by Publicis Sapient and Salesforce
This report examines today’s retail landscape through the actions, voices, and eyes of today’s shoppers, combining behavioral insights from half a billion shoppers worldwide, survey data from 6,000 people across six countries, and mystery shopping visits to more than 70 stores. We review where and how shoppers are interacting, where they experience the most friction, and what their behaviors mean for retailers.
For years, the retail narrative has been laced with doom and gloom: customer spending is down, retailers are closing stores, and millennial shopping habits will only quicken the fall. But is that narrative true? On one hand, the retail industry is reaching new heights: sales are up nearly 5% year over year in Q1 2018; digital channels have experienced robust growth, with ecommerce now accounting for 9.5% of all retail sales; and consumer confidence continues to rise. At the same time, the landscape isn’t entirely positive: stores are closing at an alarming rate, with more than 12,000 shuttered since the beginning of 2017; Amazon is dominating, capturing 78% of ecommerce growth in the U.S.; and global trade wars threaten to add a fresh wave of uncertainty.
A new swarm of retail startups, direct-to-consumer brands, and new low-cost and experience-led competitors—combined with a backstage technology revolution in supply chain, robotics, automation, blockchain, and dark stores—are changing the way retailers compete in the digital age.
From these insights, we’ve uncovered three shopper-first mandates that focus on lasting business strategies retailers can tailor to their audience—to provide a fresh, relevant, and meaningful experience for today’s customers.
This is the true story of shopping.
From our three data sources—shopping activity, consumer survey, and mystery shopping—three shopper-first mandates emerged that apply to virtually all retailers:
These three mandates can’t come to life without a strong foundation. Four modern retail truths make each of these mandates a reality:
Shoppers reward brands that connect them with products and experiences in unique, agile packages. Our research—based on a global consumer survey, behavioral data, and in-store mystery shopping visits—painted a clear picture of shoppers’ continuous demand for new, innovative, and customized products. Shoppers value freshness with their wallets, as 59% of the top 5% of products sold are new each month. This creates a sweeping product catalog churn of 32% month over month.
Speed and freshness play an important role in generating long-term brand loyalty and driving repeat purchases—two areas where brands have lost ground to both traditional competitors and marketplaces.
The classic 80-20 rule holds true: the top 20% of products drive 80% of sales. That means it’s important to keep the catalog fresh. Combined with the quick catalog churn noted above, and 69% of shoppers expecting to see new merchandise at a site or store whenever they visit, brands are shortening product development cycles and emphasizing speed and agility—all in the name of getting shoppers what they want in the shortest amount of time.
Merchandising agility is a brand’s ability to quickly accelerate product launch and turnover—it’s become the gold standard for the industry. But making it fresh isn’t about fast fashion or disposable products. It’s about profitably transforming the digital and physical shopping experiences to constantly surface what’s new and relevant.
69% of shoppers expect to see new merchandise whenever they visit a site or store. 75% of site search queries are new each month. 59% of the top 5% of best-selling products change monthly.
Uniqlo has found success with merchandising agility. The apparel retailer devotes the entire first floor of its flagship New York City store to seasonal apparel that changes even within a season, and its ecommerce site promotes new styles being added each week. Collaborative collections and partnerships with brands like MOMA, Marvel, and Disney help Uniqlo maintain a high product velocity. This always-on, always-fresh approach captures the attention of repeat shoppers who know they can depend on Uniqlo to show them something different with every visit.
“It’s not fast fashion – it’s fresh retail, which means moving at the pace of the shopper.”
– Deborah Weinswig, CEO & Founder, Coresight Research
In the pre-digital age, marketers analyzed customer value through a Recency, Frequency, and Monetary (RFM) model to inform segmentation strategies. Recency often carried the most weight, as recent buyers are more likely to buy again. Customers’ recency of purchase continues to be important today, as our shopping activity data shows that half of repeat buyers make a second purchase within 16 days of their first. However, our survey showed that while 50% of shoppers choose to buy a first-time product through a retailer, 47% turn to marketplaces for repeat purchases.
To guard against customer attrition, brand leaders must prioritize new re-engagement strategies, whether that’s through speedy marketing retargeting, personalized loyalty offers, or perfectly timed upsell opportunities.
28% of shoppers start their hunt on marketplaces like Amazon and eBay—up from 22% in 2017.
When it comes to a first purchase, retailers have the edge: 50% of shoppers choose to buy a new product through a retailer, compared to 31% for marketplaces. However, retailers fall behind in winning the second purchase, as 47% of repeat buyers turn to marketplaces such as Amazon, even if the first-time purchase was made in a brand store or retail location.
