DEMYSTIFYING THE ONLINE SHOPPER 10 MYTHS OF MULTICHANNEL RETAILING - PWC'S ANNUAL GLOBAL SURVEY OF ONLINE SHOPPERS DEBUNKS THE CONVENTIONAL WISDOM ...
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Demystifying
the online shopper
10 myths of
multichannel retailing
PwC’s annual global survey of
online shoppers debunks the
conventional wisdom about online
consumer behavior
January 2013
pwc.com/multichannelsurvey
II Demystifying the online shopper: 10 myths of multichannel retailing
Contents
Separating fact from fiction to better serve today’s online shoppers 3
Myth 1 Social media will soon become an indispensable retail channel 6
Interview: PwC’s Sean O’Driscoll 8
Myth 2 Stores will become mainly showrooms in the future 12
Myth 3 The tablet will overtake the PC as the preferred 14
online shopping device
Myth 4 As the world gets smaller, global consumers are getting more alike 16
Myth 5 China is the future model for online retail 20
Myth 6 Domestic retailers will always enjoy a ‘home field’ advantage 24
over global retailers
Myth 7 Global online pure players like Amazon will always enjoy a scale 26
advantage over domestic online pure players
Myth 8 Retailers are inherently better positioned than brands, 28
as they are closest to the consumer
Myth 9 Online retail is cannibalising sales in other channels 30
Myth 10 Low price is the main driver of customer spend at their 32
favorite retailers
Final thoughts 35
For more information 36
For a deeper dive into the “myths,” video interviews, and country
data, visit our web presence at pwc.com/multichannel survey
PwC’s Multichannel Retail Survey 2012 1
2 Demystifying the online shopper: 10 myths of multichannel retailing
Separating fact from fiction
to better serve today’s
multichannel shoppers
By John Maxwell, Global Retail and Consumer
Leader, PwC
One thing I’ve learned in have a lot of options at their fingertips:
Myth: any invented more than three decades information, services, and—not least—
story, idea, or concept; working with some of the the ability to shop from anywhere via
an imaginary or fictitious world’s biggest companies is all manner of personal technology
thing or person1 that successful executives and devices: mobile phone, PC, iPad and,
entrepreneurs often radiate soon enough, futuristic accessories like
untiring optimism. And the wearable Google-developed smart
rightfully so—the thick skin phone eyeglasses. And there are a lot
and fortitude needed to make of new consumers buying more in the
hard choices and succeed in emerging markets. Together, that should
tough times is best paired with a positive, mean good long-term growth prospects
inspiring vision. for global retailers and consumer
goods manufacturers.
And yet, sometimes the optimism needed
to change the world can prevent even the Yet many companies see the multichannel
best of us from coolly looking at the lay bullet train leaving the station and,
of the land. It can be particularly difficult instead of feeling excitement, are actually
for corporate executives to cut through more overwhelmed than anything
the hype and separate fact from fiction else. Their confusion is heightened by
when it comes to the global market for misinformation and false assumptions
multichannel retail spending. that gain currency through anecdotal
evidence, a few highly publicized
The opportunity is real, but hype media stories of success (or failure),
and half-truths—myths, if you and individual experience bias. In this
will—abound report, based on a survey of more than
In theory, digital technology can connect 11,000 shoppers in 11 different countries
any retailer or CPG company to any spanning four continents, we debunk
customer in the world who has access to some of the mythology concerning
the Internet. For their part, consumers consumers and discuss what our findings
mean for retailers and CPG companies.
1 Random House Dictionary, Random House Inc. 2012
PwC’s Multichannel Retail Survey 2012 3
Netherlands
Canada Russia
U.K. Germany
Switzerland
U.S. China
France Turkey
Brazil
Countries in 2011 survey
Added in 2012
Building on last year’s results China, for example, 70% of our survey
This is the sixth consecutive year that respondents shopped online at least once
PwC has published a study of online a week, compared with about 40% in the
shoppers, and our second truly global US and the UK, and around 20% for the
study.2 In last year's survey, which Netherlands, France and Switzerland.
included seven countries,3 we talked In fact, our 2011 findings showed that
about how multichannel shopping is here Chinese online shoppers were shopping
to stay and how global consumers are online nearly 4 times as often as their
becoming increasingly sophisticated. We European counterparts.
found retailers were sometimes having
trouble adapting their operating models But in a testament to the accelerated
to keep up. pace of change in how consumers are
shopping online, our results from last
Some of our 2011 data was, to us, year—when compared to this year’s
staggering; for example, more than 90% survey of 11 countries4—already seem
of online shoppers bought books, music a bit dated. For example, in just one
and films online. Even the categories at year we’ve seen a major increase in the
the bottom end of the online shopping
scale, such as jewellery, watches, sports 2 PwC commissioned 11,000 online surveys across four
equipment and outdoor goods, attracted continents in July and August 2012. Respondents in each
market were chose to reflect the national profiles in terms of
more than 60% of online shoppers. age, gender, employment status, and region.
3 Our 2011 study included the U.S., U.K., China, Switzerland,
Germany, France and the Netherlands
Among different countries we also
4 Our 2012 study includes the U.S., U.K., China, Switzerland,
found some eye-popping differences. In Germany, France, the Netherlands, Brazil, Canada, Russia and
Turkey.
4 Demystifying the online shopper: 10 myths of multichannel retailing
adoption of social media across our retail partners as they do so. According products through social media and
global sample.5 Whereas last year 49% to our survey, more than a third of actually conducting a sales transaction.
of our sample reported that they follow consumers have already bought products This example shows how otherwise good
brands or retailers on social media, this directly from brands or manufacturers. information can be used to lend currency
year 59% claimed to do so. Last year, just In China (56%) and the US (52%) more to a myth and, perhaps, encourage
17% of our survey sample discovered than half of shoppers are going directly corporate strategy or investment that
brands they previously didn't know to brand sites. goes in the wrong direction. The goal of
about via social media; this year more this “10 Myths” paper is help companies
than one-quarter—27%—did so. It was The making of myths and look before they leap when making
our simplest survey question concerning how to spot them those decisions.
social media—how often do you use it?— The heart of the matter for both
that illustrated the starkest turnaround retailers and consumer companies Thanks for reading, and I hope you find
between 2011 and 2012. This year, fully trying to expand their global footprint this report helpful.
