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Uncomfortable Reality
Six eCommerce and Retail Trends
Reid Greenberg, Senior Vice President,
eCommerce & Digital
eCommerce and Omnichannel Conference
April 25-26 San Francisco, CA
Kantar Retail © 2017
Agenda
Setting the Stage: Trends, Macro, Shopper
6 Digital Trends to Prepare For
Next Steps
4
Kantar Retail © 2017
2016 Represented a Step-Change in Online Shopping
41%37%
24%
14%
9%6%
42%39%
26%
15%11%
8%
47%
40%
30%
20%
12%10%
Apparel (net) Leisure (net) HBC (net) Grocery Non-FoodItems (net)
Home Goods (net) Grocery Food Items(net)
2014 2015 2016
Source: Kantar Retail ShopperScape®, July 2014–2016 6
Online Shopping Incidence, by Broad Merchandise Categories(among all primary household shoppers)
Significant changes in online shopping frequency across all broad merchandise groups
Kantar Retail © 2017 Source: U.S. Department of Commerce, Kantar Retail analysis and forecasts 7
16%All-Category Average
Online Share of Sales by Category*, 2011-2021F
10%All-Category Average
6%All-Category Average
Toys & Sporting Goods
Furniture & Home Furnishings
Apparel & Footwear
Books & Magazines, Music & Videos
Food & Alcohol
Electronics & Appliances,
Computer & Office Products
Drugs, Health & Beauty Care
* Read as: In 2021, 5% of Food & Alcohol spending will be online and, conversely, 95% of Food & Alcohol spending will remain in stores.
16% Online Share Category Average Across All Goods by ’21
‒ Online share of food/alcohol will be three-times as high from 2016 to 2021, HBC/drug more than doubles
Kantar Retail © 2017
Underlying Shopper Demands: Stress-Free Continues to Rise in Importance
Along with the belief that the physical store is NOT the best way to reduce stress
55%
58%59%
53%
52%
57%
2014 2015 2016
Rank "Stress-Free Shopping" Among Most Important Factors When Shopping
Say Online* is Best Way to Have Stress-Free Shopping Experience
Source: Kantar Retail ShopperScape®, January–May 2014, 2015, and 2016 (first series); March 2014,
2015, and 2016 (second series)8
*online = via computer, tablet, or smartphone
How Shoppers Feel About Stress-Free Shopping
Kantar Retail © 2017
Stuff Loses Share to Not Stuff…
Leaving less money for goods
By 2020, every American household will spend…
$2 on services for $1 on goods
• Healthcare services
• Waste management
• Recreation
• Social services
Source: U.S. Department of Commerce and Kantar Retail 10
Household Spending on Goods
$3.9 $5.2
$4.1$3.0
18%
Retail Sales
Total Economy (i.e., GDP)
Total Household SpendingIncluding Services
$11.5 $15.6
$16.8 $22.8
USD (Trillions)
2013 2020
Kantar Retail © 2017
Even Within Stuff, Your Stuff Loses Share to Other Stuff
Source: Kantar Retail analysis 11
Therapeutic
equipment
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1996 2001 2006 2011 2016 2021
Food Away From Home
Alcohol Away From Home
Drugs Therapeutic Equipment
Misc. Durable & Nondurable GoodsSporting Equipment
Consumer ElectronicsPets & Supplies
Health and Wellness continues to rise.
Kantar Retail © 2017
Exploring the New and Premium Fresh: 90% of the Top 100 Brands in US CPG
Lost Share Last Year
Driving retail’s prioritization of health and wellness is a new premium: Shoppers are willing to pay
more for health and wellness clarity, convenience, and personalization
Source: Kantar Retail analysis 12
Health & Wellness
Better for you” attributes define quality
Sustainability & Local
Building a sense of “trust”
Authenticity
Sense of “real”
Preservation
Purpose
why
what
how
Transparency
Kantar Retail © 2017
Seventh Generation, Patagonia, Tom’s, Even Amazon are Great Examples.
Source: Seventh Generation company site, Kantar Retail analysis 13
Sustainability
Transparency
Purpose
Kantar Retail © 2017
The Fundamentals of Retail Remain the Same
It is all just shopping to consumers who still want easy, enjoyable, experiences
Source: Kantar Retail research and analysis 14
• Shoppers are redefining convenience:
• Seeking out stress-free shopping experiences
• Looking to streamline their shopping routines
• Carefully managing their time, making SPEED important
• Finding ways to make life easier and more enjoyable
• How YOU can Help:
Engage with your shoppers however, wherever and
whenever they want, on their terms. Stand for something.
