CRT074508B Retail Survey

20 Pages·2017·2.45 MB·English

Retail
Survey
2017
What consumers are telling us
February 2017
kpmg.com
Introduction
For the third year running, KPMG in the UK This report covers the following key themes:
has collated 1,476 responses from employees,
surveying the purchase and returns experience Black Friday is now ‘Black Four Weeks’ The store isn’t dead!
across 283 brands and retailers. Our survey • Black Friday continues to extend its reach • Stores are still an essential part of the journey –
has been collated over an eight week period • What did people buy? as a showroom and collection hub
from November 2016 to January 2017, aimed • Retailers’ approach to planning is • Click & Collect – clutter or a chance to sell?
at identifying trends and analysis from the becoming more sophisticated • Changing role of the store is calling for a review
Black Friday and Christmas spending period. • Savvy consumers are wising up to of profitability
Retail continues to be an industry experiencing Black Friday discounts
tremendous change. The ability for executive • Black Friday backlash? The rise of automated operations
teams to address this is imperative.
• Beyond tracking & stock check
The ‘mobile natives’ are here • AI & robotics in the value chain
• Why are millennials so important? • Automation is possible for smaller retailers
• Mobile purchasing means consumers want
their products anytime, anywhere Outlook for 2017
• The rise of the social networking shopper.
• The perfect storm, but the perfect opportunity
• Whatever generation, whatever sector,
• How can retailers ride the tide?
improving CX is essential
The evolution of delivery and returns
• ‘Track my customer’ will become just as important
as ‘track my parcel’
• Free returns is a key criteria for consumers,
but at a cost to the retailer
• Last mile delivery services gets innovative
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
3|
| Survey overview & methodology
This years survey has been Using a combination of database cleansing and dynamic
collated over an eight week dashboard tools, we have analysed our fndings across a sample
period from November 2016 of 283 retailers and brands, and 30 product categories. We have
to January 2017. also used customised data scraping tools to examine the sales
propositions of 50+ of the largest UK retailers.
283 1,476
unique brands employee responses
and retailers from KPMG in the UK
Respondent Generational Groups
30 categories
18.6%
M
ainncedlun B’dsoi nCogkl osWt,h oWinmgoe,m nBe’esn a'Cusl toAyt,ch CcineDgss,s ,Eo DrleiVecsDt,rs o nics, o r1 un8der Generation Z 52-70 Boaboym ers
Women's Footwear, Children’s Toys,
Homewares, Sports & Travel Equipment
11.0% 10.2%
Older than Silent
19-35 Millennials
70 Generation
6.6%
6.3%
4.5% 4.4% 4.3%
4.3%
3.2%
36-51 Generation X
© 2017 PK MG LLP, a KU limited liability partnership and a member frm of the PK MG network of independent member frms affliated with PK MG International Cooperative PK“( MG International,)” a Swiss entity. All rights reserved. © 2017 PK MG LLP, a KU limited liability partnership and a member frm of the PK MG network of independent member frms affliated with PK MG International Cooperative PK“( MG International,)” a Swiss entity. All rights reserved.
Black Friday is now ‘Black Four Weeks’
Black Friday continues to extend its reach Retailers’ approach to planning is becoming With the ever-growing presence of online retailers who sell
The Black Friday trend continues to re-shape the UK retail more sophisticated a broad range of products across a number of brands and
trading pattern, with the discount period extending up The earlier, longer promotional period requires retailers retailers, it has become relatively easy for savvy consumers
to a month for some retailers. However, our survey data to re-write the way in which they plan for their peak to defne how and where they are willing to spend their
highlighted that across those four weeks, 44% of total Black sales and promotional periods. Many retailers are cash – with leading online department stores effectively
Friday purchases were made on the Friday itself, with the following the successful example of discounters by becoming price comparison sites. 38% of respondents
remaining purchases spread out over the wider ‘Black Friday’ managing product margins much more effectively, making Black Friday purchases made comparisons with
period. The duration and number of promotions on offer incorporating special buy lines into the buying process competitor’s prices or used price comparison websites.
