Webinar US Consumer Retail Buying Insights: A Technographics® Quarterly Data Flash Martha Cleary, Data Insights Director December 9, 2014. Call in at 12:55 p.m. Eastern time

Agenda Growth of online retail sales Understanding channel usage and shopping attitudes How web researching influences retail sales In-store experience Enhancing the customer experience

Offline retail sales are projected to grow at a steady rate Forecast: US retail sales ($ billions) Average growth: (2013 to 2018) Online: +9.5% Web- influenced: +7.0% Non-web-influenced offline Source: Forrester Research Web-Influenced Retail Sales Forecast, Online Retail Forecast 2012 to 2018 (US)

US RETAIL ECOMMERCE AND MCOMMERCE US online retail sales ($ billions) Mobile phone and tablet commerce accounted for 21% of online retail sales in 2013 US RETAIL ECOMMERCE AND MCOMMERCE US online retail sales ($ billions) Source: Forrester Research Mobile And Tablet Commerce Forecast, 2013 To 2018 (US); Forrester Research Online Retail Forecast, 2013 To 2018 (US)

What do all of these mean for retailers? Examine how consumers are using digital shopping channels. Understand your consumer’s unique journey. Develop an in-store experience that engenders loyalty.

One in three US online adults regularly shops across mobile and traditional devices FORRESTER’S RETAIL SHOPPER SEGMENTATION Gen Y consumers are most likely of all age groups to be “Super-Shoppers.” Online adults who are Super-Shoppers: 31% Online 26- to 34-year-olds who are Super-Shoppers: 49% Base: US online adults 18+; Source: Forrester’s North American Consumer Technographics® Online Benchmark Survey (Part 1), 2014

What drives consumers to shop online? I save time by shopping online: 65% I shop online because it is easier than going to a store: 60% Convenience Selection I find products online that I cannot find anywhere else: 68% Value I find better values and deals online: 61% Though for 38% of consumers, it’s about the experience. I like to shop online because it provides a better experience than shopping in a physical store. Base: US online adults 18+; Source: Forrester’s North American Consumer Technographics® Retail Online Benchmark Recontact Survey, 2014

Consumers’ purchase journeys often begin online . . . 64% of online consumers have researched products/services online in the past three months. Image source: Online Learning Tips (http://onlinelearningtips.com/) 75% say they generally know what they’re looking for when they search for products online, but 57% find that search engines help them find the products that they’re looking for online. Base: 58,583 US online adults 18+; Source: Forrester’s North American Consumer Technographics® Online Benchmark Survey (Part 1), 2014

. . . but the path to purchase varies widely by product category Apparel . . . but the path to purchase varies widely by product category Offline Apparel 57% Online 54% 46% Consumer electronics 84% Offline 61% 39% % of total purchases influenced by online research: (prior to sale)* % of web-influenced purchases made Respondents leveraged at least one online resource for research prior to buying. Base: US online adults who have purchased in the product category in the past three months; Source: Forrester’s North American Consumer Technographics® Retail Survey, 2014

This “channel blurring” drives cross-channel shopping trends Showrooming: Webrooming: Browse: online Buy: in-store Browse: in-store Buy: online 39% “After researching online, I ended up buying a product in a physical store.” 34% “After researching in a physical store, I ended up buying a product online.” 18- to 25-year-olds (Gen Z) 26- to 34-year-olds (Gen Y) 35- to 48-year-olds (Gen X) 49+ year-olds (Boomers or older) Did you know? In 2014, 15% of online consumers reported using a phone to compare prices while in a physical store in the past three months — up from 9% in 2013. Base: US online adults 18+; Source: Forrester’s North American Consumer Technographics® Retail Online Benchmark Recontact Survey, 2014

Shipping costs: the purchase driver retailers love to hate Are shipping costs . . . . . . an online customer acquisition tool? 47% of online consumers would buy from an online retailer they’ve never purchased from because of lowest shipping/free shipping. . . . an online customer retention tool? 45% of online consumers will buy from an online retailer again because it offers the lowest shipping/free shipping. . . . a “showrooming” differentiator? 19% of online consumers check shipping costs from online retailers when showrooming. . . . an in-store purchase driver? 15% of online consumers would pay more for a product if it was in-store and if they could avoid shipping costs. The talk about basket size: 28% have bought items not planned in order to qualify for free shipping Base: US online adults 18+; Source: Forrester’s North American Consumer Technographics® Retail Online Benchmark Recontact Survey, 2014

“Use of ‘buy online, pick up in-store’” “Buy online, pick up in-store” programs bring online shoppers back in-store “Use of ‘buy online, pick up in-store’” 88% of these consumers report they could be influenced to buy other items while in- store. Reasons: See this Forrester Research report for analysis on preparing for this: Retool Your Operations To Enable Store Fulfillment By Adam Silverman, Peter Sheldon, George Lawrie To avoid shipping costs To avoid a wasted trip to the store To collect a purchase the same day 58% 34% 29% Base: US online adults 18+; Source: Forrester’s North American Technographics® Retail Online Survey, Q3 2010 (US); Forrester’s North American Technographics Retail Online Survey, Q1 2011 (US); Forrester’s North American Technographics Consumer Deep Dive: Investigating The Customer Life Cycle (Buy Phase) Survey, Q1 2012 (US); North American Technographics Customer Lifecycle Survey (Buy Phase), 2013; Forrester’s North American Consumer Technographics Retail Online Benchmark Recontact Survey, 2014

Mobile features can enhance the in-store experience and engage shoppers “How interested are you in using/doing the following while shopping in a physical store?” Did you know? 60% of Gen Y consumers with a mobile phone are interested in receiving coupons/product information on a mobile phone while in-store. Base: US online adults who use a mobile phone; Source: Forrester’s North American Technographics® Retail Online Survey, 2014

“Factors that make consumers consider buying from an online retailer:” Initially attracted predominantly by value, repeat customers increasingly focus on experience “Factors that make consumers consider buying from an online retailer:” 1st For the first time? Again? Lower prices than other online retailers Lowest/free shipping costs The website is easy to use. Offers good customer service Did you know? 15% of buyers say their repeat purchases are driven by a loyalty program/points. Base: US online adults 18+; Source: Forrester’s North American Consumer Technographics® Retail Online Benchmark Recontact Survey, 2014

Loyalty programs that offer more than rewards will drive participation Did you know? 74% of parents want enhanced customer service as part of their loyalty programs. Base: US online adults 18+ who regularly participate in most of the loyalty programs; Source: Forrester’s North American Consumer Technographics® Customer Life Cycle Survey 2, 2014

Summary Omnichannel retail buying is growing. Understand your customers at the category level. Watch out for Gen Y shoppers. Build retention through the in-store experience.

Additional Forrester resources Customer Experience Index June 26, 2014, “Introducing Forrester’s Next-Generation Customer Experience Index” Further data insights Contact your data insights manager at consumerdataadvisor@forrester.com. Forrester playbooks “The Retail eCommerce Playbook” “The Digital Store Playbook” (coming January 2015)

Martha Cleary macleary@forrester.com For further information, please contact your data insights manager at consumerdataadvisor@forrester.com. Martha Cleary macleary@forrester.com