49% of our survey participants said they and manufacturers hoping to connect
use social media every day; that's an directly to their potential customers is Best regards,
increase of 14% over last year. In a mirror this: What are the actionable takeaways
image of that figure, 14 percentage from these year-to-year changes in
points less of our sample—24%—said consumer behaviour? The answer
that they don't use social media at all. is not always so clear, which is why
we decided to use this “10 Myths” John G. Maxwell
Last year we were struck by how strongly framework. Recently we've noticed that
domestic players dominated the lists much of the literature on online retail
of top multichannel retailers. That’s shoppers seizes on a few data points and
still true for some countries, but non- parlays them into a trend. Presto—more John G. Maxwell
domestic retailers are also breaking conventional wisdom.
through in some markets. In China, Global Retail and
Consumer Leader
for example, non-Chinese retailers/ Take social media, for example. There's
brands numbered four out of the no denying that the world is changing
top 10 favorites. fast as consumers use social media to
research brands, praise their favorite
Besides the tension between domestic products, and point out the weaknesses
and foreign retailers, another kind of of other products.
friction apparent in both last year's
and this year’s survey is that between But our survey data reveals that just
retailers and manufacturers. Many 12% of our respondents have purchased
manufacturers today have the stated goal an item through a social media site—
of vastly increasing their sales directly to up from 5% in 2011—and only 18%
consumers, potentially bypassing their purchased a product as a result of
information obtained through a social
5 Throughout this document the sample differences between media site. So despite rising participation
our 2011 and 2012 study includes should be duly noted by the of online shoppers in social media, a
reader; namely our 2012 study includes four more countries
and 4,000 more online shoppers surveyed than our 2011 major disconnect occurs somewhere
survey. PwC’s survey arm, the ISU, has confirmed that valid
comparisons can be made between the two studies.
between researching and learning about
PwC’s Multichannel Retail Survey 2012 5
Myth 1: Social media will
soon become an indispensable
retail channel
On its own, social media isn’t likely to become
an important retail channel anytime soon.
But it’s becoming more popular every year—
and it’s driving more shopping across all
channels, not just online ones.
Our survey data shows that social excursions. For example, for those brand how much some shoppers will buy, both
media will for the near future remain lovers who say they interact with brands online and in stores. So, despite the
a backwater sales channel, if you can via social media, 53% go shopping in a fact that social media has not emerged
call it a sales channel at all. The use physical store daily or weekly, compared as a stand-alone retail channel, the
of social media sites like Facebook to 45% of the overall sample, and 58% impact social media has on the brand
has exploded in recent years—the site buy something in a physical store at needs to be part of every multichannel
recently hit one billion users. But our least once a week. Forty-five percent of strategy discussion.
survey sample shows that while about this same group reports that they make
half of respondents say they’re checking an online purchase at least once a week Indeed, while social media is not yet
out social media sites daily, only a tiny (see Figure 2). a separate retail channel for most
minority uses the sites frequently to markets, it’s clearly a robust marketing
shop. In fact, seven out of ten online As it turns out, despite its inability to and communications tool for retailers
shoppers who took our survey say they lead directly to a purchase, social media and consumer product companies.
never shop this way. That should remain activity is a pretty strong indicator of According to our data, nearly half of our
the status quo for the immediate future,
as only about 5% say they’ll shop more
via social media in the next 12 months. Figure 1: Brand lovers, deal hunters and social addicts have different motivations
for visiting brand social media sites
So what are online shoppers doing
Q: What attracts you to go to a particular brand’s social media site?
on social media? Essentially they’re
commenting on companies and products
they know and discovering new ones. Attractive deals/promotions/sales 49%
But there are differences in motivation Interested in new product offerings 28%
among these social media users, and Friends or expert recommendation 26%
we’ve divided them into three groups Friends also interact with this brand on social media 17%
based on their behavior: “brand lovers,” Follow the brand because I shop with them 17%
“deal hunters” and “social addicts” Opportunity to participate in contests 16%
(see Figure 1). Feedback about a good or bad experience 11%
To research products before I buy them 10%
In this year’s survey, trends around brand Interested in interacting with the brand 9%
Deal hunters
lovers are the most striking. We found that Brand lovers
Interested in interacting with others that follow this brand 7%
38% of our respondents are following their Social addicts
Access to customer service through social media 5%
favorite brands and retailers, up from
33% last year. Brand lovers may be using
social media as a way to “warm up” for Sample size: 8,335 social media users out of the 11,067 online shoppers responding
future online or physical store shopping
6 Demystifying the online shopper: 10 myths of multichannel retailing
survey respondents—our group of “deal Figure 2: Social brand lovers shop more often in every channel
hunters’’—say they’ll click through to a
Q: How often do you shop in (each of these channels)?
specific online store if offered a good sale
or an attractive special offer. Appealing
to deal hunters looking for good offers In a physical store
and contests can be a great way to drive
Via PC
traffic to your website.
