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C onnected Shopper Journey

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Page 3: Connected Shopper Journey - TNS NIPO · 2015-07-14 · Connected Shopper Journey. Inhoudsopgave\r \r \r1. Closing the eCommerce gap 3\r \r2. Winners and ... than anyone, but the detail

1. Closing the eCommerce gap

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Closing the eCommerce gap

It’s become a truism of modern business life that eCommerce growth routinely outstrips any other channel: a rule of thumb that holds broadly true across categories, and across markets. But does this mean that businesses should be content with the growth that online sales are providing for them? Far from it. This year’s Connected Life study reveals the significant gaps that still exist between eCommerce potential and eCommerce reality, between the number of those researching online and those going on to complete purchases online.

The size of the eCommerce gap, with less than half of all online research translating into purchase, should motivate almost any retailer or brand to secure first mover advantage when it comes to closing it. However, doing so effectively requires specific insight about the barriers that keep shoppers browsing rather than buying.

Evolving ecosystems, evolving barriers In many regards, the barriers to eCommerce evolve alongside the digital ecosystem of the market, since they represent the points of friction where digital

potential doesn’t fully align with reality. For markets with the lowest absolute level of eCommerce, the dominant barrier is usually access to the internet itself. As access expands, focus shifts to the trustworthiness of eCommerce providers, the nature of the eCommerce experience and concerns over the security of making payments online. Once those concerns are met, attention falls on the delivery infrastructure that eCommerce depends on, and whether this undermines the convenience and cost benefits that it should offer. Solutions that can anticipate and address these issues greatly expand the range of shopping missions that eCommerce can meet.

However, do not assume that eCommerce will develop in exactly the same way everywhere in the world. UK eCommerce is 82 per cent PC-based but 78 per cent of Nigeria’s occurs on a mobile. The percentage of mobile transactions for Snapdeal, one of India’s largest eCommerce players, has catapulted from 5 per cent in 2013 to over 50 per cent today. Getting the right experience onto the right device can remove barriers and trigger rapid uptake of eCommerce services.

The size of the eCommerce gap, with less than half of all online research translating into purchase, should motivate almost any retailer or brand to secure first mover advantage and close the gap.

Do not assume that eCommerce will develop in exactly the same way everywhere in the world.

82% 78%

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Closing the eCommerce gap

Different categories, different gaps The barriers to eCommerce don’t just evolve with markets; they vary significantly across categories as well. And as a result they produce eCommerce gaps of different sizes and shapes. Amazon and Alibaba may have pushed the eCommerce boundaries further than anyone, but the detail of the Connected Life survey reveals that even their powerful combination of online reviews, automatic recommendations and secure payments are not enough for every category. Where eCommerce is concerned, there is no true one-size-fits-all solution.

Grocery shoppers are by far the least likely to follow up online research with online purchase, with only 23 per cent of online researchers going on to buy online in categories such as hair care. This is because the specific barriers for grocery shoppers are those that eCommerce solutions have been least adept

at addressing – at least up to now. The fact is that 43 per cent of grocery shoppers find it easier to buy offline – and for 39 per cent, getting products right away matters hugely. However these barriers are by no means insurmountable. Several grocers are currently working on eCommerce models that can deliver goods in 2-3 hours rather than 2-3 days; others are focusing on smart shopping lists that can offer a tangible convenience benefit by learning from shoppers’ buying routines, anticipating what they need and when.

Other categories have different barriers, and therefore require different solutions to unlock the potential for growth. For financial services, security concerns and a desire for personal service top the list. Many developed market banks have already developed reassuringly tangible security solutions using familiar card-and-PIN verification techniques. Now they are focusing on moving customer service onto digital platforms; those that can convince customers that this delivers a comparable experience to speaking to someone in branch or on the phone will find themselves with a considerable competitive advantage.

Where eCommerce is concerned, there is no true one-size-fits-all solution.

For technology brands the key to unlocking eCommerce’s potential lies in reassurance on quality (a concern for 42 per cent of shoppers), potentially through better use of reviews; and cutting down on delivery costs for bulky items, an issue that undermines the perceived benefits of buying online for 40 per cent of shoppers.

