1. Synchronous Selling Seema Williams Analyst, Consumer eCommerce Research

2. Theme Synchronizing channels will win customers

3. Agenda  Consumers shop across channels  Traditional retailers face challenges  Creating a synchronous customer experience

4. The on-line retail growth spiral $ 3 More categories become available $ More retailers sell 2 2 More people shop 1

5. On-line shopping takes off

6. Three stages of Web buying  Convenience spending  Small-ticket, low-risk items  Examples: books, music, apparel, gifts  Researched purchases  Information-intensive big-ticket items  Examples: travel, appliances, computers  Fulfilling essentials  Low-information habitual purchases  Examples: groceries, prescription medication

7. Today (1998) customer profile: Joe Shopper First-time shoppers accelerate spending

8. In five years -- profile: Suzy Shopper First-time shoppers accelerate spending

9. Retail Spending Growth $108

10. Consumers shop across channels Convenience Where did you purchase products in the last six months? Store Catalog Web ResearchedReplenishment Source: Forrester’s Consumers & Technographics  Retail & Media Study of 10,000 on-line consumers. *Note: Consumers who buy researched goods generally do not buy again within six months. (multiple responses accepted) 89% 91% 98% 31% 14% 11% 29% 17% 8%

11. Consumers will shift spending to the Web How much do you plan to spend in the next six months in each channel? Source: Forrester’s Consumers & Technographics  Retail & Media Study of 10,000 on-line consumers. *Note: Consumers who buy researched goods generally do not buy again within six months. (multiple responses accepted) -63% -4% -23% -20% -28% -24% 16% 4% 1% Less More ConvenienceResearchedReplenishment Store Catalog Web

12. The Net is not just another channel

13. Theme Synchronizing channels will win customers

14. Brick-and-mortar retailers fall short  Different product =unmet expectations  Variable pricing =engenders distrust  Incomplete service =forces inconvenience

15. Pure-play competitors set the standards  Infinite product selection  Lower prices  Superior service

16. The solution: center customer experience around the Web  The battle to own customers is on-line  The Net offers the best communication  Most robust shopper data found on-line

17. Synchronizing channels  Offer depth then breadth in core products  Eliminate regional pricing  Limit on-line/off-line price differential  Align marketing strategies and tools

18. Give stores a make-over  Add kiosks to extend shelf-space  Consider stores a delivery option  Proliferate points-of-sale

19. Synchronous channels will cycle consumers between stores and sites

20. The pay-off:  Protect existing customer base  Recruit new customers  Win the game of scale

21. Theme Synchronizing channels will win customers

22. Summary  Consumers are cross-channel shoppers  Web storefronts will lead  Brick-and-mortar assets come into play

23. Thank you! Seema Williams 617-520-5768 swilliams@forrester.com www.forrester.com