Via a catalogue/magazine
And companies can’t afford to ignore
Online via tablet computer
“social addicts,” either. While there are
fewer social addicts than brand lovers or Online via mobile or smart phone
deal hunters, a minority of consumers
Online via social media sites
are also using social media to talk about
their experiences with brands, learn Via TV shopping
what their friends like and recommend, 0% 10% 20% 30% 40% 50% 60%
find customer service answers, and
submit ideas and product feedback to Consumers who use social media to interact with their favorite brands
companies. Getting the message out to Consumers who use social media to follow their favourite brands or retailers
Total sample
social addicts can support the brand,
while ignoring them carries significant
reputational risk, as these very active Sample size: 11,067 online shoppers
online users tend to have huge social
media networks and wield an outsized
influence among them. All in all, there’s good reason for retailers
to continue focusing on social media
The China factor investment. Most of the world’s top
As so often is the case in this and other retailers, of course, already realizes this.
studies that look at online retailing Campalyst analysed the world’s 250
internationally, China is in a class by biggest internet retailers and found that
itself. If China eventually serves as 97% of them are already on Facebook,
any kind of barometer, social media 96% have a presence on Twitter, and
may indeed one day become a viable 90% use YouTube.6 The social media
sales channel. According to this year’s traffic generated in many cases is
survey, more than one in four Chinese impressive; 43 of the 250 can claim more
shoppers made purchases through a than one million followers on Facebook,
social media site. led by Victoria’s Secret, with over 18
million followers.7
In general, Chinese shoppers seem to be
more actively engaged with social media: 6 http://blog.campalyst.com/2012/05/15/top-250-internet-
57% of them say they’re following brands retailers-on-social-media-q1-2012-infographic/
7 Ibid.
or retailers on social media, compared
to 38% of our global sample. And more
Chinese online shoppers are using social
media to interact with brands, provide
comments on companies and products,
and find new brands.
PwC’s Multichannel Retail Survey 2012 7
PwC’s Sean O’Driscoll urges
companies to get beyond the
myths and take the long view
When Sean O’Driscoll and Jake McKee co-founded consulting firm
Ant’s Eye View in 2009, it didn’t take them long to assemble a blue-chip
client list consisting of, among others, Google, Microsoft, P&G, Starbucks,
Bloomingdales, Unilever and AT&T. It turns out that many organizations
need help getting customers more engaged with their brands through
social media, which was one of the Seattle-based firm’s greatest service
strengths. PwC acquired Ant’s Eye View in August 2012, with Sean and
Jack joining as principals.We talked with Sean about his take on our
social media–related myths.
Sean O’Driscoll
Sean, one of our 10 myths centers products through friends on Facebook
around the role of social media or on Twitter, which eventually leads
Principal, PwC and its future as a retail channel. to a purchase, that obviously goes on
We posit that, based on our online all the time.
shopper responses, social media
isn’t likely to become an important Part of the issue is the debate on
retail channel anytime soon. What’s what exactly constitutes an online
your take on the future of social as transaction. From a survey perspective,
a sales channel? people may say they aren’t buying on
There have been quite a few attempts at a social network, but isn’t Amazon a
Facebook commerce, and most of these social network? It certainly is an online
pilots have been pretty disappointing. community. Jeff Bezos made it social
I’d call them nothing more than through the strength of Amazon reviews
experiments. Setting up a storefront on and how much credibility people give
Facebook—companies are still trying those reviews, in addition to the social
out how to do that successfully and data that enables the experience to be
in some cases debating if it’s even the shared with others.
right model. There are some notable
exceptions. You can purchase a Delta The value of advertising on Facebook
Airlines ticket through Delta’s Facebook is certainly a debate. It’s quite big news
page and Ticketmaster has been an to talk about companies walking away
innovator. One issue is that there are from Facebook or other sites because
some limitations from a design point of the number of ad impressions or the
of view with Facebook. On the other perceived lack of productivity of those
hand, learning about a company and its investments. It’s just not as interesting to
talk about the nuts of bolts of how brands
8 Demystifying the online shopper: 10 myths of multichannel retailing“If you allow risk concerns to
paralyze you so that you don’t
create that Facebook storefront,
or you don’t engage consumers
in a way they enjoy, then you are
missing opportunities to create
lasting value.”
can create engaging and participatory Back in the 1990s the industry was
content in social spaces that builds terrified that membership complaints
traffic to traditional e-commerce, or about being locked into an annual
even in-store purchases. That’s the real contract would move online and be
issue: how can brands build compelling visible to everyone. For that reason,
content, engagement and advocacy many health clubs were very slow to
through their social environments, and create a social community for members,
leverage the content and relationships to which was strange since this is an
inspire intent to purchase? industry in which people connect and
share their goals and experiences.
Frankly, this is no different than the
world of brick and mortar. If you put up Companies should really think about
four walls, fill it with product and add it the other way—have they created a
sales people, will you be successful in dynamic, participatory presence for the
retail? Not likely. Success comes down vast majority of their customers who
to creating a distinct experience that like them? If you allow risk mitigation
engages a shopper. Social media is a concerns to paralyze you so that you
compelling part of successfully creating don’t create that Facebook storefront,
that sort of engagement online, but or you don’t engage consumers in a
simply being in the channel isn’t good way they enjoy, then you are missing
enough—you must make it compelling opportunities to create lasting value.
to the user.
Do you run a risk of a negative customer
What can companies do to turn their experience creating negative buzz
social media presence into that kind online? Of course, but you run that risk
of participatory environment that regardless of what you do. So embrace
leads to a purchase? the moment, and ensure that you have
There is a philosophical challenge that a great online presence and protocols
is stopping many of them. A lot of the to listen, discover and respond to those
brands have been fearful because, in moments of truth.
a sense, they are creating a channel
for negative sentiment. If they create a
channel, will they create a group that
dislikes them? One example is the health
club industry.
PwC’s Multichannel Retail Survey 2012 9So you don’t think negative social One of our themes is that China’s
media comments are a big deal online shopping model is unique and
for brands? not replicable in other countries.
It’s something a company needs to deal What’s your experience with China?
with, sure, and most have set up “listening South Korea, Northern Europe, these
posts” so they can engage in complaint are populations with heavy smart phone
management and customer recovery, and broadband access over the past 10
whether that’s through coupons or some years, and they are at the “tip of the
other outreach. We’ve seen brands like spear” in terms of social engagement
Comcase, AT&T, Wells Fargo, and Jet with brands and retailers. It’s amazing
Blue doing that. But as a brand you can to think that the most shared piece of
spend all your energy managing the risk content ever on Youtube is Gangham
and save a couple of bucks, or you can Style from a South Korean pop singer!
embrace the social media opportunity And in China and, say, India, I think you
and generate a lot more revenue and will see similar engagement now that
growth. I can’t think of a business that these huge economies are skipping right
ever managed their risk into growth. over land lines.
