Value and Optimisation in Multichannel Retailing Quantitative Research Report August 2010

2 Some Background... ACRS strategic realignment away from ‘public’ education to focus on: 1. Customised ‘in-house’ education 2. Customised (proprietary) research 3. Thought leadership research (funded by industry) a. Single partner research b. Collaborative industry research The Retail Thought Leadership (RTL) project o 2009 ‘Retail 2020’: The Future of Retail (Australia, NZ, Asia-Pacific) CEO Forum with 10 industry leaders from Australia & NZ Multichannel retailing 1. Consumer value perceptions, and 2. Optimisation of the retail channel mix

3 RTL 2010 Research Objectives The questions addressed are: 1. How do consumers value different channels, in terms of their pre- purchase, purchase and after-sales behaviour? 2. How does the configuration of different multichannel offers impact on consumer perceptions of shopping value and satisfaction levels? 3. How can consumers be segmented to reflect their multichannel retail preferences and behaviour? 4. How do generational differences impact value perceptions and satisfaction?

4 Does the online channel pay? A comparison of online versus offline information search on physical store spend International Journal of Retail & Distribution Management

Research Overview

6 Our Research Partners

7 Research Approach Workshop with CEOs & industry Agreement on objectives & outputs Agreement on design & sample Research approach Method approach Design of questionnaire Pre-testing & fieldwork One-on-one testing Pre-test online (n=100) Online survey of 1,000 consumers Validation test with NZ sample Reporting & presenting Analysis of the data Presentation series Development of report Customised ‘in-house’ series

8 Retail Categories Consumer electronics Holiday travel Clothing & footwear

9 Consumer Behaviour Stages Pre-purchase research PurchaseAfter-sales

Typical Multichannel Behaviour

11 Cross-Channel Behaviour Pre-purchase research PurchaseAfter-sales Store (mall) Catalogue Store (strip) Retailer website Search engine Store (mall) Store (strip) Retailer website (travel only) Store (mall) Store (strip) Retailer website Search engine Although limited

12 Pre-purchase: Channel Usage

13 Purchase: Channel Usage

14 After-sales: Channel Usage

What Consumers Want

16 Multichannel Expectations

17 Relative Channel Importance: Pre-Purchase Consumers are online

18 Relative Channel Importance: Purchase

19 Relative Channel Importance: After-Sales

Reactions to Different Multichannel Offers

21 The MC Offer Store onlyTraditional Multichannel Emerging Multichannel

22 Conve nience Enjoy ment Risk Sat Loyalty

Consumer Segmentation

24 Segmentation variables

25 Macro-Segments Four macro-segments A few interesting comparisons to note... LoyalsAdoptersTraditionalsFunctional Spend (avg. $)$78.00$84.00$93.00$78.00 Smartphone20%22%16%27% Connectedness number of retailer communications ( s) an individual is signed up to

26 49% of are pro cross- channel shoppers

27

28 Macro-segment 1: Store Loyals Rate Store as most important channel across search, purchase & after-sales Represent 34% market share Relatively low in terms of ‘innovativeness’ High proportion of Baby Boomers across macro-segment 3 micro-segments…

29 Functional Store Shoppers 18% <2.5 Assessed on a 7-point scale 1 = not at all important, 7= very important > Search: 2.3 Purchase: 1.4 After-sales: 1.4

30 Tactile Shoppers 11% <2.8 Assessed on a 7-point scale 1 = not at all important, 7= very important > Search: 2.8 Purchase: 1.5 After-sales:

31 Anti-Multichannel Shoppers 5% <1.3 Assessed on a 7-point scale 1 = not at all important, 7= very important > Search: 1.3 Purchase: 1.0 After-sales: 1.1 <2.0 Search: 1.9 Purchase: 1.4 After-sales: 2.0

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33 Macro-segment 2: Channel Adopters Place relatively equal (high) importance on all channels (and higher than most on emerging) Represent 28% market share Relatively high in terms of ‘shopping enjoyment’ High proportion of Gen Y & Gen X across macro-segment 3 micro-segments…

34 Channel Neutrals 13% Assessed on a 7-point scale 1 = not at all important, 7= very important Search, Purchase & After-sales: ~ Search, Purchase & After-sales: ~

35 Cross Channel Actives 11% Assessed on a 7-point scale 1 = not at all important, 7= very important 5.4 > 6.1 > 4.8 Search: 4.4 After-sales:

36 Cross Channel Pioneers 4% Assessed on a 7-point scale 1 = not at all important, 7= very important 6.3 > 6.2 > 6.0 >

37

38 Macro-segment 3: Traditional MC Shoppers Place highest importance on store and traditional channels (catalogue, Internet) Little importance on ‘emerging’ channels Represent 21% market share High proportion of Gen Y & Gen X across macro-segment 2 micro-segments…

39 Anti-Emerging Channel Shoppers 19% Assessed on a 7-point scale 1 = not at all important, 7= very important <3.1 Search: 3.1 Purchase: 2.1 After-sales: 2.6

40 Purchase Focused Shoppers 2% Assessed on a 7-point scale 1 = not at all important, 7= very important After-sales (store): 2.0 After-sales (trad): 1.8 After-sales (emerg): 1.6

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42 Macro-segment 4: Functional Shoppers Low importance scores across channels Represent 17% market share Low in terms of ‘innovativeness’ and ‘enjoyment’ Spread across generations and skew toward females 2 micro-segments…

43 Shopping Independents 4% Assessed on a 7-point scale 1 = not at all important, 7= very important 5.9 > <2.9 <2.4 ???

44 Shopping Dependents 6% Assessed on a 7-point scale 1 = not at all important, 7= very important 5.8 <1.6 <

45 So macro segments, representing 49% of shoppers, are pro-cross channel shoppers