Focusing on loyalty and personalization efforts will be key to sustaining your shopper relationships over time.
For today’s shopper, easy access to limitless products is just a click away. Amazon alone lists more than 3 billion products across 11 global marketplaces, making it clear that retailers and brands can’t compete on the size of their catalog. Instead, they must aim for differentiation—to create products and experiences that appeal to customers’ desire for something unique that connects to their values and interests.
Top-performing brands have their sights set on unique products: 31 out of 70 brands in our mystery shopping study offered customization or collaboration-driven products, and four of the five top-performing stores offered some type of customization.
Percent of Shoppers That are More Likely to Buy from A Brand or Retailer That Offers…
Shoppers reward brands that anticipate and identify the precise moments when a need exists or interest is piqued in their shopping journey. Shoppers today are more connected than ever, seamlessly switching between channels and devices, all while expecting retailers to know them and make purchasing easy. Yet in our study, too many retailers didn’t meet shoppers’ expectations. For example, across the 70 physical store locations studied, the average mobile score was 1.74 out of 5, grading areas like in-store app experiences and tailored push notifications.
Rather than leave omni-channel customers wondering where to go next, retailers must engage customers in context and on their terms.
Despite purchase power shifting to digital channels, the store continues to be an indispensable part of the customer journey. Forty-six percent of shoppers prefer to make a purchase in a physical store, compared to 35% for laptops and 18% from smartphones. This preference toward purchasing in stores is true across all age groups, even young shoppers, with 58% of Gen Z shoppers (those aged 18-24) preferring the physical store shopping experience.
While just 9% of shoppers have taken advantage of invitations to exclusive events in stores, 74% were somewhat or very interested in doing it again. About six in ten (57%) report that they choose retailers because of their customer service. In addition, 71% of shoppers prefer to return in-store vs. 36% for laptops and 22% for phones. 51% of shoppers say sales associates need inventory visibility and 46% say they need the ability to look up product details.
With a top-three overall score in our mystery shopping study and fifth place in the “Be Where I Am” category, Nordstrom is imagining the store of the future, especially in its NYC Men’s concept. This retailer caters to multiple types of shoppers—from the time-pressed shopper, to shoppers looking to linger and spend an afternoon in the store. Key offerings include a 24-hour self-service return kiosk, an onsite barber shop and speakeasy, and a dedicated click-and-collect space.
Mobile is now the top driver of both traffic and sales, with more than 60% of customers beginning their journey on a mobile device and mobile order share rising to nearly 40% between Q1 2014 and Q4 2017. Mobile wallets now account for 30% of mobile orders globally, and sites with mobile wallets see 2x mobile conversion rate growth. 71% of shoppers now use a device in-store, up from 62% in 2017. Their activities while using a device in-store are diverse, from purchasing to reading reviews.
How do you use your phone to shop while in a physical store?
The use of voice assistants is growing, but how much emphasis should brands really place on this technology? Our study found that shoppers are mostly in the experimentation stage, with 38% of shoppers having used voice for at least one shopping activity (like purchasing, searching, or checking prices) in the past three months. For those who own a smart speaker, that number jumps to 70%—underscoring the idea that this area may grow as use of in-home assistants increases. Just 12% of shoppers say they are very interested in ordering products by using voice. Shoppers said they’re more comfortable using voice to buy items that are less expensive or with which they already have familiarity.
An excellent customer experience encompasses more than stores, ecommerce, and marketing—it also includes service. Our data shows that during the year’s peak shopping season, shoppers were far more likely to self-serve using FAQ searches during Cyber Week than the rest of the season. Cyber Week saw five customer service cases logged for every one knowledge-base view, the lowest rate across the entire holiday season. This week also represents the peak volume of self-service, as 26% of all knowledge-base searches occurred during Cyber Week. As Christmas drew near, shoppers sought the direct engagement of customer service, bringing service cases to their highest levels.
The big question on every retail and consumer goods company’s mind: How do we compete against marketplaces? The first step is understanding their strengths and weaknesses—and where retailers and brands can shine.
In our consumer survey, marketplaces received top scores in half of our evaluation metrics, including price (56%), product variety (51%), product availability (50%), and inspiration (48%). Retailers win for customer service, while brands win for product quality, innovation, and uniqueness. Marketplaces typically own the reordering experience, as nearly half (47%) of reorder or repeat purchases take place via online marketplace, regardless of where the initial purchase was made.
In our mystery shopping study, 365 by Whole Foods set a new, innovative standard for the grocery market. Instore services like Next Level Burger and Orwasher’s, a pour-your-own beer and wine station, encourage shoppers to extend their visit. Technology-led experiences include intuitive weigh stations for produce, a beer and food pairing recommendation kiosk, and free Wi-Fi. Cohesive messaging throughout the store promotes sustainable, organic, and healthy foods—reminding shoppers why they choose Whole Foods.
