Savvy Markting - Digital Shopper Review

DIGITAL SHOPPER MARKETING COMES OF AGE

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-DIGITAL SHOPPER MARKETING COMES OF AGE

APRIL 2014

CONTENTS


- SHOPPER MARKETING AT A CROSSROADS

GROWING SHOPPER APPETITE FOR DIGITAL

- SMARTPHONE OWNERSHIP REACHES CRITICAL MASS

- TABLET OWNERSHIP PLAYS A KEY ROLE

- UNLOCKING LATENT DEMAND IS THE BIG OPPORTUNITY

RETAILERS OWNING AND DRIVING THE DIGITAL AGENDA

- GROCERS TO FACILITATE CHANGE

- DIGITAL INNOVATION PERCOLATING INTO THE GROCERY ENVIRONMENT

- ONE TO WATCH: SAINSBURY’S SCAN AND GO

- ONE TO WATCH: TESCO TRIALS IBEACONS

IMPLICATIONS

- THE PROLIFERATION OF SHOPPER TOUCH POINTS

- MAKING IT RELEVANT

- SEAMLESSLY LINKING THE CHANNELS

FINAL THOUGHTS

- IT’S TIME FOR A SEISMIC SHIFT

- BENEFITS ALL ROUND

- FINAL THOUGHTS


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• Digital shopper marketing is nothing new. Ever since the first smartphone hit the market seven years ago agencies, consultants and commentators have keenly hypothesised about how the opportunity will unfold.

• All too often though, the emphasis has been on technology and how clever it is, rather than on how shoppers behave, how they use technology and how it can be used as an enabler to solve real problems and ultimately make shoppers’ lives easier. As a result, the pace of development to date in grocery retail has failed to match the hype that proceeded it.

• However, we now find ourselves at an interesting time during which shopper marketing more broadly is undergoing a period of substantial change. This change is not only technological, but is the result of emerging post-downturn shopper behaviours and the changing structure of the grocery market.

• While the outcomes of this change will be far reaching for both retailers and brand owners, our research and analysis suggests a major outcome will be the firm establishment of digital technology in shopper marketing over the next 12-18 months.

• In this short report we take a closer look at the emerging digital shopper marketing landscape and consider the major implications.

SHOPPER MARKETING AT A CROSSROADS

DIGITAL SHOPPER MARKETING

GROWING SHOPPER APPETITE FOR DIGITAL

RETAILERS OWNING AND DRIVING THE DIGITAL AGENDA


-GROWING SHOPPER APPETITE FOR DIGITAL

SMARTPHONE OWNERSHIP REACHES CRITICAL MASS

• At the centre of the development of digital shopper marketing has to be its key enabler: the smartphone. Smartphone penetration currently stands at 71% among UK shoppers, while we expect 78% will own one by the end of 2014.

• Smartphones have become a ubiquitous part of people’s lives, with shoppers instinctively turning to their phones throughout the day for a multitude of reasons. As smartphones have become more powerful, so the range of tasks shoppers carry out using their phones has proliferated.

• Moreover, shoppers’ expectations of technology is on the rise - they believe they should be able to perform basic shopping tasks with their phones, from collecting and storing coupons to searching for product information.

Source: Savvy Shopper Panel March 2014

ALL

SH

OP

PER

S

%

MA

LE

FEM

ALE

18 -

24

25 -

34

35 -

44

45 -

54

55 -

64

65 -

74

0

20

40

60

80

100

71 73 69 87 86 77 65 56 49

PROPORTION OF SHOPPERS THAT OWN AND EXPECT TO OWN A SMARTPHONE

PROPORTION OF UK SHOPPERS THAT CURRENTLY OWN

SMARTPHONE

PROPORTION THAT SAY THEY WILL

OWN ONE BY THE END OF 2014

71% 78%


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TABLET OWNERSHIP PLAYS A KEY ROLE

• Tablet ownership too has grown at a rapid pace over recent years, with shoppers attracted by their easy to use interfaces and, increasingly, the availability of more affordable devices. 59% of households now have at least one tablet and we expect that to rise to 71% by the end of the year.

• Tablets, with their large screens, have become the go-to connected devices at home. While smartphone use is principally focused on practical tasks like finding stores, product information and prices, tablets are typically turned to for inspiration such as recipe ideas.