Kantar Retail © 2017
An Uncomfortable Reality
Digital enables “everywhere commerce”
15
eCommerce = MeCommerce
Kantar Retail © 2017
Six Key eCommerce and Retail Trends Emerging
Source: Kantar Retail research and analysis 17
Kantar Retail © 2017
1. Mobile and Social Commerce
Shopping is quickly moving to the small screen
Source: Kantar Retail ShopperScape®, March 2015 and 2016 18
24%
20%
18%
16%
15%
Having access to information aboutproducts or brands
Discovering new products or brands
Having stress-free shoppingexperience
Completing my shopping as quickly aspossible
Having fun/enjoying myself
Percent of Gen Y Parents Who Think Smartphone is
Best Venue for Accomplishing Shopping Goal
PPT Change
vs. Year Ago
All Shoppers
All Gen Y
Gen Y Parents95%
92%
72%
Percent of Shoppers Who Own a Smartphone(among primary household shoppers)
Kantar Retail © 2017
Desktop Is Rapidly Becoming Less Relevant
Share of U.S. Digital Media Time Spent by Platform
Source: comScore 19
Kantar Retail © 2017
Social Media Platforms Increasingly Shoppable
Introducing commerce capabilities to capitalize on massive, mobile-first audience
Source: Kantar Retail research and analysis, social media website 20
45% 34%
45%
68%
Kantar Retail © 2017
2. Subscription Economy
Meal kit innovation, new competitors, partnerships, and strategic acquisitions accelerate
Source: Kantar Retail research and analysis, Kantar Retail ShopperScape®, August 2016, Company
website21
6%
Surprise Subscription
5%
Regular Subscription
3%
Meal Kit Delivery
Penetration of eCommerce Delivery Models(share of primary household shoppers who have used service)
Kantar Retail © 2017
Embarking on a Journey to Predictive-Replenishment
Shoppers are willing to give up non-experience products in favor of auto-replenishment
Source: Kantar Retail research and analysis, Company website 22
To
day
To
mo
rro
w
Subscription
management
1-touch
ordering
No-touch
ordering
Integrated
replenishment
Predictive
replenishment
“If you don’t have an AI strategy, you
will die in just a few years.” - Devin Wenig, CEO, eBay
By 2025, 5% of all U.S. eCommerce
transactions will likely consist of some type
of auto-replenish or subscription process.
This is equivalent to the annual sales of
approximately 800 Walmart Supercenters!
Kantar Retail © 2017
3. “Instalivery”: Instant Delivery
On-demand culture, elevated expectations for immediacy
Source: Kantar Retail research and analysis, WSJ 23
“We can eliminate that [extra] trip in your
life. Customers really like it. It’s something
that really helps them accomplish a task. - Stephenie Landry, VP of Prime Now
Kantar Retail © 2017
The Rise of Third Party Partnerships
Requires minimal upfront investment, allows retailers to test and learn quickly
Source: Kantar Retail research and analysis, company website 24
Kantar Retail © 2017
3. Voice Commerce
What a difference one holiday season (and a new device coming to market) makes
5%
7%
October 2016: currently use voice-controlled home assistant
January 2017: currently own voice-enabled assistant/speaker
Source: Kantar Retail ShopperScape®, October 2016 and January 2017 26
Voice-Enabled Smart Home Assistant Ownership:
October 2016 vs. January 2017
*Data for October 2016 and January 2017 come from non-identical questions, and note slight differences in description of technology
Note: Arrows indicate significant difference between time periods (95% confidence level)
That’s a 40% jump in ownership in 3 months!
Kantar Retail © 2017
Conversational Commerce the Next Retail Frontier
Augmenting and easing daily interactions; creative opportunities abound
Source: Kantar Retail research and analysis, Fast Company 27
"Imagine what happens with Hot Wheels and
Thomas the Train when you have this connected
hub. Do you hear sound effects? Can you have
greater interactions?” - Robb Fujioka, senior vice president, chief products officer at
Mattel
Kantar Retail © 2017
5. Amazon Logistics
Controlling fulfillment costs by creating an independent delivery system
Source: Kantar Retail research and analysis, company reports 28
“Creating an air transportation network is
expanding our capacity to ensure great delivery
speeds for our Prime members for years to come.” – Dave Clark, Amazon’s Senior Vice President of Worldwide Operations, August
2016
$4.5
$6.5
$9.0
$8.7
$11.5
$16.2
4.7%
4.7%
5.3%
4.4%
4.5%
4.6%
4.7%
4.8%
4.9%
5.0%
5.1%
5.2%
5.3%
5.4%
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
FY 2014 FY 2015 FY 2016
Shipping Revenue Outbound Shipping Costs
Net Shipping Costs as % of Sales
US
D B
illio
ns
Shipping Costs(1) vs. Shipping
Revenue(2), FY 2014-FY 2016
Net S
hip
pin
g C
osts
% o
f S
ale
s(1) Shipping costs includes sortation and delivery centers and transportation costs.
