
flagship stores designed to allow conducted in these showrooms, purchase, requesting after-sales service,
people to touch, see and feel the which showcase only selected or researching products. There will
brand with great staff, a high level highlights of the range available be parallel mobile and tablet apps
of service, an outstanding designed online. The showrooms likewise will designed to drive traffic to the
space, and state-of-the-art interactive hold little stock, but will be able to stores by highlighting upcoming
experiences. These stores will be able arrange extremely swift and efficient events and showing video and other
to take orders, but most purchases delivery. The defining characteristic promotional material.
will take place online via dedicated of the whole product range is
mobile phone and tablets apps. selection, because the retailer has
tapered down the breadth of choices
to just the best-in-class items.
20 Customers take controlWe’ve seen the multi-channel future,
and it’s China
We were surprised there was such uniformity in This compares with 36% in the UK and 31%
the study results across the world. But Chinese in Germany.
online shoppers, including those in Hong Kong,
Moreover, mobile shopping is significantly more
had markedly different survey responses than
popular in China, as mobile phone usage and
online shoppers in other countries.
network access have outpaced broadband roll-out.
First, Chinese multi-channel shoppers in It looks very much as if China is skipping the
our survey purchase a far higher proportion of their ‘online by PC’ phase and moving straight to
purchases online than do our respondents from handheld devices.
other countries, and do so across all categories.
Social media certainly is one of the big stories in
For example, according to our survey, they
China. According to our survey, Chinese online
purchase about 60-65% of their clothing, footwear,
shoppers use social media (90%) far more than
books, music and films online. The comparable
those in other countries, so it follows that social
figures for the rest of the markets are around
media has a relatively bigger impact on their
35-45%. They also lead the way in going direct to
purchasing decisions. Simply put, retailers
brands, with around 60% online shoppers in China
targeting the Chinese shopper – whether based in
having bypassed retailers to shop online directly
China or abroad – should do so through social
from the brand.
media, not traditional channels.
The new catalogue category: If these could be some of the winners, Not needing a significant physical
helpful, handy, at-home what about the losers? Certainly those presence would make the cost of entry
Gone will be the cumbersome paper facing the highest degree of risk into those markets much lower, and
catalogues so expensive to distribute. are bricks and mortar specialists in could have significant implications
Instead, customers will receive categories already in the process of both for domestic operators and those
a dedicated tablet computer moving wholly online. Books, music, international companies looking to
designed for sofa-based browsing electronics and toys will be the build a presence there.
and one-click buying. Catalogue obvious sectors. There will still be
The behaviour of Chinese consumers
retailers will update their product physical store estates offering clothing,
observed in our study might well be
range on a real-time basis, and there furniture and jewellery, but the
a leading indicator of how markets
are a number of support features department stores and grocers will
like Brazil, India, Indonesia, and
such as live web-chats, advice on provide ever-fiercer competition.
South Korea could develop, allowing
accessorising, and a parallel TV
Emerging markets will lead them to leapfrog the traditional
channel designed to build the brand
the way Western model. In 2020, in these
and generate excitement.
This could indeed be a vision of the markets, it won’t only be about
There will be local stores in some future in mature markets like the developing shopping centre, or
key locations and a larger number US and UK, but it could start much distribution networks; it will be a
of local collection and return points quicker in emerging markets, brand new retailing world, and a
– some operated by third parties – to especially those that don’t already very mobile one at that.
manage deliveries and accept returns. have a hefty retail infrastructure.
Changing the retail landscape 21Contacts
Global R&C Leader The Netherlands
John Maxwell Dennis van Ameijden
T: +1 973 236 4780 T: +31 (0)88 792 35 20
E: john.g.maxwell@us.pwc.com E: dennis.van.ameijden@nl.pwc.com
China Joost Huismans
Carrie Yu T: +31 (0)88 792 74 77
T: +852 2289 1386 E: joost.huismans@nl.pwc.com
E: carrie.yu@hk.pwc.com
UK
France Mark Hudson
Sabine Durand-Hayes T: +44 (0)20 7804 5141
T: +33 (1) 56 57 85 29 E: mark.hudson@uk.pwc.com
E: sabine.durand@fr.pwc.com
Puneeta Mongia
Anne-Lise Glauser T: +44 (0)20 7212 3643
T: +33 (1) 56 57 84 53 E: puneeta.mongia@uk.pwc.com
E: anne-lise.glauser@fr.pwc.com
US
Germany Lisa Dugal
Gerd Bovensiepen T: +1 617 471 6916
T: +49 211 981 2939 E: lisa.feigen.dugal@us.pwc.com
E: g.bovensiepen@de.pwc.com
Mark Jenson
Clemens M. Bachmann T: +1 678 419 1096
T: +49 211 981 2588 E: mark.r.jenson@us.pwc.com
E: clemens.m.bachmann@de.pwc.com
Ian W. Kahn
Switzerland T: +1 646 471 4580
William Wright E: ian.w.kahn@us.pwc.com
T: +41 (0)58 792 8243
E: william.wright@ch.pwc.com
Mike Foley
T: +41 (0)58 792 8244
E: mike.foley@ch.pwc.comPwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 163,000 people in 151 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2011 PwC. All rights reserved. Not for further distribution without the permission of PwC. “PwC” refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm’s professional judgment or bind another member firm or PwCIL in any way. Designed by PwC Brand & Design 20929 (11/11)
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