In the financial services industry security is a concern for its users.

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Closing the eCommerce gap

Don’t let the hard work go to waste Moving from online research to online purchase ought to be a frictionless experience. When the hard work of gaining consumer attention and engagement online has been done, the decision to purchase has largely been made, the only thing stopping the shopper buying online are the barriers they perceive to eCommerce in general and to the category they are buying for in particular. Huge growth potential still exists for retailers and brands that can end this disconnect and close the eCommerce gap. Those that succeed in doing so will be those that best understand the very specific remaining barriers for their market and category – and build the solutions that ensure they dominate when online shopping comes fully of age.

Huge growth potential still exists for retailers and brands that can end this disconnect and close the eCommerce gap.

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2. Winners and losers alongthe path to purchase

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We know that ever-increasing numbers of consumers are going online to help their shopping, whether it’s to speed up a transaction, research best prices or seek reassurance that they are making the right choice. However, it is not the same across all categories and brand owners need to think carefully about the right approach to take to ensure that their digital strategy doesn’t distract from sales.

Winners and losers along the digital path to purchase

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Don’t believe everything you readThe world is changing. If you believe all you read, nobody makes a purchase decision nowadays without going through an elaborate process that might involve visiting a store to find a few options they like, using their smartphone to check on prices and independent reviews, going on Facebook to canvass their friends’ opinions, and completing the purchase on-line. But what is the story for the weekly grocery shop? Shopping would truly be a full time occupation if detergents, pet food and bread were all purchased in this manner. The weekly shop would likely take all week.

There is a huge amount of misinformation or misunderstanding concerning the ‘digital shopper’ as he or she relates to FMCG purchasing. If FMCG brand manufacturers and retailers are to succeed, then they must dispense with these myths, and think about what their shoppers actually demand from the digital path to purchase.

The basic rules stay the sameThe answer is surprisingly simple! Although the explosion of digitaltouch points has made the world more complex, the basic rules stay the same. As Herb Sorensen put it in ‘Inside the Mind of the Shopper’ (2009), the relationship between the shopper and the retailer consists of three shopper inputs and two retailer outputs in return. Shoppers give time, money and angst, and in return they receive items and satisfaction. When it comes to meeting shopper needs – any application that saves time, money or angst (or even better all three) will have a good chance of success. Any application that does not deliver against one of these basic needs will likely fail.

What is the ‘digital’ path to purchase and how is it different?Before we ask how the digital path to purchase can deliver against these three shopper needs, let’s pause to ask what we actually mean by the ‘digital’ path to purchase. The reality is that there are no alternative digital and analogue routes to completing grocery shopping; there is just one path to purchase, and it

may or may not include some digital influences. The various stages of the path to purchase remain the same: there are various different models for FMCG products but usually they include pre-trip planning and research, locating categories, searching for products, selecting a product, buying, and finally usage or consumption. The key development is that now any or all of these stages might be conducted using a variety of digital touchpoints or influences. I stress the word might because the reality is that the vast majority of today’s grocery shoppers continue to follow a determinedly analogue path to purchase! A recent TNS study in the US showed that approximately 90 percent of trips were ‘analogue only’, with most digital activity occurring pre-store rather than in-store.

of trips were ‘analogue only’, with most digital activity occurring pre-store rather than in-store.

90%

Winners and losers along the digital path to purchase

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When trying to map out a successful strategy it is worth making a distinction between e-commerce and traditional bricks and mortar retail, as the path to purchase and the various stages along it can be very different in each case. But let’s also make a distinction between a digital influence along the path to purchase, and digital media. Like traditional media, digital media can help build brand equity and awareness, but a brand’s Facebook page, just like a TV ad, is not part of a shoppers’ path to purchase unless it has been used to inform that purchase.