(2) Shipping revenue includes a portion of amounts earned from Prime membership and amounts earned from FBA programs related to shipping services.
Kantar Retail © 2017
Logistics as a New Revenue Stream
2015 10-K listed as a “transportation service provider”
Source: Kantar Retail research and analysis, company website, company reports 29
Kantar Retail © 2017
6. The Power of Partnerships
Unconventional adjacencies to drive traffic in-store
Source: Kantar Retail research and analysis, Kantar Retail store visits, Houston Business Journal 30
Burt’s Bees Display at Barnes & Noble
Nutella Café at Loblaw, Toronto
Birchbox at Gap Chobani Café at Walmart
Kantar Retail © 2017
Store of the Future
Source: Accenture, Kantar Retail analysis 31
Smart mirrors allow
customers to “virtually”
try on different
clothing.
Shoppers can call
for assistance, check
inventory, and use
touch screens on
robots or shopbots.
Beacons serve
up information, such as
purchase histories and
personal preferences, on
frequent store visitors to
help sales associates
deliver high-touch service
to their most valuable
customers.
IoT-connected digital
signage pushes content
to stores in real time,
customized for specific
stores, cities, or regions.
Personalized, digital coupons are
pushed to a top shopper when she
enters, based on past purchases.
RFID solutions track
inventory as it moves
across the supply chain.
Customers can use a
smartphone or wearable
device to quickly scan an
item and call up product
information, reviews, or
social media opinions.
Dude! FOUND IT!
Smart shopping
carts can help
shoppers navigate
store aisles based on
their digital shopping
lists.
Smart shelves
in store detect
when inventory
is low.
Source: Insider Trends, David Dalziel 32
3. Next Steps
“Future digital will be less
visible, less of an add on
and more of an integrated
story.”
Kantar Retail © 2017
What Now?
Source: Kantar Retail Analysis 33
Key Learnings Planning Implications
Uncomfortable is the new norm. Get used to it.- Continue to build out internal capabilities, seeking ways to
educate and then inform. Know that you’ll always feel behind.
Health & Wellness is bigger than ‘other stuff’
- Growth isn’t coming from FMCG. Think about creating solutions
for our over-worked, over-stressed, limited-time shopper’s lives.
Where can you really partner with your retailers?
C&C baskets are bigger than in store. $125 vs $60. This
shipping format will EXPLODE!
- Partner with retailers to optimize for curbside. Use digital do drive
this. 90% of Americans live within 15 mins of a WMT. Partner with
Kroger!
Ecommerce is only part of the digital picture. An entirely
‘Everywhere Commerce” needs to be developed. Mobile is
key.
- A complete digital strategy includes interaction at every point
along the path to purchase, including locating stores, creating lists,
checking prices, product research, sharing content and
purchasing. These touch points occur both in and out of stores,
and shoppers are increasingly using technology to simplify and
improve the process. Help ensure this content is readily found,
optimize for mobile and partner with your retailers.
Future-Stuff is coming here.
- AI, auto replenish, AR, Voice are all here and rapidly picking up
speed as well as the remainder of the ‘6 trends’. Invest in
technology enablers that can help you leap ahead of competitors.
Be bold.
Kantar Retail © 2017
Establishing a Digital Innovation Think Tank
Development of technological capabilities and a digital culture is critical
Source: Kantar Retail research and analysis, company website, Fast Company 34
Store No. 8- Tech startup incubator
- Headed by Seth Beal and Katie
Finnegan
- Based in Silicon Valley
- Recruit and build startups that
specialize in emerging
technologies (i.e., robotics, virtual
and augmented reality, machine
learning and artificial intelligence)
Kantar Retail © 2017
For further information please refer to
www.kantarretailiq.com
Contact:
Reid Greenberg
SVP, eCommerce and Digital Retail Insights
T: +1 (802) 255 4474
reid.greenberg@kantarretail.com
@reid_greenberg
@kantarretail
www.kantarretail.com
35
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