In our survey, we asked about I’m not fully discounting the idea that
consumers’ “purchase journeys,” consumers behave differently in different
and how those are evolving. Whether countries, but I think consumer behavior
it’s setting up a Facebook storefront as we think of it may be more related
or trying to attract buyers over to infrastructure than we realize. In
Twitter, it’s really about changes in China they are not evolving into this
the purchase journey, right? behavior; they are leaping straight into to
That’s right. The questions both brands it because the lack of land line /physical
and retailers should be asking themselves infrastructure constraining the change.
are, how is the buyer’s journey changed
from 10 years ago, and at what points Another of our myths focuses on the
does that journey touch digital channels? direct-to-consumer phenomenon. We
think that retailers may lose some
As a brand, if you haven’t significantly ground to manufacturers in terms of
changed your channel, connecting and where consumers go to purchase.
marketing mix over this timeframe, then Direct-to-consumer sales are going to
you’re clearly not optimized. I chose the explode over the next five years, and
phrase “10 years” for a specific reason. retailers will be hit hard. I expect that in
It seems like for many of these trends, 10 years, today will seem like the Stone
not much seems to change over five Age in terms of the consumer product
years, but absolutely everything changes sales dynamic.
over a decade. Look at your own survey.
I’ll bet over five years, shopping trends
online aren’t that much different. But
10 years ago? Hardly anyone around the
world was shopping online.
10 Demystifying the online shopper: 10 myths of multichannel retailingBut it’s not all bad news for retailers. I
think products that are relational, rather
than transactional, will be a much eas-
“Direct-to-consumer sales are going to
ier sell from the manufacturer. If people explode over the next five years, and
attach their identity to a certain item of
clothing or brand of sneaker, they will be
retailers will be hit hard. I expect that
much more likely to buy directly from the in 10 years, today will seem like the
fashion house or the sneaker manufac-
turer, assuming the manufacturing can
Stone Age in terms of the consumer
tap into the natural advocacy associated product sales dynamic.”
with their brands. Other items—take
a can of Coca-Cola—that may be emo-
tional items for some will likely not be a
big direct-to-consumer product, because
it’s omnipresent in the channel.
PwC’s Multichannel Retail Survey 2012 11Myth 2: Stores will
become mainly showrooms
in the future
Many multichannel shoppers say they research
online, but more still prefer to buy products at a
physical store. If the store format can adapt, it may
still have a bright future.
To paraphrase the American author Figure 3: The purchase journey across selected categories
Mark Twain, the death of the physical
Q: Which method would you most prefer for researching and buying?
store has been greatly exaggerated.
In fact, far from cannibalizing store
traffic and turning physical locations Research and buy in store Research and buy online
into showrooms or museum pieces, Research online, buy in store Store-to-web
web product research drives far
more shoppers to make a physical Books, music …
store purchase than vice versa. It’s
even conceivable that stores, in some Electronics
categories, are realizing more traffic and
sales due to web-only coupons and deals. Electricals
For starters, 23% of our respondents H&B
research consumer electronics online
and then go to a store to buy the product, Clothing
compared to only 2% who do it the other
way around (see Figure 3). A similar Furniture
ratio holds true across several shopping
Grocery
categories. With the exception of the
books, music, movies and video game
0 20% 40% 60% 80% 100%
category, consumers don’t yet seem
ready to erase the traditional retail outlet Sample size: 11,067 online shoppers
from their shopping landscape.
Some things never go out of style immediately is important to almost as The centerpiece of the
There’s more evidence when you take a many—and no online shop can offer purchase journey
look at survey participants’ answers to either of these advantages. All told, We also can’t emphasize enough
a question on what makes shopping at our global sample makes more daily or that the physical store remains the
a physical store attractive. The ability to weekly purchases in brick-and-mortar centerpiece of the purchase journey
see, touch and try products still ranks stores than they do online. And while for many categories. In nine out of
as shoppers’ number one reason to visit significant numbers of shoppers intend eleven categories, in fact, the majority
a store in person. Getting the product to shop more online next year, most don’t of consumers use physical stores for
plan to concurrently cut purchases from both researching and purchasing the
physical stores. products they want to buy. Even when
it comes to consumer electronics, a
12 Demystifying the online shopper: 10 myths of multichannel retailingcategory dominated by online research Figure 4: The hold-outs
and purchase, one in four of our survey
In each of the 11 countries in the survey, a significant percentage of internet users
participants responded that, for them,
said they rarely, if ever, shop online.
the store plays a dominant role along the
purchase journey.
3 – 4 time s a y es
Figure 3 also illustrates another intriguing ear im
– 2t r
1 ea
dynamic: for every shopping category, ay Russia 32%
the majority of consumers still prefer a Canada 25%
Occasional ye ar
“single-channel shopping experience.” InMyth 3: The tablet will
soon overtake the PC as the
preferred online shopping
device
While tablets and smart phones are catching up,
shoppers are still overwhelmingly using their PCs
to shop online.
There’s no doubt that the tablet market Smart phones aren’t making serious A bellwether in China??
is growing fast. In 2012, the world saw a inroads as a shopping device, either. As The future of both tablets and smart
100% increase in global tablet sales and with tablets, most of those using these phones as shopping devices looks
by 2015, Gartner expects tablet sales to devices don’t expect to use them more for stronger when one considers China.
reach 320 million units.10 Tablets aren’t shopping in the near future. And many While only 17% of global online shoppers
just replacing smart phones or laptops— still don’t use them for shopping at all. In turn to their tablets to buy something
they’re expanding the ways people use fact, the overwhelming majority of our at least once a month, 39% of Chinese
online devices. Three-quarters of tablet respondents still use their PC to make online shoppers do, and 21% make tablet
users reach for their device at least once purchases (see Figure 5). That situation purchases every week. Around a third of
a day and nearly half spend more than 11 doesn’t look likely to change anytime Chinese online shoppers make purchases
hours per week on their tablets.11 soon. More than one-third of our global at least once a month via their smart
sample expects to increase their PC phone. In fact, half of those who shop
By 2015, the manner by which shopping next year, far more than the with online pure player leader Taobao
consumers will access the Internet will percentage who say they expect to shop used their smartphone.