• An interesting perspective for tablets is the rise of ‘second-screening’ whereby people use their tablets while they are watching TV. This new ability to interact with TV content – including adverts – has powerful implications, in particular the ability to use broadcast media as a means to deliver a call to action.

ALL

SH

OP

PER

S

%

MA

LE

FEM

ALE

18 -

24

25 -

34

35 -

44

45 -

54

55 -

64

65 -

74

0

20

40

60

80

100

59 59 59 65 68 64 59 50 44

PROPORTION OF UK SHOPPERS THAT HAVE AT LEAST ONE TABLET IN THEIR HOUSEHOLD



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UNLOCKING LATENT DEMAND IS THE BIG OPPORTUNITY

• As smartphone and tablet penetration has increased, we find that many shoppers are left frustrated that they cannot easily use these devices for a broader variety of shopping tasks.

• Crucially, shoppers understand the full potential of smart devices and are able to see the benefits that digital technology could offer to make their lives easier when planning and buying their food and groceries.

• During numerous focus group discussions we have found that shoppers are both practical and creative when discussing how they would like to be able to use smart devices for shopping in the future. We have also found in our quantitative research substantial demand for many shopper marketing initiatives which are likely to become available over the next 12-18 months.

THE GENERATION Y DEMOGRAPHIC ONLY KNOWS A WORLD WITH THE INTERNET AND HAVE BEEN BROUGHT UP WITH SMART TECHNOLOGY AND SOCIAL MEDIA. NO LONGER YOUNGSTERS, THIS GROUP OF SHOPPERS ARE NOW ADULTS AND IN THE NEXT COUPLE OF YEARS WILL SOON BE MAINSTREAM SHOPPERS.


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• The most significant finding of our research is the scale and scope of shoppers’ latent demand for digital shopper marketing. The graph over the page shows the proportion of all UK shoppers that find various potential digital shopper marketing initiatives appealing. Across the board, appeal is high – particularly compared to when we asked the same question at the beginning of 2013.

• The greatest potential in the eyes of shoppers is the ability to receive targeted coupons directly to smartphones.

• 65% of all shoppers (including those that don’t own a smartphone) find the idea of receiving targeted coupons to their phones attractive. We attribute the appeal of this to two factors. First, the growing popularity and distribution of coupons over recent years means shoppers find the idea of collecting coupons digitally more convenient than sorting through piles of paper. Second, shoppers understand that digital coupons can be targeted more specifically to their individual needs, crucially improving relevance.

• Of particular interest when considering the implications for shopper marketing, 64% of shoppers find the concept of receiving coupons to their phones while they are actually in-store appealing. This would allow retailers and brands to influence shopper behaviours and decision making at the point of purchase.

• As well as findings items in store, shoppers see potential in consolidating their array of loyalty cards into a series of smartphone apps.


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42

46

50

52

53

58

59

64

65


0

Receive a targeted discount coupon directly to your smartphone

Receive a targeted discount coupon directly to your smartphone, while you’re actually in the supermarket

Find what you’re looking for in-store

Use as a loyalty card, replacing all the loyalty cards in your wallet

Get additional product information about products you’re thinking about buying

Enter competitions

Pay for low price goods in shops (by touching the phone on a scanner at the till)

Receive targeted recommendations for products you might like directly to your smartphone, while you’re actually in the supermarket

Receive targeted ideas for new recipes, based on what you’ve bought in the past, directly to your smartphone, while you’re actually in the supermarket

10 20 30 40 50 60 70

PROPORTION OF UK SHOPPERS THAT FIND EACH DIGITAL SHOPPER MARKETING INITIATIVE APPEALING


%

-RETAILERS OWNING AND DRIVING THE DIGITAL AGENDA



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GROCERS TO FACILITATE CHANGE

• At the same time as shopper interest in digital initiatives is reaching its tipping point, grocery retailers are making a number of interesting developments.

• This is important because we expect retailers, more so than brands, will ultimately facilitate and lead the change. Retailers have the scale to develop and market new technologies, but more importantly only they own the relationships with shoppers week in, week out.

• Furthermore, our research suggests that shoppers see retailers as the natural owners of digital shopper marketing. They already trust grocers with their personal information through various loyalty schemes and they are used to retailers using that information to target them.

