The Multi-Channel Shopper and the new engagement landscape for retailers and brands

Dr Alan TreadgoldGlobal Head of Retail StrategyLeo Burnett Group

16th International Food Business Russia SummitMoscow, February 2011

2

Multi-channel shopping: The defining theme for retailers and brands

Understanding the Multichannelshopper: Our key questions• Who is the multichannel shopper?

• Is there a “psyche” to multichannel shopping?

• What are the motivations (or barriers) to multichannel shopping?

• Are there different kinds of multichannel shoppers?

• What purpose do different channels serve?

• How do multichannel shoppers shop different product categories?

Our Research in Russia13markets

12 •Skin Care•Laundry detergent•OTC Medicine•Tobacco•Hard Liquor•Beer

categories

685respondents

10channels

•Carbonated soft drink•Chocolate bars•Electronics•Mobile phone hardware•Automobiles•Designer clothes

• Moscow• St. Petersburg• Novosibirsk• Nizhny

Novgorod• Ekaterinburg• Samara• Omsk

• Kazan• Chelyabinsk• Rostov-na-Donu• Ufa• Volgograd• Perm

•Store•Web•Mail order catalogue•TV (infomercials, home shopping channels) •Land line telephone

•Mobile phone•In-home parties and door-to-door sales•Magazines•Direct mail•Store produced newspapers, flyers, circulars

The Headlines

A highly engaged shopper…

86% of respondents use more than one shopping channel when shopping a category

Across the 12 product categories, the average shopper uses 5.2 channels to shop

Multichannel shoppers spend a lot of time shopping

30

52

0102030405060

Light

Heavy22

200

0

50

100

150

200

250

Light

Heavy

Minutes Hours

*Note: Heavy multi channels shoppers defined as the heaviest 25% of shoppers within a category, Light MCS defined as the bottom 25% in a category

Time Spent Shopping for:Packaged Goods Durables

They use all channels –but online dominates

0

10

20

30

40

50

60

Light Multichannel Shoppers Heavy Multichannel Shoppers

CIRCULAR

MAIL

MAGAZINE

IN‐HOME PARTY

MOBILE PHONE

LANDLINE TELEPHONE

INFOMERCIAL

MAIL/CATALOG

ONLINE

IN‐STORE

0

50

100

150

200

250

Light Multichannel Shoppers Heavy Multichannel Shoppers

Channels used when shopping for:

CPGs (in mins) Durables (in hrs)MINUTES HOURS

30 HOURS

52 HOURS200 MINUTES

22 MINUTES

*Note: Heavy multi channels shoppers defined as the heaviest 25% of shoppers within a category, Light MCS defined as the bottom 25% in a category

While multichannel shoppers share some common traits,there are different types of

multichannel shoppers

The 6 Key drivers of multichannelshopping

Bargain Hunting

Habitual

PremiumLow Price

List Driven

Exploratory

Profiling the Multi-channel shopper in Russia

Bargain Hunting

Habitual

PremiumLow Price

List Driven

Exploratory

OpportunisticAdventurer11% / 95

EfficientSprinter8% / 121

StrategicSaver12% / 130

SavvyPassionista37% / 107

DollarDefaulter5% / 117

QualityDevotee27% / 80

Percent: Heavy Multichannel ShoppersIndex: Heavy Russian Multichannel Shoppers / Total Shoppers in Russia* Overall shopper archetypes are based on overall attitudes towards shopping

The multichannel shopper in Russia compared with ‘the West’ –more about style; less about saving money

Segment Name Western Russia Gap

Strategic Savers 29% 12% -17Opportunistic Adventurer 15% 11% -4Saavy Passionista 14% 37% +23Quality Devotee 16% 27% +11Efficient Sprinter 13% 8% -5Dollar Defaulter 13% 5% -8

Source: Leo Burnett / Arc multichannel shopper research 2009 & 2011

Why…are people multichannelshopping?

HIGH RISK

LOW RISK

LOW REWARD

HIGH REWARD

Perceptions of Risk and Reward explain levels of multichannel shopping

EG: Banking EG: Designer Clothing

EG: Household Basics EG: Books

*Note: Numeric % represents the percent of category shoppers shopping 3 or more channels

High Risk

Low Risk

Low Reward

High Reward

Electronics

89%

Designer Clothes

85%

Over The Counter Medications

63%

Carbonated Soft Drinks

51%

Candy

52%

Hard Liquor

57% Beer

63%Laundry

Detergent

70%

Smart Phones

92%

Automobiles

86%

Skin Care Products

94%

Entertainment

PassionBurden

Routine

Risk / Reward perceptions and the Russian Shopper

Quality Devotee

In Russia the presence of the different Shopper archetypes varies widely when viewed through the lens of the type of product being purchased

37

39

123

123

91

162

Consumer Package Goods Durables

Savvy Passionisita

Efficient Sprinter

Dollar Defaulter

Strategic Saver

Opportunistic Adventurer

Consumer Package GoodsSkin Care

Laundry detergentOTC Medicine

TobaccoHard Liquor

BeerCarbonated soft drink

Chocolate bars

DurablesElectronics

Mobile phone hardwareAutomobiles

Designer clothes

When are the different engagement channels being used in the shopping journey?

The experience in Russia – less focus on one or 2 engagement channels only

INDEX: Likelihood of using a channel in a phase

115

106

112

133

105

Trigger To Start Shopping

113

114

106

123LATE

Select. Buy

MIDDLEDefine criteria

Compare optionsSeek adviceExperience

EARLYAssess needs. Gather ideas.

Learn. Consider options

THROUGHOUTPROCESS

113

105

Example: The electronics ‘path to purchase’ in Russia

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

StoreWeb

Search Purchase

% o

f ele

ctro

nic

sho

pper

s

Beginning Early Middle Late End

20

Implications forRetailers and Brands

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Effectively engaging the multi-channel shopper requires 3 lenses of insight

CategoryThe most essential lens for understanding the

multichannel shopping is the category

ShopperWithin a category different shoppers

employ very different shopping strategies, or

“archetypes,” each with its distinct

motives

ChannelDepending on the category and the shopper, channels vary in their ability

to address different shopper needs

1 2

#1

A 360o approach is mandatory for effective shopper engagement

Mobile commerce will be the next key engagement platform for many

New SchoolConvenience:The whole world in yourhands

(50% of US shoppers will have a smartphone by Christmas 2011)

Retailers must re-imagine the role of their stores

“Multichannel defines the new landscape. Retailers are going to have to adapt and make sure they’re not disintermediated.”

Ian Cheshire – CEO, Kingfisher Group UKNRF Convention, NYC, 01/11

Re-imagining the role of the retail store - dial up experience, stimulation and ideation

Apple, NYC

Sainsbury’s: Inspirational food ideas instore

And finally...Strong brand ideas must be at the heart of winning in the multichannel landscape

What kind of retail experience do I want to offer?

What does the physical store experience need to be?

What is the compelling brand idea to bring the desired experience to life?

How should the brand idea be delivered across multiple channels?

The key questions

The kind of retail experience you want to offer

Optimise the physical stores to deliver the desired experience

Define the experience with a compelling brand idea

Use the brand idea to help determine how to deliver your brand across multiple channels

The store that makes shopping easy

Tesco: The brand idea is at the heart of their multichannel strategy

Thank YouAnd if you’d like to know more:Alan TreadgoldGlobal Head of Retail Strategy

Tel: +44 (0)7958 694045alan.treadgold@leoburnett.co.uk