The Retailer Summer 2018_FA_20.07

22’000 global shoppers tell us What, Why, Where and How they plan to spend their money

Jac Windsor P w C Retail Partner

“Over the last few years, digital evolution has disrupted this – with consumers abandoning old routines, reinventing existing habits and discovering entirely new ways of shopping.”

I WOULD LIKE TO INTRODUCE YOU TO PwC’S 2018 GLOBAL CONSUMER INSIGHTS SURVEY (GCIS). THIS IS AN EXPANDED VERSION OF OUR DECADE LONG TOTAL RETAIL SURVEY. IT’S OUR BIGGEST GLOBAL CONSUMER SURVEY AND NOW CAPTURES THE VOICES AND SHOPPING BEHAVIOURS OF OVER 22,000 CONSUMERS IN 27 COUNTRIES. So, what has the research told us this year, both globally and closer to home in the UK? First, some top-line findings on consumer sentiment. Globally, consumers are upbeat about the future of the economy, over one-third think it will improve in 2018 and a further 40% say it will stay the same. Here in the UK they’re not quite so optimistic - just 16% expect the economy to perform better and 37% expect it to perform worse. More positively, almost three-quarters predict they will spend more or the same than they did last year. Those holding back are most concerned about Brexit (70%), inflation (61%) and fuel prices (50%). Diving into what we might term the “disruptor” topic, our GCIS provides further evidence – if it were needed – that the rise of digital continues in the UK, with 90% of respondents saying they shop with Amazon, and 39% saying they start their product search there. However, only 3% now say this has stopped them shopping on other retailers’ websites, down from 17% last year. Could this be the start of a step-change? That said, Amazon Prime continues to demonstrate that subscription models can be a successful consumer channel, with 38% of Amazon users also being Prime members, with 80% believing it gives them value for money. Interestingly, people within that 38% are more likely to be aged 25-34 and to own an AI device such as a voice recognition gadget. Unlimited free delivery (82%) and access to entertainment (57%) are seen as the most obvious benefits of Prime membership. We were interested to delve further into how consumer habits are evolving across the shopping journey from inspiration to transaction and fulfilment. Behavioural science has consistently found that habits are essential to human happiness. Regular and frequent routine allows us to navigate the myriad of available shopping options. Retail has long benefited from stable consumer shopping habits, allowing retailers to predict shopping patterns and generate deep loyalty. Over the last few years, digital evolution has disrupted this – with consumers abandoning old routines, reinventing existing habits and discovering entirely new ways of shopping.

respondents would accept drones for any product, 17% for low value products). Consumer habits will continue to evolve – enabled by both retail technologies and retailer innovations. Retailers will have the choice about how best to serve consumers but will need to choose where to focus investment on the most meaningful moments in the end-to-end shopping journey for their target customers.

Finding inspiration In response to many UK consumers increasingly looking to their peers (25% of respondents tap into social networks) for shopping inspiration, retailers are reallocating their marketing budgets from traditional to digital media. However, retailers need to be mindful of unwanted communications with 36% of respondents comfortable with retailers monitoring shopping behaviour but 48% of respondents adamantly opposed to location-based offers. Buying stuff Mobile has more than doubled in importance in the UK consumer shopping channel repertoire (22% versus 8% in 2013). The physical store remains very much relevant with 41% of UK respondents using the store for daily or weekly shops – and indeed the store as a channel is on the rise (up from 32% in 2015). However consumers are changing the way they shop in store. For example, just under half of all UK respondents (43%) use smartphones to pay for store purchases (a combination of click & collect, in store apps and mobile payments). Half of UK respondents (54%) have also experienced augmented reality in store. Retailers are responding by re-defining the role of the store – combining both technology and human interactions to meet customer demands for convenience and engagement. Getting products delivered Consumers increasingly want to close the window between transaction and fulfilment, best captured as IWWIWWIWI (I want what I want when I want it). The majority of UK respondents (96%) expect online purchases to be delivered within five business days (and 26% expect it the next day). Many UK respondents are also willing to pay a premium for a faster service (40% for same day and 24% for less than 3 hours). Retailers are recognising that their delivery (and returns) proposition is a source of competitive differentiation in its own right – giving customers choice about delivery locations (e.g. lockers), time slots (e.g. nominated time slots) and Going forward, there are emerging technologies that will shape consumer shopping habits including AI and drones to name two. Almost 40% of UK respondents have said they already own or are planning to purchase AI shopping assistants (the likes of Amazon Echo, Google Home and Apple HomePod), which is similar to trends in the US but way behind the curve of China at over 70%. UK consumers are also open to drones as a delivery method, depending on the type of product being delivered (11% of communications (e.g. real time tracking). The next wave of disruption

JAC WINDSOR // pwc.co.uk

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