Shoppers reward brands that go beyond transactions and orders to be relevant and resonate. Today’s shoppers are relationship-driven, favoring brands that bring value and meaning to their lives. Retailers and brands must look for new ways to differentiate by appealing to customers’ emotions and forging connections based on shared beliefs.
Our research found that shoppers reward brands that create lasting relationships over time—specifically through loyalty programs and 1-to-1 personalization efforts that extend across both digital and physical channels. Our survey found that 64% of shoppers feel retailers “don’t truly know them,” highlighting the need for retailers to prove that they do.
For example, in our mystery shopping, Lush’s compact store had an analog, multi-sensory experience, with smell and touch being dominant. Lush also stood out in its pervasive values-based messaging in the store, with extensive commentary about animal cruelty and natural, environment-friendly products. Overall, our visit highlighted Lush’s strong connection to values.
Today’s shoppers seek to put their wallets where their values are. Brands and retailers can appeal to shoppers’ emotion in any number of ways—through donations, activism, material sourcing, or advocacy. In our survey, 45% of customers indicated that they are more likely to buy from a brand or retailer that donates a portion of purchase proceeds to charity. Many brands have significantly increased their efforts in this area. Our mystery shopping activity reveals that nine of the ten top-scoring brands received an above-average score in the area of emotional connection.
We’re in a new era of loyalty programs—programs that aren’t just about accruing points, but about rewarding shoppers with better experiences and building more meaningful relationships. In some cases, these loyalty programs cross into the membership territory, as they prove to be so valuable that customers are willing to pay for them. Amazon now has 100 million Prime members. In our mystery shopping study, Amazon Books extends Amazon’s popular Prime membership to brick-and-mortar storefronts. Impressive in-store services like discounted products, mobile checkout, and free home shipping are exclusively available to Prime members—boosting loyalty across channels.
66% of shoppers are more likely to buy from brands and retailers offering a loyalty program.
In the quest for better customer understanding and more meaningful relationships, personalization—as provided through machine learning and artificial intelligence (AI)—is already having a measurable impact:
Personalization might take the form of personalized search results on an ecommerce site, predictive “you might also like” recommendations, or a store associate studying a shopper’s past purchases before offering up new items to try on in-store. Whatever the application, personalization makes the shopper’s context relevant and tells shoppers: we’re listening. And in an environment where 64% of consumers say they don’t feel retailers truly know them, that level of listening is important.
Sephora fuses loyalty and personalization to make the shopper relationship resonate—and last. Sephora’s Beauty Insider program lets customers accumulate points for discounts, but it also gives members covetable samples of top products. This lets customers try new products in a low-risk way, while encouraging them to branch out of their typical purchase cycle. Sephora was also a best-in-class example in our mystery shopping study, tying for fifth place out of 70 stores. In personalization, Sephora was especially strong. A customer could get results in-store from Color IQ, Fragrance IQ, and Skin Care IQ cosmetic kiosks, then sync them with their Sephora digital account. The Sephora app also recommended in-store products, based on previous purchases, once users selected the in-store mode.
“To enable and empower shopper success in a retail organization today, it’s absolutely critical to focus on these four pillars of consumer engagement: mobile, stores, intelligence, and connected experiences.”
– Rob Garf, VP of Industry Strategy & Insights, Salesforce
Mobile’s impact on digital has been well documented—it accounts for 60% of all traffic and 92% of ecommerce order growth. However, mobile’s influence is even more pronounced in physical stores, where 83% of shoppers aged 18-44 are using their phones. Phones have become the cradle of convenience for shoppers, eliminating friction and enabling shopping to happen anywhere.
To successfully lead with mobile, retailers must carefully review where mobile shoppers are encountering friction—from tiny search bars to lengthy checkout processes—both in store and online.
Stance brought the ultimate in shopper-first convenience into their stores, launching mobile in-store self-checkout, with no app required. Johnston & Murphy, by removing friction online during checkout, saw 15% of mobile orders now use Apple Pay. On average, a buyer using Apple Pay speeds through checkout 90 seconds faster than other buyers.
As customers’ in-store expectations continue to grow, brands must not only meet their immediate needs (in other words, sell products), but also build a long-term relationship. The top three stores in our mystery study—Nordstrom Men’s, Bloomingdales, and Adidas—create unique and compelling physical spaces. Key lessons:
These stores emerged as the top 10 winners in our mystery shopping study, as graded on factors from in-store mobile experience to personalization to loyalty program signage. (See Methodology for more details.)