varied greatly by retailer and by product category, with some months in advance and only offering and promoting
Black Friday backlash?
retailers offering discounts across their entire offering, and discounts on those selected categories or products.
others employing a more tactical and targeted approach. Some premium brands opted out of Black Friday promotions
Discounting too aggressively during Black Friday and entirely in order to maintain their brand positioning. For
What did people buy? not separately planning for the overall festive period can example, a UK high street fashion chain claimed that
Overall, Women's Clothing, Electronics, Men's Clothing lead to misjudgement of pick ups and declines in rate of Black Friday discounts were deceptive, as products
a
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volume. Electronics promotions were spread across and clearance sales implemented after Christmas in order that from a consumer perspective, signifcant discounts
the longest period, with many discounts remaining to clear unsold stock. Such sales negatively impact margins, are indicative of the true value of their products.
for the full month. In comparison, Women's Clothing and our survey highlighted that 46% of purchases made
promotions were spread across a shorter 5-day period. outside of the ‘Black Friday period’ were still bought at a
discount. Merchandisers need to consider historical sales
Interestingly, our data revealed that the volume of electronics patterns and keep their fnger on the pulse of daily rates "B lackFridayhasnowfirmly
purchases fell from 20% during the designated ‘Black Friday of sale on key lines. This will help them make the right call
period’ to 9% in the regular, non-Black Friday period covered and maintain the right level of retail theatre to continue to
by the survey. This suggests that electronics remain one of delight their customers throughout the festive months. established itself in the UK and is
the ‘big ticket’ items that consumers delay purchasing until
Black Friday. This dovetails with the trend of consumers using Savvy consumers are wising up to Black Friday discounts here to stay. Sales increased yet
more price comparison sites in order to fnd the best bargain, Now that Black Friday is frmly embedded in the retail
with 55% of those who purchased electronics on Black Friday calendar, consumers have ‘wised up’ and deliberately hold
making price comparisons during their path to purchase. back spending in the weeks and days running up to Black again in 2016 with the event now
Friday. This is refected in our survey data which revealed that:
• 49% of Black Friday purchases were motivated by price. expandedovermultipledaysand
• 74% of those who paid a discounted price
would not have paid full price. movingincreasinglyonline."
Paul Martin, Head of Retail, KPMG in the UK
© 2017 PK MG LLP, a KU limited liability partnership and a member frm of the PK MG network of independent member frms affliated with PK MG International Cooperative PK“( MG International,)” a Swiss entity. All rights reserved.
5|
| Findings
Black Friday period Top fve categories purchased on Black Friday
Used a Other
mobile app Electronics 20%
1%
12% Women’s clothing
19%
Used
mobile
internet 18% Purchased Men’s clothing 11%
46% through desktop
web browser Beauty 6%
sBtoureg h/ to in tah e 23% Household appliances 5%
High Street
%
49 o f Black of non-'Black Friday'
Friday purchases purchases during the
%
were motivated 46 period were bought
by price at a discount
Black Friday purchases were
spread across a four week period
Purchases
tmhaed Bel aocukt side 11% Pmuardceh aosne s
Friday period Black Friday %
itself
77
24%
44%
Purchases
made in of those who made
t
pheer i5o-dd ayft er 21% Black Friday purchases
Black Friday Purchases made used the retailer’s
in the 5-day period online channel,
before Black Friday including mobile
© 2017 PK MG LLP, a KU limited liability partnership and a member frm of the PK MG network of independent member frms affliated with PK MG International Cooperative PK“( MG International,)” a Swiss entity. All rights reserved. © 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The‘mobilenatives’arehere
Why are millennials so important? peaking (especially in promotional periods) in the morning Understanding exactly what key customer segments
Millennials constitute 25% of the UK population(2) and are and evening when consumers are commuting or at home. expect from each of these pillars can be the
the largest generation in Western history. Millennials in catalyst for proftable change – guiding investments
particular, and consumers at large, increasingly expect Having understood the specifc traits belonging to different in customer experience improvement.