The principles of successThe key to success in retail is providing shoppers with what they want and closing the sale. The process is simple: shoppers search for products, and retailers and brands search for shoppers. As previously discussed, shoppers are investing time, money and angst into this search. To quote Herb Sorensen again, “the point here is that when shopping, shoppers do not search because they like to search, but because there is a

barrier between them and what they need or want to purchase. It’s sad that there are people in sales and marketing who actually think that if they can make the search (also known as shopping) longer and more pleasurable, they will sell more! Tsk, tsk! Selling is always about the close, and the sooner the better.” Good retailing is about connecting shoppers with the products they want to buy – if this can be done quickly it frees time for incremental browsing and purchasing. Conversely if shoppers are delayed they become frustrated and spend less.

The folly of interruptionWhen we apply this logic to the path to purchase for FMCG products, the question becomes: how can digital touchpoints and influences realistically be used to save shoppers time, money and angst when buying the weekly groceries? Bear in mind that our supermarkets are already overflowing with promotional offers, and the amount of angst associated with the habitual

purchasing of a favourite detergent brand is minimal. So the opportunities to save shoppers time, money and angst can be hard to find.

Brand manufacturers and retailers have a whole new armoury of weapons to try and influence shoppers along the path to purchase, but making these weapons relevant is challenging. The danger is that brands and retailers will ‘interrupt’ shoppers with irrelevant communications – either due to untargeted executions, or because they don’t properly understand shopper needs. Such interruption is unwelcome and can be counterproductive if it delays purchases. Shoppers’ needs are often simple – they know what items they want to buy and they want help finding them. It is important that brands and retailers meet the shopper on their own terms, give them what they want, and focus on the basics of saving shoppers time, money and angst. Those focused on mass interruption will surely fail.

Winners and losers along the digital path to purchase

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Purchase

Shopper

Purchase

Shopper

Digital touch point

Digital touch point

Digital winners and the importance of context versus contentDigital winners will be those that look past technology itself to focus on how it can be applied to meet shopper needs. Since the opportunities to save shoppers time and money are relatively few, “smart” applications will be required. These should facilitate quicker shopping by recognising a shopper’s purchasing history and their location in-store, and delivering relevant, tailored communications and offers. The real story is not so much about mobile, for example, but about data. The application of technology that counts most will be the ability to use large quantities of information streamed into a single set of factors in real-time: the products a shopper needs, the offers they want and the right tone and timing of communication. Traditional (mass) marketing has always been about content, but a shift in thinking is required as real time, 1-1 communication with shoppers will make context far more important than content when it comes to the success of shopper marketing.

It is hugely important that brands and retailers use digital touchpoints to shorten the path to purchase rather than lengthen it. The focus should be on narrowing and straightening the path, helping shoppers to zoom in quickly on what they need and speeding the decision-making process when it comes to buying it.TNS has developed a simple framework or checklist that maps the various stages of the path to purchase against the key shopper needs. This framework can be used to assess the value that any digital (or analogue) touchpoint or interruption is likely to bring.

Touchpoints will shorten the path to purchase

Winners and losers along the digital path to purchase

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A recent study in the US asked a large sample of digitally engaged grocery shoppers an open-ended question “what else can your retailer do to help?” Tellingly of the six key response types, the first two were requests to stop doing things.

� Don’t send me late information � Don’t overdo promotional emails and texts � Save me time � Make it quick and easy to find items in the store � Help me get what I want � Give me meal ideas

This example helps illustrate the point that there are very few applications that are successfully addressing the time, money and angst factors at the moment.

Targeting time, money and angstApplying digital technology productively to FMCG shopping is a new and far from developed area. However solutions are starting to emerge that show how digital technology can be thoughtfully and carefully applied to help address key consumer needs.

TNS framework

Save time Save money Save angst

Pre-store planning & research

Locating in-store

Searching at shelf

Selecting

Buying

Winners and losers along the digital path to purchase

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Saving shoppers timeSmartphones can be used to save time in-store with self-scan and self-checkout. Shoppers simply scan products with their smartphone and checkout instantly without having to wait in-line. Applications that help shoppers make a list and then find what they want in-store can also prove to be winners, as most time in-store is spent trying to locate and search for products.

Saving shoppers moneyCurrently, the most common digital activity along the path to purchase is the printing of on-line coupons at home – a simple money-saving tactic, occurring pre-store. Increasingly though, tailored or personalised offers show the ability to improve the relevance and efficiency of offers. Emerging are ‘smart’ offers that can be delivered to the shoppers’ phone, based on their historical purchases, brand preferences and loyalty, their location in-store and what’s in the shopping cart as the moment.