AI and machine learning empower retailers to anticipate shoppers’ next moves and deliver tailored experiences. While just 6% of digital shoppers click product recommendations, those shoppers account for a staggering 37% of revenue. By fully embracing AI and optimizing its use on digital channels, retailers can best connect shopper with product and reach them in the appropriate micromoment. AI also gives retailers a prime opportunity to show shoppers they truly know them—which 64% of shoppers say they don’t feel today.
Jack Wills, a UK clothing retailer, uses Commerce Insights from Salesforce to determine product affinities and drive incremental revenue. Within the first week of testing recommendations, Jack Wills saw strong conversion improvement, prompting the brand to enable AI-powered recommendations on four sites.
Digital transformation puts the pressure on retailers to provide excellent experiences in every channel. The best way to meet growing shopper demands is to connect experiences across the journey. Brands must organize around the customer, breaking down silos between departments, uniting disparate data systems, and adopting a cohesive digital transformation strategy for the organization.
Suitsupply, a rapidly growing brand, has revolutionized traditional tailoring with a connected clienteling and tailoring experience. Service agents have full access to customer profiles, including transaction history and color and size preferences, to intelligently serve customers across channels and use customers’ preferred support channels—including support video chats for personalized service stylists.
Retailers are facing a massively changed—and challenging—landscape. The newly empowered customer, Amazon’s continued growth, new startups, and the next wave of technology innovation require the industry to rethink almost every aspect of the business, from data-driven personalization and marketing optimization to commerce, loyalty, supply chain, and the role of the store. New rules apply.
As retailers embrace digital business transformation and retool their organizations, a continued focus on your unique customer is essential. Think of it as radical customer centricity. To compete and win, departments and executives must come together with one goal in mind: putting shoppers first.
The data shared in Shopper-First Retailing highlights the magnitude of change yet to come: just 38% of stores in our mystery shopping study offered click-and-collect capabilities, yet a full 87% of shoppers say they start their hunt for a new product on digital channels. Shoppers choose retailers instead of marketplaces or brands primarily for customer service, but retailers have to offer more than a convenient returns counter to compete. The next wave of technologically powered changes will see voice, sensors, and blockchain impacting experiences and expectations.
Retailers have an opportunity to transform for the present age, in which shoppers are truly in control, by listening to what shoppers actually want: for retailers to make experiences fresh; meet them wherever they are, and give the relationship meaning. Putting the shopper first isn’t about testing tactics, but instead, about meeting customer expectations for relevance and convenience as they evolve. We hope retail organizations of all stripes take advantage of the untapped opportunity to advance by evolving.
This study aimed to understand consumer behavior, opinions, and attitudes related to retail and the role of digital in the shopping experience. Researchers from Publicis Sapient and Salesforce developed a consumer survey including questions fielded in last year’s retail study and the 2017 Salesforce Connected Shopper survey, as well as new questions crafted to address emerging technology and retail trends.
The survey was conducted online with 6,000 people in 6 countries (1,000 participants in each country): the United States, Canada, Australia, Germany, France, and the U.K. Recruited participants were at least 18 years old and were screened for shopping frequency in stores and online. Where possible, year-over-year results were generated for questions asked in 2017 legacy surveys.
Shopping activity was provided by the Salesforce Shopping Index, which looks at the shopping activity of more than 500 million shoppers worldwide on the Commerce Cloud platform, in Q1 2018. Service activity was provided by the Salesforce Service Cloud, which includes more than 200 million aggregated service cases across retailers between November 21-December 31, 2017. All data has been aggregated and anonymized by Salesforce to produce a diverse analysis set.
This study evaluated how major U.S. and U.K retailers are building connected and compelling in-store experiences. In an age when online retail is rapidly growing, to what extent do retailers leverage digital channels, messaging, and services to create resonant in-store experiences?
Researchers from Publicis Sapient and Salesforce conducted unannounced visits to mobile and in-store properties of 70 U.S. and U.K. retailers (we visited seven retailers in two different cities). We audited English-language mobile apps and primarily flagship stores in New York City, London, and San Francisco. The research began in April 2018 and concluded in June 2018.
To determine our top performing brands, we evaluated four core areas: in-store digital functions (including mobile app effectiveness, WiFi, and alternative payment methods), the brand’s communication of values in-store, the quality of product testing and service experiences, and the degree to which products felt fresh and could be customized. When offered, we evaluated a retailer’s ecommerce effectiveness and omnichannel initiatives, such as click and collect.
We also compared our results to our previous evaluations conducted in 2012, 2013, and 2015.