1、CHRISTMAS 2018:TODAYS SHOPPER INTRODUCTION Retailers seem to be under ever-increasing pressure to achieve growth against a backdrop of rising inflationary pressures and persisting economic and political uncertainty. At the same time, the industry itself is throwing up challenges of its own the might

2、 of Amazon, and consumers able to easily compare prices to find the best deals online. Not only that, but there is greater uncertainty as a huge proportion of total annual sales happen in a short window despite the appeal of Black Friday and Cyber Monday fading, they are being replaced with flash sa

3、les for loyal/subscribed customers. There is also uncertainty around the many goods that will be returned during the Christmas season this can be costly for retailers and squeezes margins further. The challenge is how to capture sales during this short peak period when retailers are faced with the u

4、npredictability of many different types of shopper, many of whom admit they are more price sensitive than they were a year ago. Somehow retailers need to get a better understanding of customer behaviour to make the right offers and discounts, so they can maximise revenue in a short period of time wh

5、ile managing the costs of returns. It is a delicate balancing act. Retailers can reduce abandonment rates with real-time offers based on current activity, while using previous history can also improve sales revenue. Equally, implementing the optimal shipping and surcharge cost strategies can drive a

6、 positive impact on profit margin. Advanced analytics can draw out insights to drive up sales and help predict demand in this new world by making sense of all the available (internal and external) information. 2 “The Christmas season can be a nerve-wracking time for retailers. With consumers spendin

7、g on average 30 per cent more in shops during November and December than the rest of the year, performance over the festive season can make or break a retailers year. With BRC sales data for this November showing just 0.5 per cent growth on last year, many in the industry will be understandably nerv

8、ous. Consumer confidence has been weakened by both the uncertainty around Brexit and the inflationary squeeze on incomes over the last two years. As a result retailers are having to compete hard for shoppers attention. However, we shouldnt write off a successful festive season just yet, with increas

9、ing improvements in fulfilment consumers are becoming more accustomed to shopping at the last minute, so we may see a late surge in sales.” Rachel Lund, Head of Insights & Analytics, British Retail Consortium KEY FINDINGS: Shoppers are getting more sophisticated and planning their shopping more meti

10、culously than ever before, to ensure they get the best value from their available budget Consumers are optimistic about their spending levels, but many admit to being more price conscious compared to a year ago, which is driving their desire to research the best deals Every shopper is unique the sur

11、vey results highlight a wide range of attitudes to price, how they shop, how they describe themselves etc - so until you get to the segment of one, it is difficult to determine how best to target them Black Friday appeal is fading. Consumers are less likely to use discounts as their primary motivati

12、on to make a purchase. Convenience, free delivery, product availability and customer experience are key motivators to making a purchase, so retailers need to understand the impact of all these factors Many people research online then buy in-store. Amazon and Google are leading the way in driving sal

13、es, but retailers who pay commission fees for Amazon to sell their products will see a direct cost implication. Amazon has become the new shop window for many retailers, despite squeezing margins Automated online recommendations do not have much impact on shoppers likelihood to buy, suggesting many

14、offers are not particularly well targeted Retailers with out-of-stock products risk losing a significant volume of sales. Getting inventory levels right is critical to keeping consumers attention and wallet share High levels of returned items complicate the picture further for retailers and there ar

15、e associated costs in managing these Try-before-you-buy is becoming more standard in the fashion and apparel industry and it is an emerging trend for other retail sectors. While it can threaten profitability and make decisions over inventory more difficult, it is a necessary evil that retailers need

16、 to embrace to survive the digital retail storm. 3 CONSUMERS MORE PRICE SENSITIVE THAN A YEAR AGO, BUT SPENDING REMAINS OPTIMISTIC In 2017, 35 per cent of consumers said they were more price sensitive than a year ago. This has grown significantly over the course of the year, with 46 per cent now say

17、ing they are more price sensitive. Meanwhile, 38 per cent of shoppers claim they are equally as price sensitive as a year ago, when the figure in 2017 was more than half (52 per cent) (Fig.1). Nearly half (45 per cent) expect to spend about the same amount of money on Christmas gifts as last year .