Saving shoppers angst This is perhaps where digital, and specifically mobile, comes into its own. Shoppers need reassurance at the point of purchase and mobile can provide this – often with simple tactics such as calling out best sellers or pointing our affinities Amazon-style (X percent of buyers of this product also bought…).

Moving forward, augmented reality technology has potential for retailers, particularly in easing the search process. By pointing a smart device’s camera at a shelf, shoppers could access overlaid information highlighting their stated product preferences such as nutritional information, environmentally friendly packaging and not tested on animals.

Winners and losers along the digital path to purchase

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A war is brewing…..?There is usually a ‘healthy tension’ in the relationship between brands and retailers, and it is a relationship in which the retailer has become increasingly more powerful over the years. Is mobile about to change the dynamics of this relationship?

For retailers, mobile represents an opportunity to facilitate real-time, location-based, 1-1 personalised communication between brands and shoppers at the point of purchase, and charge a healthy premium for the service. Retail as media is not a new concept, but this capability can represent a step-change in allocation of media budgets towards retailers.

For brands on the other hand, mobile represents an opportunity to bypass the retailer and talk to the shopper directly at the point of purchase. Shoppers can scan a QR code or take a picture of the pack, opening a dialogue with the brand that includes the potential to deliver offers and make purchases via a website.

Winners and losers along the digital path to purchase

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The advent of the mobile wallet will mean that an individuals’ purchasing history will be stored on their mobile phone, and so brands may be able to access item-level detail without the permission of the retailer, and in turn develop their own 1-1 tailored communications. The potential is huge. Just think if a brand could recognise its own loyal shoppers in-store as well as buyers of competitor brands, and target promotional offers accordingly, ensuring maximum efficiency of promotional spend.

But the battle for ‘ownership’ of these capabilities is yet to begin. To harness the power and potential available, vast product databases are required linking product images with detailed attributes and cross-referencing this with individual purchasing histories to create

instant, tailored shopper marketing. No wonder that Hal Varian of Google predicts “the sexy job in the next 10 years will be statisticians.” The sheer complexity of the task raises the possibility that third parties with expertise in analysis and big data may trump both retailers and brands when it comes to delivering solutions. Third parties need not be retailer-specific either – think of an independent ‘shopping companion platform’ that allows shoppers to meet all of their needs from any number of different stores based on location, price, availability, and personal preferences.

If or when brands do manage to begin to bypass the retailer the whole system by which brands and retailers do business will be shattered, and predicting how that situation might resolve itself is extremely difficult.

Winners and losers along the digital path to purchase

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What next?When it comes to the future, let’s turn to experts in the business of efficient digital searching and retail for a view on where we are heading. “We used to joke that the ideal Amazon site would not show a search box, navigation links, or lists of things you could buy,” said Greg Linden, a former Amazon programmer, quoted in the book One Click: Jeff Bezos and the Rise of Amazon.com, “Instead, it would just display a giant picture of one book, the next book you want to buy.”

Will shopper marketing ever reach such a point? In all likelihood the advances in technology will continue to be very rapid, astounding consumers and changing the way they shop.

But the principles of shopping will remain the same, and success for brands and retailers along the path to purchase will only be achieved if they can find ways to save shoppers time, money and angst.

Winners and losers along the digital path to purchase

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Getting smart about the digital path to purchase The TNS framework to help brands and retailers prioritise their investments in the digital shopping space requires three key steps:

1. Assess the current situationDetermine how shoppers are currently using technology throughout the path to purchase. We build our understanding using both custom and syndicated tools.

2. Understand the “why” and key driversUnderstand the needs that are motivating shoppers to use technology – and the time, money or angst that this is saving them.

3. Apply these insights to inform strategyUsing this input, we develop a model and conceptual framework to evaluate future investment decisions and ensure marketing effectiveness.

?