look much different than it does today, more using other devices (see Figure 6).
with the smart phone accounting for An astounding 87% of our Chinese
40% of Internet traffic, computers 34% That said, using smart phones at the end respondents are using their PCs to shop
and tablets 26%. Global spending on of the purchase journey, particularly every month, 20 percentage points
mobile apps is projected to soar from $7 in-store, is a growing trend. A September higher than the sample overall. So
billion in 2010 to $35 billion in 2015.12 2012 research study finds that two-thirds even in a country where consumers use
of technology industry insiders believe their smart phones and tablets more
When it comes to shopping, that smart phones will outpace both cash extensively, the PC still has a clear lead
the PC still rules and credit cards as a payment option by over both. One thing we can say for sure:
So does that mean tablets will soon take 2020.13 The technology is called Near there is ample enthusiasm in China to
over as the preferred online shopping Field Communication (NFC) and many shop across all devices.
device? Our survey research suggests smart phones already offer it. While the
the answer is still no, at least for the time experts interviewed didn’t agree how 10 http://www.gartner.com/it/page.jsp?id=1980115, http://
being. Only 9% of shoppers say they long it would take to gain consumers’ www.gartner.com/technology/research/ipad-media-tablet/
future-of-tablet-market.jsp
they’ve changed their habits to shop with trust in payment by mobile, most 11 Online Publishers Association, A Portrait of Today’s Tablet
a tablet more often—and around three believed the question is when, not if. User Wave II, June 2012
out of five don’t use this type of device to 12 PwC, Best Practices in Advertising Effectiveness, 2012
shop at all. Our respondents don’t expect 13 http://www.computerworld.com/s/article/9226268/
to increase their tablet purchases much 14 http://www.ebayinc.com/content/press_release/
Millions_of_Reasons
next year either, with only 11% thinking
they’ll shop more with their tablet.
14 Demystifying the online shopper: 10 myths of multichannel retailingOther roles for the tablet Figure 5: Far more online shoppers use their PC’s to make purchases
and smart phone
Q: How often do you go shopping* using the following shopping channels?
There are also signs that both tablets
and smart phones have a significant role
to play in other aspects of the shopping Daily Weekly Monthly Less than once a month Never
experience. Separate research suggests
that users are turning to their tablet to PC
research products across all advertising
categories, from consumer electronics Tablet PC
to personal care and beauty to home
furnishings.15 For retailers, the potential
Mobile/smartphone
of these devices as an advertising
channel may be even more important.
One recent study showed that tablet Social media
users in particular are highly receptive
0% 20% 40% 60% 80% 100%
to advertising, with 47% reporting that
they interact with ads on their tablets
at least once a week.16 We believe that Sample size: 11,067 online shoppers
digital channels will play an increasingly
important part of the advertising mix
going forward.17
Figure 6: More than one-third of shoppers expect to use their PC
more often for shopping next year
15 Online Publishers Association, A Portrait of Today’s Tablet
User Wave II, June 2012 Q: How do you think the frequency of your shopping behavior
16 Ibid.
(e.g. buying clothes, books, electronics etc) will change over the next 12 months
17 Reaching the connected consumer, PwC, December 2011 using the following shopping channels?
Don’t know Never
use this
More Same Less channel
PC
Tablet PC
Mobile/smartphone
Social media
0% 20% 40% 60% 80% 100%
Sample size: 11,067 online shoppers
PwC’s Multichannel Retail Survey 2012 15Myth 4: As the world gets
smaller, global consumers
are getting more alike
Although consumers shop with more global
retailers than ever before, there is a wide range of
local difference in consumer behaviors.
For the first time since the Industrial as green tea, raspberry, and blueberry. Figure 7: Emerging market cities will
Age, the global economic engine is The result was a 60% growth in annual set the pace for retail sales growth
being powered by southern hemisphere sales, making the Oreo the best-selling
Retail sales growth per annum, Cities of
nations, not northern, Organization for cookie in China.20
Opportunity, 2012–2025
Economic Co-operation and Development
(OECD)-type countries. Global So while it was slightly different take on
Beijing 9.9
manufacturing and GDP (factoring the product, an iconic Western brand Shanghai 8.9
in purchasing power parity) reached was successfully exported. Which brings Mumbai 7.7
a 50/50 split between the developed us to the Holy Grail for retailers and CPG São Paulo 5.6
economies and emerging economies in companies alike: an ever-growing global Kuala Lumpur 5.4
Buenos Aires 5.2
2010.18 Most significantly, the income middle class aspiring to the same suite of Istanbul 5.2
gap between people of the developed and global brands. Online retail destinations Johannesburg 4.9
developing worlds is shrinking faster than can now be accessed from New Zealand Abu Dhabi 4.7
Hong Kong 4.5
any time in history.19 to New England. And borderless
New York 4.0
communication is increasing the speed of Seoul 3.1
Now fast-forward 15 or 20 years. Instead retail and consumer trends. So you might Los Angeles 3.0
of one billion people on the planet expect that most consumer habits would London 3.0
Moscow 3.0
wanting to live better, three or four turn out to be highly transferrable to Chicago 2.9
billion people will. But what will these other markets and cultures. Mexico City 2.8
consumers buy, and how much of it will Singapore 2.6
And there are a few similarities. Toronto 2.5
look like what’s selling now? Figure 7,
Stockholm 2.1
from PwC’s Cities of Opportunity project Across the world, lower prices, free Paris 1.7
research, shows how cities in the shipping, and ease of comparison are Madrid 1.7
emerging markets will deliver the most top reasons to shop online, while being Sydney 1.5
Tokyo 1.5
annual growth in terms of retail sales. able to touch and see the product, and San Francisco 1.4
getting it immediately and at no extra Berlin 0.7
Many companies are doing their own charge are top motivators for going to a Milan 0.5
experimentation to find out who will physical store.
be buying what consumer goods in the
Retail sales ($US billion, 2012 constant prices
future. Take Kraft, for example. Several 18 After the Storm, PwC economic paper, PwC economist and exchange rates), growth per annum (%)
years ago, after its Oreo brand had Per Berglund, 2010.