• We have found that most shoppers have concerns that if brands take the lead they would end up with too many apps from too many brands, leading to unnecessary confusion and complexity. That isn’t to say brand owners can’t play a major role, it is just unlikely that they will be able to play the lead role without considerable collaboration.

WHICH OF THE FOLLOWING TYPES OF BUSINESS WOULD YOU TRUST TO SEND YOU TARGETED FOOD AND GROCERY PROMOTIONS AND DEALS DIRECTLY TO YOUR SMARTPHONE?

24

17

22

32

58

68

0

Grocery retailers (e.g. Tesco, Sainsbury’s, ASDA, Morrisons, Waitrose)

Loyalty card providers (e.g. Nectar, Clubcard or Boots Advantage Card)

Brands you regularly buy (e.g. Coca-cola, Smirnoff, Heinz, Walkers)

Comparison websites (e.g. Moneysupermarket.co.uk)

Deal sites (e.g. Groupon, KGB Deals, Living Social)

None of the above

10 20 30 40 50 60 70 80


%


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DIGITAL INNOVATION PERCOLATING INTO THE GROCERY ENVIRONMENT• The leading grocery retailers have

many digital projects and initiatives already in the market or in the pipeline.

• Clearly some are essential, such as the roll out of in-store Wi-Fi, which is necessary to ensure shoppers’ smartphones are permanently connected while they are in-store.

• For the many other technologies and trials, the test of time will determine the winners and losers. However there are two initiatives currently being trialled which have caught our eye for their potential. We take a closer look over the next couple of pages.


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ONE TO WATCH:SAINSBURY’S SCAN AND GO

• Currently trialling at 10 stores, Sainsbury’s Mobile Scan & Go initiative has interesting and powerful potential.

• Mobile Scan & Go is a service that allows shoppers to scan their shopping with their smartphone as they walk around the store. They finish by scanning a QR at the checkout and pay in the normal way.

• This may be impressive in itself but the full potential of such a project could have even greater impact. For instance, the technology could be developed further to provide the shopper with targeted coupons while they’re in the store. These could be based not only on the shopper’s demographic profile and purchase history (from Nectar data), but could be targeted based on the day of week, time of day (and therefore likely needstate), forthcoming events and even products that shoppers scan as they walk around the store.

• Technologies of this type have potential to influence individual shoppers with pin point precision while they are actually in the store.

• ASDA will be trialling a similar scheme in its York store from May 2014.

Source: J Sainsbury’s


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ONE TO WATCH: TESCO TRIALS iBEACONS

• Tesco is trialling iBeacons in its Chelmsford store with a store-specific app.

• iBeacon is a technology which allows a shopper’s smartphone to communicate with a number of beacons located around a store. This means the smartphone knows where it is within a store, and therefore which products the shopper is standing near.

• The technology has the scope to target shoppers with communications, such as vouchers, as they walk past a fixture or aisle. This would provide retailers and brands with new virtual in-store touch points that could target specific shoppers based on their profile or purchase history – a far sharper marketing tool than POS and other current static in-store media.

• Tesco has made it clear that it will not be sending messages to shoppers immediately, to avoid scaring customers. However, our research suggests, if executed carefully in a highly targeted way, many shoppers would opt-in to receive in-store coupons and vouchers.

iBEACON IS A TECHNOLOGY OWNED BY APPLE AND IS CURRENTLY BEING TRIALLED BY GROCERY RETAILERS ACROSS THE WORLD. ESSENTIALLY IT MEANS THAT SMALL BEACONS LOCATED AROUND A STORE CAN COMMUNICATE WITH SHOPPERS’ PHONES AS THEY WALK PAST A PRODUCT, FIXTURE OR DISPLAY.

-IMPLICATIONS



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THE PROLIFERATION OF SHOPPER TOUCH POINTS

• The development of digital shopper marketing requires us to redefine how we think of the path to purchase.

• No longer is it merely focused on the in-store journey or a shopper’s route through a dot com website. Increasingly we need to think of the path to purchase simply as people’s lives.

• Shopper’s are now constantly connected. People can be turned into shoppers at almost any time, prompted to buy at the moment they are inspired wherever they are.

ALREADY MOBILE TECHNOLOGY MEANS THAT SHOPPERS CAN ADD ITEMS TO THEIR ONLINE SHOPPING BASKETS FROM A MULTITUDE OF TOUCH POINTS. THIS IS IMPORTANT AS IT MEANS WE CAN ENGAGE SHOPPERS AT THEIR POINTS OF INSPIRATION, RATHER THAN HAVING TO WAIT FOR THEM TO VISIT A STORE OR DOT COM WEBSITE.