Winners and losers along the digital path to purchase

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3. The truth about mobilesand shopping

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The truth about mobiles and shopping

A lot of shoppers carry apps on their mobile phone that enable them to find product information, compare prices – and seek out better deals. A lot of those shoppers have at some point used those apps to find out if the store they are standing in really offers them the best deal they can get. These are the kinds of topline data points that give both brand marketers and retailers sleepless nights. Mobile has been earmarked as the new frontline in their bid to maintain share of shoppers’ spending: they must use it to steal shoppers and spend from others – or be the victim of such mobile showrooming themselves.

But what if we asked a different, and much more detailed set of questions? What if, instead of asking if people had used a particular app, we asked them when, how often and what for? Even better, what if, instead of asking them to recall how often mobile influences their shopping behaviour, we asked them to describe exactly how it influenced it as it happens – or at least so shortly afterwards that the distortionsof human memory didn’t skew their answers?

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The truth about mobiles and shopping

A new approach to mobile research In a groundbreaking approach to mapping the real influence of mobile on shopping in the US, that’s exactly what TNS did. And the results suggest the need for a major rethink on mobile’s current and potential role. On the one hand, apps are not diverting shoppers from buying products in anything like the numbers that previous research has suggested; on the other, retailers’ impressive equity in the mobile space mean that they are best placed to lead its development as a disruptive influence – and they have plenty of good reasons for doing so.

Our approach was straightforward – and entirely focused on shoppers who actually use shopping apps. We used mobile listening technology to detect when the people in our survey actually used the different apps on their phones, and we then served them an invitation to participate in a quick mobile survey at what was likely to be the most appropriate moment. We didn’t want to cause frustration by actually interrupting their shopping experience, so the survey arrived either within a few hours or the next morning. It asked simple, purposeful questions about how they used their phone for shopping and other activities. We asked these questions when mobile shopping was front-of-mind for our participants. And we kept the survey short, so that it would feel natural to complete it then and there, on their phone.

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The truth about mobiles and shopping

Installed is not the same as used One of the first things that our new approach showed was that, although lots of people do have a range of mobile shopping apps on their phones, very few of those people use them on anything approaching a regular basis. For example, of all android phone owners with a product info or price comparison app installed on their phone, only 24 per cent had used it in the last month.

When we examined the behaviours of all our participants, we found that only 10 per cent had used a product info app in the last month. And price comparison? The mobile functionality that is supposedly leading potential buyers to walk out of store doors in droves? Only 5 per cent had actually compared prices on their phone in the past month.

By far the most popular apps for monthly usage were those that enhanced the shopping experience rather than disrupting it: mobile coupons and retailers’ own sites had both been used monthly by more than a quarter of participants. Retailer app users had used them on two of the last five shopping trips on average, more frequently than any other type.

Just because it’s mobile doesn’t mean it’s in store The next key finding involved where those who had just used a mobile shopping app had actually used it. Contrary to the popular image of the mobile showroomer, this wasn’t usually in a store. Almost a quarter of our shoppers had used their apps whilst browsing or walking aisles, but far more had done so at home, 59 per cent in all. Another 11 per cent had used their apps on the way to the store (either in the store parking lot itself or whilst traveling by train or car), rather than in the store itself.

By far the most popular apps for monthly usage were those that enhanced the shopping experience rather than disrupting it.

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The truth about mobiles and shopping

What really happens when shoppers compare prices in the aisle? What of those that did activate their apps within the store environment? Did those apps hijack the path to purchase in the way that we might expect? Only to a limited extent, as it turns out. When we focused on those who had used their phones to compare prices in store (in other words, those most likely to do something different to buying the product they had originally planned), we found that 35 per cent had simply continued to buy the brand and product they originally intended, in the store they were standing in. Only 13 per cent switched to another store, with 10 per cent opting to buy online and 11 per cent switching to a different product. The second most likely outcome of comparing prices in store was that the shopper didn’t buy the product type at all (31 per cent), potentially a reflection of the fact that some shopping trips are focused on browsing rather than buying.