Mature-cities avg = 2.6% per annum
been underperforming in the Chinese 19 Ibid.
20 2012 GMA/PwC Financial Performance Report
Emerging-cities avg = 5.6% per annum
market for about a decade, Kraft
decided that it had to adjust to local Sources: Oxford Economics; PwC, Cities of Opportunity
tastes, developing new flavours such
16 Demystifying the online shopper: 10 myths of multichannel retailingThink different Figure 8: Why shoppers go online is dramatically different across countries
But our data from this year’s study
Q: What are the most important factors that attract you to shopping online in general?
suggests that consumers in different
countries are still much more different
than they are alike. Internet users’ SUI 52% BRA 75%
appetite for online shopping and social
media varies widely. And growing Lower prices/better deals
purchasing power doesn’t automatically
BRA 29% NLD 61%
translate into shopping enthusiasm.
More convenient (fast checkout, 24/7 etc.)
The same is true for physical stores.
Turkey has suffered less from Eurozone
TUR 34% SUI 59%
weakness over the past several years
than some European countries, and has
Easier to compare and research products and offers
a relatively strong retail sector. Still,
just 16% of our survey respondents US 35% SUI 59%
there say they like to shop just for sheer
enjoyment. Instead, thrifty Turkish Home delivery option
shoppers are laser-focused on price. HK 29% USA 42%
60% say that attractive deals, sales or
promotions are a reason to go shopping Wider variety of products
in a brick-and-mortar store, compared to
just 40% of the sample as a whole and a BRA 16% RUS 40%
mere 19% of Chinese shoppers. Chinese
shoppers, on the other hand, show much Customer reviews of products available
more passion when it comes to shopping
GER 14% CHN 27%
in physical stores. Nearly half of our
Chinese respondents said they enjoy this Highest response
Easier to find my favorite brands online Global average
kind of shopping as a pleasure.
UK 10% RUS 20% Lowest response
The differences are just as dramatic
when it comes to how consumers think Better product information
specifically about online shopping
(see Figure 8). Overall, the top reason
consumers say they turn to the Internet is 0% 10% 20% 30% 40% 50% 60% 70% 80%
in search of deals. That’s especially true
of Turkish, French and British shoppers. Sample size: 11,067 online shoppers
Shoppers in Switzerland, on the other
hand, are much less likely to see bargains
as the reason to shop online.
PwC’s Multichannel Retail Survey 2012 17For them, the top reasons are the other hand, want to see detailed
convenience and home delivery. And information about products. And
while the majority of shoppers across the in Turkey, having a wide variety of
total sample do view online shopping as payment options is almost as important
more convenient than going to a physical as getting information about specific
store, it’s not a universal view. In the products—48% of shoppers say it makes
Netherlands, 61% of shoppers think a specific online store attractive. That
it’s easier to go online, but just 29% of compares to just 19% of shoppers in
Brazilian shoppers would agree. France or China. And more than twice as
many Turkish as Brazilian shoppers say
Open-minded shoppers in China that vouchers or coupons prompt them to
One result in particular is worth noting. visit a specific online store.
Less than half of Chinese shoppers go to
an online store to look for a particular No “one” global consumer
product or brand, perhaps because, as No matter how global multichannel
stated earlier, many view shopping as retailing may get, we see precious little
a source of pleasure. That’s radically evidence for a global pattern of consumer
different from the mature markets habits or preferences. Even developed
(Canada, France, Germany, Netherlands, markets show few similarities. The
Switzerland, the UK and the US) in our more minutely retailers and brands can
sample, where in each case a majority of identify what differences do exist among
customers are visiting a specific online their potential customers, the more they
shop to look for a particular product. will be able to appeal to these consumers.
Obviously Chinese shoppers are still And the Kraft example cited earlier in
more open-minded at that point than this section? Perhaps the lesson was not
their peers in the developed countries. that ‘the global consumer’ adapted to the
For retailers, that might imply that Oreo, but that the Oreo adapted to local
Chinese consumers are more open to tastes with its different local flavors.
deals and promotions that are offered
on websites, and might even be more
open to change their mind depending on
these offers.
The list of differences among countries
goes on: Chinese shoppers are much
less interested in free shipping; for
them, customer reviews of products are
most important. Russian shoppers, on
18 Demystifying the online shopper: 10 myths of multichannel retailingThe more specifically retailers
and brands can identify what
differences do exist among their
potential customers, the more
they will be able to appeal to
these consumers.
PwC’s Multichannel Retail Survey 2012 19Myth 5: China is the future
model of online retail
China is at the forefront of some key trends, but
we believe its multichannel and online model is
unique.
Our research21 confirms that Chinese of the financial strength of Alibaba, Figure 9: Chinese consumers shop
consumers have adopted the Internet as in May 2012 Yahoo got over $7 billion online much more frequently
a retail channel much faster than their for its stake in the company, for which
Q: How often do you go shopping?