consumer groups, retailers need to understand what this
‘instant gratifcation’ from their end-to-end path to purchase.
means in terms of forward planning. As users spanning a An analysis of what the consumer wants to experience
The abundance of alternative products on offer from
wider age range adopt mobile purchasing methods, retailers can made by comparing detailed rational and emotional
both traditional retailers and industry disruptors, and the
should be looking to ensure the online customer journey descriptions of a perfect retail journey with the customer
ever-increasing ease with which consumers can make
refects this, creating seamless customer experiences. journey that internal stakeholders are trying to engineer.
comparisons between retailers online, makes it ever
By aligning the two, retailers can create a customer base of
harder for retailers to retain their millennial customers. The rise of the social networking shopper
‘superfans’ who will remain loyal and provide reliable proft.
Survey data revealed that millennials were more The role of social media in the end-to-end purchasing
likely to ‘shop around’ before making their purchases. journey has become more prominent over recent years for KPMG Nunwood has developed a Six Pillar Model
Approximately 40% visited competitor stores (online some generational groups. Our survey showed up to framework that helps organisations codify, analyse
or high street) before purchase, compared to 32% 5 times more social media use in the customer journey in and transform customer experience.
of Generation Z. This evidences the need for retailers the younger generations versus those over 35. Retailers are
to segment consumers by behaviour when pricing increasingly using less traditional forms of marketing to tap
their products. into the mind of the consumer and infuence their purchasing "T he2017consumertruststheir
decisions. The likes of Facebook, Snapchat and Instagram
Brands across many industries rely on inertia and have become an integral part of the marketing mix for many networksimplicitly.Millennialsand
habit for loyalty, but millennials are feet-footed, retailers – especially in fashion, where the power of celebrity
demanding and quick to take their business elsewhere. endorsement and social media trendsetters are strongest.
It is essential retailers understand millennial GenZnolongerbelievemarketing
customer journeys and can cater to these. For example, retailers are experimenting with Snapchat
to measure the popularity of new product ranges comms.Theendusernowseeks
Mobile purchasing means consumers want their by asking customers to ‘screenshot’ their favourite
products anytime, anywhere products. Retailers can subsequently utilise this
Our data revealed that 28% of total respondents data to help with category planning and buying. validationfromsocialnetworks
made purchases on their smartphones. Of these,
59% were millennials, compared to 31% Generation X Whatever generation, whatever sector, and the crowd to tell us truthfully
improving CX is essential
and 5% Baby Boomers.
Retailers are increasingly using data in order to analyse and whether the product is any
The rise of mobile shopping has altered temporal purchasing transform customer experience (CX). KPMG Nunwood
patterns, enabling consumers to purchase throughout the has developed a framework which highlights the six key good. As a result we'll see PR and
day when its most convenient – usually outside of traditional pillars great customer experiences are built on. Businesses
daytime working hours. Our survey data demonstrated that deliver Personalisation, manage and deliver against
that the fewest mobile purchases were made in the Expectations, act with Integrity, Resolve issues when things incidentalendorsementreplace
afternoon (24%), compared to 40% in the morning and go wrong, minimise Time & Effort and deliver Empathetic
37% in the evening. The most popular hour for mobile interactions are likely to be successful in the future. The traditionalmarketingchannels."