App use varies across categories… The usage patterns for price comparison and other mobile shopping apps vary across categories, of course. Our research showed that use of shopping apps was fairly evenly divided between groceries and other categories (48 per cent had triggered our survey by using their app on a grocery shopping trip). Those shopping for non-grocery items were significantly more likely to use their apps to compare prices, with white goods, electronics, clothes and shoes the most likely products to be compared. They were also slightly more likely to change their minds and buy a product online rather than in a store, although still only 15 per cent did so the last time they used an app.

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The truth about mobiles and shopping

Clothes, shoes, electronics and white goods also featured prominently amongst the products that shoppers were most likely to use mobile coupons to buy – although plenty of FMCG items made this list as well. Food and beverages were the most popular focus of coupon use, and household products, oral care, hygiene and hair care had all been discounted by around a quarter of our app users. It is coupons rather than product info and price comparison that represents the dominant use of apps in the store environment.

… but the drivers remain the sameAlthough the usage of apps may vary across categories, a remarkably coherent picture emerges when it comes to what shoppers really want from them, how they actually use them, and whom they trust to deliver the mobile-enhanced shopping experience that they want. So if mobile shopping apps aren’t the retailer-wreckers they are often perceived to be, what are they?

As with all elements of the shopping experience, people want mobile shopping solutions to save them time, money and angst: 63 per cent said their last use of an app had saved them money or earned rewards, 35 per cent said it had saved them time and 33 per cent said that it had helped them make a better decision. However, the best environment for mobile apps to save time, money and angst isn’t the store itself, when most shoppers want to get on and buy things, it’s in the moments before they head out on their shopping trip. Mobile apps aren’t so much shopping companions as shopping planners.

The real mobile shopping moment is in the home This is why product info apps are three times more likely to be used at home than in a store – and coupon apps are six times more likely to be accessed before somebody heads out on a trip rather than while they are engaged in one. Even price comparison apps are more likely to be used when planning a trip than during one.

So if mobile shopping apps aren’t the retailer-wreckers they are often perceived to be, what are they?

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The truth about mobiles and shopping

Where’s the trust, really? Just as significantly, retailers themselves appear to enjoy a clear, current advantage when it comes to influencing shoppers in this trip-planning phase. A seamless, trusted brand experience that can offer information on availability, pricing and product features appears far more welcome than aggregated information about prices at different stores. Indeed it may be that consumers have far less faith in independent price aggregators than is often assumed. Retailer apps hugely outscore other types when it comes to how useful shoppers consider them to be, and it’s noticeable that 74 per cent of those using them said that they had saved them money or earned them rewards. This has the potential for making

mobile the natural channel for brand and retailer promotions. Rather than disrupting and frustrating shoppers in store, apps could be used to deliver pricing messages and promotions in the trip-planning phase when they are most likely to be welcomed.

The mobile opportunity Far from being undermined by the promise of mobile-related shopping solutions, retailers appear to be the best placed of all mobile players to deliver them. If they can develop solutions that respect the key drivers of mobile shopping behaviour, and make trips happier, easier and more convenient, then have an open invitation to improve their shoppers’ experiences, secure loyalty and increase spend.

Far from being undermined by the promise of mobile-related shopping solutions, retailers appear to be the best placed of all mobile players to deliver them.

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Get in touch

About TNS NIPO TNS NIPO advises clients on specific growth strategies around new market entry, innovation, brand switching and stakeholder management, based on long-established expertise and market-leading solutions. TNS NIPO is part of TNS. With a presence in over 80 countries, TNS has more conversations with the world’s consumers than anyone else and understands individual human behaviours and attitudes across every cultural, economic and political region of the world.

Please visit www.tns-nipo.com for further information or follow us on Twitter @TNSNIPO. Nienke SmitDirector Shopper & Retailt +31 (6) 34 65 64 81t +31 (20) 522 59 47e [email protected]

Get in touchIf you would like to talk to us about anything you have read in this report, please get in touch with Nienke Smit.

Nienke is Director Shopper & Retail at TNS NIPO. She provides retail & shopper insights and support to a range of clients.

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Page 28: Connected Shopper Journey - TNS NIPO · 2015-07-14 · Connected Shopper Journey. Inhoudsopgave\r \r \r1. Closing the eCommerce gap 3\r \r2. Winners and ... than anyone, but the detail