global peers—even though fewer are it paid $1 billion in 2005.22 That’s a
long-time online shoppers. Only 30% huge jump in value, in line with the
Global China
of our Chinese respondents have been phenomenal growth China is seeing
shopping online for more than five years, in online commerce. In fact, Alibaba Daily 3% 4%
compared to 44% of the global sample. founder Jack Ma believes his company
Several times
But they’re already shopping much more will soon become bigger than Amazon a week
12%
frequently (see Figure 9). and eBay combined—and may someday
even surpass Walmart in the breadth of
Ahead of the digital curve its presence.23 Weekly 14% 36%
Chinese shoppers are also ahead of the
curve in terms of using new devices and Some fundamental differences
social media. As we’ve already pointed between Chinese and other
out, far more Chinese online consumers consumers
have already shopped via tablet and So can online retailers now expect
smartphone (see Figure 10). And nearly emerging trends in China to set the tone Monthly 32%
one in four Chinese online consumers around the world? We think the answer 18%
say they plan to use their tablets or their is an emphatic ‘no’. Online shopping
smartphones more often to shop in the habits are dramatically different in
next twelve months, compared to only China. Take recommendations and
around 11% of the global average. Their reviews, for example. One of the key
3–4 times a year
usage of social media as a shopping reasons Chinese consumers go online is 18% 22%
channel follows a similar pattern. Far to find reviews. As shown in Figure 11,
more Chinese consumers are using a when it comes to deciding on which
social media platform to make purchases, online shop to visit, recommendations 1–2 times a year 5%
compared to the global average. from friends and experts are muchFigure 10: Chinese shoppers are ahead of the curve when it comes to using new
devices and social media One-stop shopping in China
Q: How often do you go shopping? Online via Tablet PC? Online via mobile phone or
smartphone? Online via social media platform? Taobao, the undisputed
powerhouse of Chinese online
62% commerce, is a cross between
58% 56% Amazon’s Amazon Marketplace
and eBay that serves both as a
marketplace for small sellers and
as an auction site. In fact, 95% of
30% 28% all the Chinese online shoppers
24% we surveyed have shopped with
Taobao in the last twelve months.
Smartphones Tablets Social media platform When one looks at how many
Chinese consumers Global consumers
shoppers use the top online player
across all countries surveyed,
Note: Respondents who say they are shopping daily, weekly, monthly, or less than once a month.
the average is just 72%. The
Sample: Global: 11,067 online shoppers ; China: 900 online shoppers company’s success has been
attributed to its AliWangWang
service (a direct communication
Figure 11: Recommendations are a top reason Chinese consumers
channel to sellers) as well as
visit specific online shops reliable seller ratings and its own
Alipay payment system. Possible
Q: What prompts you to visit a specific online store?
growth paths include offering
additional services, as has been
Friends or expert recommendation shown by American counterpart
Price comparison website Amazon. For example,
Looking for a particular brand/product Taobao doesn’t yet provide
I know this shop fulfillment services.
Social media interactions
Search results
Advertising
Personalized recommendations on other websites
Receiving a promotion via email or text
Flyer or recommendation in-store
0% 10% 20% 30% 40% 50% 60%
China Global
Sample: Global: 11,067 online shoppers; China: 900 online shoppers
PwC’s Multichannel Retail Survey 2012 21Chinese consumers are also enthusiastic The infrastructure effect
users of voucher/coupon sites. In fact, Yet another reason that China may not be
more than twice as many Chinese a model for the future of online shopping
shoppers are likely to visit an online store is the manner in which technology has
because of a voucher or coupon offer, as enabled new waves of middle class
opposed to search results. But the world Chinese consumers to bypass traditional
isn’t following China in this regard; if methods of shopping. “I think consumer
anything, search engines are getting behavior as we think of it may be more
more important for background research related to infrastructure than we realize,”
on products and brands. says Sean O’Driscoll, a principal at PwC
whose social media consulting firm,
Demographically, China’s online Ant’s Eye View, was purchased by PwC
shoppers are the youngest and most in August 2012. “In China they are
employed not evolving into this behavior; they
Demographically, China might be are leaping straight into it because of
different enough that its path may not the lack of landline and other physical
be applicable to other countries. The infrastructure.”
online survey audience we used for each
country was nationally representative If the Chinese online shoppers embrace
for age, gender, employment status and of social media and mobile shopping is
region. China had by far the youngest related mostly to infrastructure reasons,
online shopping percentage, with 81% it stands to reason that while other
of our respondents being 34 years old or emerging markets, such as India, may
younger. Just by comparison, only 41% mimic the Chinese dynamic, developed
of our French sample was 34 years old markets will not be influenced by China
or younger. and will continue their much slower
adoption of mobile commerce and
Then there is employment. In our purchasing through social media.
Chinese sample, 66% of respondents
said they were employed full-time, with
Russia the next closest at 54%. All of
which is to say that the Chinese online
shopper is young and relatively well-
off, while developed market online
shoppers reside in countries with aging
populations and shrinking purchasing
power. It may be that the behaviors
Chinese shoppers are exhibiting in
this survey are those of young, happily
employed shoppers—which some
countries lack, and will continue to for
the foreseeable future.
22 Demystifying the online shopper: 10 myths of multichannel retailingFar more Chinese consumers are
using a social media platform to
make purchases, compared to
the global average.
PwC’s Multichannel Retail Survey 2012 23Myth 6: Domestic retailers
will always have a “home
field” advantage over global
retailers.
Foreign retailers are making inroads into
consumers’ lists of favorite multichannel retailers.
In our 2011 survey we were struck multichannel retailers include seven In Germany, the three non-German
by how strongly domestic players companies from its bigger neighbor to companies in the top ten list—C&A, H&M
dominated the lists of top multichannel the south. German consumer electronics and Esprit—all have large networks of
retailers. To some extent that’s true retailer MediaMarkt is almost as popular physical stores. The same is true for Ikea,
this year, too. In many mature online in the Netherlands as it is in Germany. which made Germany’s list last year.
markets, domestic retailers have a Switzerland’s multichannel scene For C&A, H&M and Esprit, Germany is
significant advantage. In France, for includes several players from bigger their biggest market and the retailers are
example, not one foreign retailer made European countries, like Weltbild and probably no longer viewed as ‘foreign’
consumers’ top ten. Ikea. And Sweden’s H&M is tied for by Germans; in fact, Dutch retailer C&A
second place in Germany, moving up even now has one of its two headquarters
Some challenges to domestic from third place last year, and comes in located in Düsseldorf. Walmart, Apple,
retailers third on the list in the Netherlands. Ikea and Carrefour all make the top ten
What’s interesting is the large number in more than one country outside each’s
of exceptions to this rule. Geographical But there’s more at work than just home base. It’s no coincidence that these
proximity, of course, facilitates location. The level of investment seems companies have made a point of making
expansion. Canada’s top ten favorite to make a significant difference, as well. investments in key international markets.