purchases was 8pm (10%). This has logistical implications creation of positive memorable experiences is becoming
for retailers, as the window for orders dropping into the the new battleground in improving customer value Craig Ryder, KPMG Nunwood –
warehouse for fulflment is becoming much longer and Customer Experience Director
© 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
7|
| Findings
Most popular categories for Millennials that used social media
Electronics Women's clothing Beauty
% % % Up to 5x higher rate of
16 16 14
use of social media by
Women's footwear Men’s Clothing Sports & Travel Equipment under 35s vs over 35s
% % %
12 10 6
%
59 o f Millennials
used loyalty schemes,
twice as frequently as
Generation X (30%)
Millennials
constitute
%
25 of the UK
population
© 2017 PK MG LLP, a KU limited liability partnership and a member frm of the PK MG network of independent member frms affliated with PK MG International Cooperative PK“( MG International,)” a Swiss entity. All rights reserved. © 2017 KPMG LLP, a UK limited liability partnership and a member frm of the KPMG network of independent member frms affliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The evolution of delivery and returns
‘Track my customer’ will become just as Free returns is a key criteria for consumers, The ‘gig economy’ has become increasingly prevalent in
important as ‘track my parcel’ but at a cost to the retailer urban areas, and especially notable in the food delivery
Communication between retailers and consumers has The ability to return goods for free has become a sector. An example of this is an operating model of self-
increased signifcantly with the introduction of delivery hygiene factor for most consumers, but the process employed couriers to take food ordered via a smartphone
re-directs, drop off information and collection points. is becoming increasingly burdensome for retailers. app from virtually any chain or independent restaurant and
The tracking of a consumer’s delivery preferences and 62% of our respondents deemed a free service drop it off within the hour of booking. This is bleeding into
profle will become increasingly important as parcel the most important factor when returning an item, the retail industry, and some providers now collect products
providers try to increase the ‘frst time delivery’ hit compared to 35% who stated convenience was most direct from high street retail stores in the same manner, so
rate, and gain a personal view on each consumer. important. A recent KPMG in the US survey, ‘The truth it is only a matter of time before the ‘food and ‘non-food’
about online consumers’ found that within fashion, delivery sectors are fully integrated. Parcel carriers will have
Using this analysis to ‘track my customer’ will allow consumers were three times more like to use ‘returns to adapt their operating model to take advantage of this
retailers to understand the shopping patterns, delivery policy’ as a choice for deciding who they buy from.(3) model. We expect a rapid increase in the level of innovation
preferences, and returns profle of their customer base. and disruption in last mile delivery: an area to watch in 2017.
Capitalising on the trends shown in this data will become On average it took 6 days for respondents to receive
imperative in providing a proftable online business. reimbursement when returning via online methods. Retailer and parcel providers need to integrate
The desire to be reimbursed more quickly, combined their customer facing operations more fully so
Our data reveals there is still a balance between ‘premium’ with the ‘safety’ of returning in-store is likely to have that consumers receive a seamless experience.
next day and ‘economy’ 3+ day delivery services, with made in-store returns more popular. This trend was This in turn will reduce the full cost to serve.
over 50% opting for a free 3-5 day economy service, refected in the survey, with 34% of respondents
as opposed to paying to receive their item faster. who purchased online opting to return in-store.
Understanding what consumers actually value in
regards to delivery services is essential and could see We are now seeing an increased focus on streamlining
‘track my customer’ becoming just as important for the returns sector, as companies start providing “A sconsumerconfidencegrows
retailers as ‘track my parcel’ has been for consumers. returns e-platforms, optimal redirection of stock,
an integrated returns process and an awareness of
Consumers are considering the delivery providers, the consumer’s reimbursement needs. Retailers inlastmiledelivery,it’simperative
returns and service offerings as a key part of their must now integrate returns cost to serve in the
buying cycle. Retailers and their parcel providers total customer journey proft & loss calculation.
need to understand patterns and preferences to make that retailers and parcel providers
sure they offer the best service, as well as identify ‘Last mile’ delivery services get competitive
and manage loss-making fulflment propositions. Further helping the improvement in returns services, is activelymanagethereturns
the fact that the parcel delivery market has transformed
into one that is digital, transparent, and fexible. The most
signifcant advances have been made in the ‘last mile’ processtoensureaprofitable
component of the delivery model which has been key
to improving customer experience. The concept of ‘last onlineofering.”
mile’ delivery has seen urban-based delivery start-ups
cutting out warehouses and distribution hubs altogether, Iain Prince, KPMG Supply Chain Director
responding to customer demands for instant delivery.