18、Consumers are generally more optimistic with their spending, with 23 per cent saying they will spend slightly more on gifts than previous year compared to 15 per cent who say it will be slightly less. Not only that, but 10 per cent are planning to spend significantly more this time round. These find

19、ings emphasise the importance to retailers of being able to target the right shoppers with the right price or discount. Those looking to spend more than last year may also be among the 12 per cent that are less price sensitive than a year ago, so the strategy for these shoppers will need to be very

20、different to those at the opposite end of the spectrum who are more price sensitive and plan to spend less. The results also highlight how shoppers attitudes can change in just a year, as less than half think their price sensitivity and spending will mirror last years. Retailers cannot therefore rel

21、y too heavily on historic information, as data from a year ago is often irrelevant. Not applicable/ Im not sure I am EQUALLY as price sensitive now as I was a year ago I am LESS price sensitive now than I was a year ago I am MORE price sensitive now than I was a year ago 45.9% 12.0%38.2% 3.9% Fig. 1

22、: When thinking about your shopping habits, which of the following best describes you? 4 Exploring consumer shopping behaviour and attitudes towards price, just over a third (36 per cent) describe themselves as a comparison hunter, who revert to online retail outlets to seek the best possible price

23、(Fig. 2). A quarter (25 per cent) are discount enthusiasts who see discounts as their primary motivator when making a purchase. However, these findings also highlight a broad range of shopper types as 11 per cent say they prefer convenience over price, while the same proportion describe themselves a

24、s penny pitchers where a tight budget means they value price over product. A not insignificant proportion (8.9 per cent) cannot put themselves into any of the available categories. The findings underline how retailers are dealing with many different types of shopper when it comes to their attitude t

25、o price, and the situation is fluid as many of them have different attitudes to price and spending than just a year ago. Even the majority the comparison hunters are a challenge for them, as they will search for the best possible price online (Fig. 2). When asked about their shopping behaviour, a qu

26、arter of consumers (26 per cent) describe themselves as an organised shopper. They know exactly what they want and plan their purchases in advance. However, a similar percentage (19 per cent) are thoughtful shoppers. They like to take advice from others and think carefully about their purchases. A s

27、imilar proportion again (20 per cent) describe themselves as a promiscuous shopper. They are curious and enjoy shopping around for the best deal, and often are not loyal to a particular brand or retailer. Fig. 2: When it comes to Christmas shopping, which of the following best describes your attitud

28、e towards price? 0554045 None of the Above / Not sure Big Spender Willing to go over budget with impulse buys Brand Junkie Willing to pay the price for premium brands Convenience Over Price Ease of access to the product wins over price Discount Enthusiast Discounts motivate me to purchase

29、 Comparison Hunter Reverts to online to seek the best possible price Penny Pincher Tight budget and will put price over product 11.4% 35.7% 25.4% 11.1% 3.6% 4.1% 8.9% 5 These three groups make up nearly two-thirds (65 per cent) of all shoppers and illustrate how a clear majority think carefully abou

30、t what they need to buy and are prepared to spend time finding the best deal. Last year only half (51 per cent) described themselves as falling into one of these three categories, suggesting this years more price conscious shoppers are prepared to put even more effort into researching their purchase

31、s. There nevertheless remains a mix of different consumer profiles that affects how they shop, as the remaining 35 per cent spread themselves across a number of other categories. These include less organised shoppers such as impulse buyers (13 per cent) and leisurely browsers (nine per cent). Retail

32、ers need to understand what type of shopper they are dealing with use of predictive analytics to understand how their target audience will behave can help achieve more personalised (even segment-of-one) targeting. 2017 2018 65% of shoppers are prepared to spend time finding the best deal vs 51% in 2

33、017 6 BLACK FRIDAY APPEAL IS FADING Consumers are no longer waiting for key discount dates like Black Friday and Cyber Monday to make their holiday purchases, now that discounting tends to happen over a longer period. Last year, three in 10 consumers (29 per cent) would do the majority of Christmas

34、gift shopping on Black Friday and Cyber Monday. Just a year on and this figure has dropped by nearly half to 15 per cent on Black Friday and only three per cent on Cyber Monday (Fig. 3). Instead, nearly half (48 per cent) are shopping during the entire holiday season including November and the first

35、 three weeks of December, while only 14 per cent leave it until the week before Christmas. This has eased pressure on retailers to some extent as they are no longer faced with sales in a single day having such an impact on revenue for the entire year. However, retailers can no longer rely as much on