Take Walmart in Brazil. The company
entered the market back in 1995. In
2004 and 2005, major acquisitions gave
it a large network of stores throughout
the country.24 From 2006 through 2012,
the company invested several billion
dollars in further expansion.25 With
533 stores, nine brands, and five store
formats, Walmart is the third largest
retailer in Brazil.26 In our survey of
the favorite multichannel retailers in
Brazil, the company comes in fourth
(see Figure 12).
24 http://online.wsj.com/article/SB1000142405311190400610
4576502562571349884.html
25 http://www.retailingtoday.com/article/
walmart-invest-756-million-brazil
26 http://worldcrunch.com/business-finance/
why-walmart-can-039-t-beat-the-competition-in-brazil/
24 Demystifying the online shopper: 10 myths of multichannel retailingForeign retailers are breaking into other Figure 12: Foreign retailers and brands make it to the top 10
emerging markets too. There are four
Favorite multichannel retailers for select countries
foreign retailers/ brands in Chinese
shoppers’ top ten list of multichannel
retailers, and three are on the list China Brazil Turkey
in Turkey. Suning 26% Lojas Americanas 37% Teknosa 31%
Apple Store 15% Livraria Cultura 27% Vatan Bilgisayar 24%
Staking a claim in emerging Other 13% Livrarias Saraiva 21% LCW 20%
markets Gome 12% Wal Mart 15% Migros 16%
How to get started breaking into Adidas 12% Carrefour 12% D&R 13%
emerging markets? For many companies, Nike 10% Extra Hipermercados 12% Koctas 10%
bricks and mortar stores come first. In Carrefour 9% Casas Bahia 11% Nike 10%
China, H&M has focused a lot of effort on 66buy 8% Magazine Luiza 9% Adidas 8%
building a network of physical stores—in Womai 7% Ponto Frio 8% IKEA 8%
September 2012 the Swedish fast-fashion LiNing 7% Other 6% Collezione 7%
retailer opened its 100th store in China.27
Now that physical stores are generating Domestic companies Global companies
strong revenues (over $500 million in
revenues in 2011 and revenues up 11%
in the first half of 2012), the company Sample: China: 900; Brazil: 1,006; Turkey: 1,004 online shoppers
views its multichannel presence as the
next frontier.28 That means raising the
brand’s profile on line and revving up Cash is king But retailers need to keep in mind that
e-commerce sales through partnerships Retailers wanting to increase online it’s not just the local base of domestic
with online retailers.29 sales will need to have some cash on retailers they are competing with. Many
hand. When Carrefour expanded its consumer goods companies that have
In September 2012, Home Depot closed Brazilian operation into the online space added retail activities have blurred the
all seven of its big-box stores in China. in 2010, the company invested $50 lines between retailers and consumer
The company reportedly “misread the million to develop the right platform.32 product goods companies. Global players
country’s appetite for do-it-yourself In our survey, online shoppers in Brazil like Adidas, Nike and Apple are among
products.”30 Home Depot is now ranked Carrefour in their top five favorite these brands, as are regional players like
switching to specialty stores focused on multichannel retailers. The French the French beauty and personal care
local market preferences and working on supermarket giant’s expected growth brand Yves Rocher, which, according to
launching online operations with a local rate of 15–16% annually in Brazil can’t be our survey, now ranks third in Russia in
partner.31 Our survey found that one-fifth matched in most mature markets. terms of favorite retailer/brand.
of Chinese online shoppers say they’ve
purchased at least 40% of their home Whatever the market, the many global 27 http://www.chinadaily.com.cn/bizchina/2012-10/01/
improvement goods online in the last retailers now breaking into the favored content_15794506.htm
twelve months. That could translate into multichannel ranks are clearly just as 28 AdAge http://adage.com/article/
special-report-chinas-women-to-watch/h-m-s-vivian-chen-
opportunity for Home Depot. capable at gaining the consumer’s trust adapting-western-fast-fashion-china/236202/
as their domestic competitors, and just 29 Ibid.
as successful with offering a product 30 http://online.wsj.com/article/SB1000087239639044443350
4577651072911154602.html
assortment that meets local taste.
31 Ibid.
32 https://www.datamark.com.br/en/news/2010/3/
carrefour-brazil-prioritizes-and-bet-in-online-sales-122064/
PwC’s Multichannel Retail Survey 2012 25Myth 7: Global online
pure players like Amazon
will always have a scale
advantage over domestic
online pure players.
Many domestic online pure players are holding
their own.
Amazon and eBay are online giants Figure 13: Our survey sample very much prefers shopping with between two and
not just in the US, but also around the five online-only retailers
world. So it’s not surprising that our
Q: Which online-only retailers have you shopped with over the past 12 months?
survey respondents in several countries
ranked them high on their list of online
pure players. 56%
55%
For example, in Germany, 89% of online
shoppers made purchases on their PC
with Amazon and 75% with eBay over 56%
the past 12 months. Domestic online
retailer Zalando was a distant third
with only 22%. That might suggest 19%
that domestic players are at a serious 12%
18% 24%
disadvantage—but appearances can 14% 8% 8%
be deceiving. After Zalando there are 4%
8%
a whole host of German players where
5-17% of shoppers are making purchases. None Only 1 retailer 2 to 5 6 to 10 More than 10
Both Amazon and eBay actually entered 2011 2012
the German market by acquiring a local
player. And after 15 years, Amazon still
Sample size: 11,067 (2012); 7,005 (2011)
has only a 13.8% share of total internet
sales in Germany.33 While an eventual
shakeout is probably likely, eliminating recognition and customer loyalty, making
some of these smaller retailers, the fact it harder for new entrants to compete,
remains that domestic online players do especially in competitive, mature
possess a path to success. markets. Some heritage catalogue
businesses that already had a strong
Indeed, we’ve found that in many cases customer base used to shopping at home
domestic online pure players are able to have had strong success in evolving into
withstand entry by foreign competitors. pure online players. La Redoute and Trois
They’ve already built up brand Suisses in France, as well as Wehkamp in
the Netherlands, are prime examples.
33 http://www.thenation.com/article/168124/
how-germany-keeps-amazon-bay-and-literary-culture-alive#
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