Jeff SmithEVP Global Solutions MarketingJuly 29, 2014

DIGITAL AT THE HEART OF THE RETAIL EXPERIENCE

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TOPICS FOR TODAY

Digital is becoming fundamental to the consumer experience for any (and every) retailer

Retailers are pushing the envelope when it comes to incorporating digital

There is a significant opportunity to improve the use of digital, particularly in marketing

DIGITAL IS BECOMING FUNDAMENTALTO THE CONSUMER EXPERIENCE

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CONSUMER USE OF DIGITAL IS PERVASIVE

Source: Nielsen Cross-Platform Report, eMarketer

TV

Mobile

Online

RadioPrint

2013

11:09

4:31

2:21

2:19

1:260:32

2010

9:36

4:24

0:24

2:22

1:360:50

Hours spent consuming media by the average American every day

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WHEN IT COMES TO RETAILING, THE DIGITAL STORY STARTED AWAY FROM THE STOREPercent of adults that purchased items online

Source: Nielsen Scarborough USA + Release 2 2009-2013, Adults 18+

2009 2010 2011 2012 2013

52%54%

56%

59%

62%

+19%

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… BUT MOBILE HAS BROUGHT DIGITAL INTO THE STORE IN A BIG WAY

Source: Nielsen Performance Management Practice

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DIGITAL IS CHANGING THE RELATIONSHIP WITH CONSUMERS

Source: Nielsen Performance Management Practice, Nielsen Scarborough

of U.S. adults share their opinions about products & services by posting reviews/ratings online

of U.S. adults went online to see consumer reviews on their computers in the past month

Shoppers are having real-time digital conversations with retailers and manufacturers… and about them

26% 18% 28%

More likely to say social media is very important for finding out about products and services

35%

More likely to say social media is very important for showing support for their favorite companies or brands

Mobile shoppers are more likely than other consumers to use social media

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RETAILERS AND MANUFACTURERS ARE BECOMING CONTENT PRODUCERS ONLINE

Source: Content Marketing Institute

Percent of B2C marketers using content marketing

10% do NOT use

content marketing

90%DO use content

marketing

Change in amount of B2C content creation

(last 12 months)

Significantlymore

More

Same amount

40%

21%

4%Less

32%

Unsure 3%

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WHAT DO CONSUMERS WANT FROM RETAILERS IN A DIGITAL WORLD?PERSONALIZATION: YOU’VE GOT MY DATA: USE IT TO MY ADVANTAGE, AND TO MAKE ME FEEL GOOD—AND KEEP IT SECURE

I CAN TALK TO ANYONE, ANYWHERE, ANYTIME: IF YOU WANT TO BE THE ONE I’M TALKING TO, YOU MUST BE ABSOLUTELY CREDIBLE

I LIVE IN A FAST-PACED WORLD: I KEEP UP, AND I EXPECT YOU TO KEEP UP, TOO

I INTERACT WITH YOU THROUGH MANY DIFFERENT CHANNELS: MAKE SURE WHAT I FIND IS CONSISTENT ACROSS ALL OF THEM

I AM ALWAYS ON: MAKE SURE YOU ARE ALWAYS ON ALSO

RECOGNIZE I HAVE CHOICES. I SEEK VALUE, I SEEK IT NOW, AND I’M PREPARED TO GO ELSEWHERE TO GET IT

Source: Nielsen, “The Future of Retailing and the Rise of Digital”

RETAILERS ARE PUSHING THE ENVELOPE WHEN IT COMES TO DIGITAL

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TARGET TAKES YOU FROM SHOPPING ONLINETO SHOPPING IN-STORE

Source: Target

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WALMART IS PRICE MATCHING POST-SALE

Source: Walmart

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TESCO & PEAPOD EXPERIMENT WITH VIRTUAL STORES IN SUBWAYS

Tesco / Home plus in Seoul

Peapod in Chicago

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WHOLE FOODS IS PUBLISHING ONLINE

Source: Whole Foods

THERE IS A SIGNIFICANT OPPORTUNITY TO IMPROVE THE USE OF DIGITAL, PARTICULARLY IN MARKETING

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WE EVALUATE MARKETING EFFECTIVENESSON 3 DIMENSIONS

REACTIONHow did it change

behavior?

RESONANCEHow did it

change attitudes?

REACHWhat audience

did I reach?

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WHEN IT COMES TO DIGITAL REACH, WE SEE A BIG OPPORTUNITY FOR IMPROVEMENT

Based on 11,300 retailer campaigns, digital advertising hits its target audience…

78%

51%

55%

32%

22%

49%

45%

68%

F18-49

F25-54

M18-49

100%

P18-49

On-target Off-target

Source: Nielsen Online Campaign Ratings data

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WHEN IT COMES TO DIGITAL RESONANCE, RETAILERS LAG BEHIND OTHER VERTICALS

Source: Nielsen Online Brand Effect data

Awareness

Attitu

des

Favo

rabilit

y

Purchase

Intent

Preference

Retail Norm All Verticals Norm

Bran

d Li

ft %

Opportunity to adopt digital brand advertising effectiveness best practices to drive brand lift

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MEASURE ROI FOR MORE EFFECTIVE ADVERTISING SPEND

Source: Nielsen Buyer Insights data

Retailers can demonstrate the combined online and offline sales impact of digital campaign exposure

+25% lift in Total Sales

+11% lift in Dollars spent per Buyer

+13% lift in percentage of target audience to make purchase

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RETAILERS CAN DO MORE WITH MOBILE MARKETING

Source: Nielsen The Mobile Tipping Point Study 2014; Nielsen Scarborough Mobile Insights Study

Mobile as a percent of digital ad spend remains relatively low …

… yet consumers are open to mobile advertising

Accurate, consistent measurement is key to making this a success

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THE FUTURE OF RETAIL HAS DIGITAL AT ITS HEART

• Mobile is core to the retail experience

• Digital shopping may have less to do with home delivery and more to do with transforming the customer experience

• The evolving consumer relationship – personal, direct, and immediate

• Digital marketing as a foundation and an opportunity