36、 discounts or special events to attract customers. They must put more emphasis on other factors, besides price, to target customers based on individual needs and preferences. Fig. 3: When do you usually shop for Christmas gifts? 00 Other time of year Boxing Day Christmas Eve Cyber Monday

37、Black Friday The week before Christmas During the holiday shopping season (Nov & fi rst three weeks of Dec) 48.0% 14.3% 15.2% 3.4% 1.8% 1.1% 16.2% 7 SEARCH ONLINE, BUY IN-STORE Amazon and Google are the most popular places to look when consumers are researching Christmas gifts to buy. Together, they

38、 attract nearly half (45 per cent) of shoppers, compared to a third (32 per cent) preferring to look in-store for gift ideas, and only 12 per cent going direct to the retailer (Fig. 4). Despite talk of the death of the high street, three in 10 consumers still prefer to look for gift ideas in store.

39、Also popular is apparel (33 per cent), Christmas decorations (45 per cent), food and drink (59 per cent) and home furnishing (34 per cent). However, these percentages only apply in relation to gift ideas and do not reflect which channel shoppers use to make their purchases. In fact, nearly half (47

40、per cent) of consumers typically make their final Christmas gift purchase in-store, compared to just 32 per cent of consumers preferring Amazon or Google (Fig. 5). Physical stores are the preferred places for making a purchase of apparel (49 per cent), Christmas decorations (62 per cent), food and d

41、rink (73 per cent) and home furnishing (49 per cent). Compared to (Fig. 4) the rise in these percentages demonstrates that shoppers are often researching items online before buying them in-store. This underlines the need for retailers to have a multi-channel view of their customers. The findings als

42、o demonstrate how prominent Amazon and Google are in buying decisions not just in terms of researching items, but often buying items too. More than 60 per cent of all consumers first look for books and music items on either Amazon or Google, and more than half (55 per cent) make their final purchase

43、 there too. 8 With a significant decline in consumers going direct to retailers to research Christmas gifts (12 per cent) or buy them (13 per cent) (Figs 4 & 5), brand owners need to wise up to the potential of partnering with online retailers like Amazon and Google to maximise their brand exposure.

44、 However, they are effectively paying commission to Amazon to be the shop window for their products (e.g. in costs per click), which puts a squeeze on profit margins. This approach also needs to be correctly balanced with physical stores on the high street, as this will still often be where consumer

45、s go to complete their buying journey. The squeeze on margins through partnering with Amazon, combined with more complex buying journeys, again underlines the importance to retailers of being able to understand more about how their customers shop. They need to be able to use this information and com

46、bine it with analytics, to make smarter decisions about how to correctly price their products across different channels. Understanding more about the buying journey can also help them understand at what time, and via what channel, they can target certain consumers with offers for certain products. 0

47、20406080100 Other Home Furnishing Food & Drink Christmas Gifts Christmas Decorations Consumer Electronics Books & Music Items Apparel 14.8%19.0% 43.7% 30.4% 11.2% 11.5% 11.2%8.7%44.9%24.2% 4.9% 9.2%58.5%13.9%13.6% 24.8%13.6%19.1%12.3% 24.7%20.3%11.5%32.1%11.6% 18.2% 15.4%21.1%21.0%34.9% 14.8%34.2%21

48、.3% 18.7% 18.9%15.4%14.9% 14.2% 7.1% 7.8% 33.4% Other/ I dont research beforehand In-Store Direct to Retailer GoogleAmazon Fig. 4: Where is your first point of call when researching for gifts/products to buy? 9 Fig. 5: Where do you typically make your final purchase? OtherIn-Store Direct to Retailer

49、 GoogleAmazon 020406080100 Other Home Furnishing Food & Drink Christmas Gifts Christmas Decorations Consumer Electronics Books & Music Items Apparel 8.8%18.0% 45.2%10.3%9.9%26.2% 35.8%17.3%10.8%28.0% 10.2%9.9%61.7% 46.7%13.2%9.7% 12.4% 10.9%9.0%16.1%49.4%14.7% 28.5%36.1%8.2%11.1%16.2% 72.9% 22.4%8.1% 12.3%6.0% 5.4%4.7%4.7% 8.5% 8.2% 8.8%16.1%48.5% 10 MAKING IT PERSONAL Consumers are motivated by many different fac