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MAKING IT RELEVANT

• The ability to target digital shopper marketing communications is revolutionary. It provides retailers and brands with exciting new ways to help shoppers edit ranges without having to rely almost exclusively on untargeted price promotions.

• Price will still be important, but we know that the depth of discount required is significantly lower when deals are targeted precisely.

• Targeting of promotions can deliver considerably higher ROI for brands as marketing spend is targeted only to the relevant audience. Also, because it is digital, campaign return is completely measurable.

SHOPPERS TELL US THAT THEY ARE OVERWHELMED WITH CHOICE IN SUPERSTORES. IT’S HARDLY SURPRISING WHEN YOU CONSIDER THAT IN A SINGLE SHOP A TYPICAL SHOPPER ONLY BUYS AROUND 25 OF THE 45,000 SKUs STOCKED AT A LARGE SUPERSTORE.


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SEAMLESSLY LINKING THE CHANNELS

• In an increasingly multi-channel and multi-format grocery environment, smart technology, particularly phones, can act as the link enabling interaction between them.

• Consider that a shopper can access a retailer’s full range using their smartphone even while shopping in a convenience store. Alternatively, shoppers can already order a product online and collect it from a store.

• Retailers can work their assets harder and shoppers benefit from greater convenience.

DIGITAL TECHNOLOGY HAS THE POTENTIAL TO GIVE CONVENIENCE STORE SHOPPERS ACCESS TO A RETAILER’S FULL RANGE OF PRODUCTS.

-FINAL THOUGHTS



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IT’S TIME FOR A SEISMIC SHIFT

• The advent of digital shopper marketing is set to fundamentally reshape the way that grocery retailers and brands communicate with shoppers.

• Indeed we believe digital shopper marketing has the potential to be the most significant development since the arrival of self-service supermarkets.


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BENEFITS ALL ROUND

• For shoppers this digital revolution will provide unprecedented relevance of promotions and information.

• Uninspired by the current in-store bombardment of many hundreds of irrelevant offers and other marketing communications, shoppers welcome the idea that they can receive deals and inspiration which are targeted directly to them, based not only on their demographic profiles and purchase history, but on the time of day they are shopping and even factors like current weather conditions.

• For retailers digital could be the solution they need.

• Particularly for the Big Four, digital shopper marketing could be part of the answer they need as they struggle to adapt to changing market conditions, in which the relevance of their flagship supermarket formats is diminishing. The arrival of targeted shopper communication could help them break the vicious margin eroding cycle caused by a paradox of choice in which shoppers find themselves overwhelmed by vast ranges, principally left to edit choice using deals.

• For brands, the benefits could be profound.

• The ability to target communications means campaigns can be delivered based on more precise objectives and, as a result, can generate stronger ROI. It will also give smaller brands with more modest budgets access to shopper marketing, by focusing funds only on their core target shoppers.


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FINALTHOUGHTS

• In conclusion, it’s fair to say that the benefits of digital shopper marketing for all parties are clear. Now is the time to harness them, engaging shoppers with personalised, relevant and timely marketing communications that inspire purchases in new ways and which explore exciting areas of creativity and innovation.

• Digital shopper marketing is no longer the future, but the very present. We’re excited about the possibilities of embracing it.


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PREPARED BY:

ALASTAIR LOCKHART HEAD OF INSIGHT

[email protected] DD. 01132 376 538 M. 07557 120 547

Confidentiality and Intellectual Property Rights Notice Copyright and all other intellectual property rights contained within this document belong to Savvy Marketing. You must not copy, store in any electronic form, or otherwise reproduce the whole or any part of this document without the express written consent of Savvy Marketing.

Insight sits at the centre of everything Savvy does from supporting the planning process and proposition development, to understanding shopper and consumer behaviour, tracking global trends and optimising campaigns to deliver maximum ROI.

As well as working on bespoke client projects, Savvy’s specialist insight team runs a regular programme of research including the monthly Savvy Shopper Panel, in-depth shopper interviews, focus groups, detailed store audits and accompanied shops.

Savvy Markting - Digital Shopper Review

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