© 2017 PK MG LLP, a KU limited liability partnership and a member frm of the PK MG network of independent member frms affliated with PK MG International Cooperative PK“( MG International,)” a Swiss entity. All rights reserved.
9|
| Findings
On average it took
6 days for consumers to %
receive reimbursement 50
on returning items of Children’s
Footwear and
% %
62 35
of total respondents said of Women’s Fashion
that a free returns service online purchases were
was the most important 'intentional returns'
factor for returning purchases
of respondents purchasing
on mobile phone and
% apps between the hours
35
of 7pm–10pm opted for
next day delivery
%
80 £5.39
Total chosen delivery options of online orders average delivery price
1 hour received free delivery for those who paid
Same day Other
Not known 3%
1%
2%
3%
5+ days 7% Promised Average % of
Delivery Delivery Deliveries
Timescale – Cost – Free
Next day Fig.1
52% Next Day £5.43 90%
32% Other £7.00 86%
3-5 days 3-5 Day £4.81 79%
© 2017 PK MG LLP, a KU limited liability partnership and a member frm of the PK MG network of independent member frms affliated with PK MG International Cooperative PK“( MG International,)” a Swiss entity. All rights reserved. © 2017 PK MG LLP, a KU limited liability partnership and a member frm of the PK MG network of independent member frms affliated with PK MG International Cooperative PK“( MG International,)” a Swiss entity. All rights reserved.
The store is not dead!
Stores are still an essential part of the journey – Click & Collect – clutter or a chance to sell? Changing role of the store is calling
as a showroom and hub The rise in Click & Collect services has enabled retailers for a review of proftability
The physical store still has a role to play in the retail to increase footfall in stores. Our survey revealed a rise The rise in online sales has meant that for many retailers’
sector, despite the increasing rise of online, with 36% in respondents opting for Click & Collect services, with stores, the sales per square foot has decreased. With
of respondents, up by 4% from last year, continuing to 21% of respondents choosing to collect their purchases the NNDR (National Non Domestic Rates) revaluation
spend in store. Our survey also revealed that regardless via this method, compared to 14% last year. Our survey set to impact UK property, we expect to see retailers
of whether a purchase was made there, 40% of shoppers also revealed that, of respondents who returned an looking to re-review store proftability and the store
visited a store at some point during their purchasing journey. item purchased during the survey period, 51% of network in order to adapt to rent increases. This would
Retailers are responding to this by not just using stores as returned in-store, compared to 26% that returned via include the quantity, size, and locations of stores.
a means to generate direct sales, but to act as mini-depots postage, and 15% via collect+ - regardless of the way
for Click & Collect orders, BORIS returns (bought online they received the item. This suggests that returning to
returned in store), and to provide a showroom for products. stores is still a preferred method for consumers, and a
key opportunity for retailers to boost in-store sales.
Today’s shoppers may make their fnal purchase online,
but they see physical shopping as a fun activity – a way Some retailers may have experienced an increase in
to spend time, shop around and observe what’s on-trend footfall but argue that this merely serves to clog up the “T oday’sconsumersarelookingfor
and on offer. Retailers and brands are therefore driving stores, and potentially lessens the quality of the in store
footfall to their physical stores by creating interactive experience. This year could therefore see the rise of smart
experiences and ‘retail theatre’. For example, large store layouts, and the ‘mobile’ or ‘co-located’ ftting room. value,convenienceandaunique
sportswear brands have used stores to run ftness Retailers can leverage their Click & Collect space to act
classes after trading hours.(4) With need to create a as both a drop-off point and ftting room. Our data tells us
positive customer experience at the forefront of retailers’ that Click & Collect only increased impulse buys in-store experience. The role of the store
minds, we expect to see more retailers reviewing by 2%, so for retailers wishing to drive impulse buys, a
their store set-ups to create a multi-purpose space. more strategic placement of Click & Colect pick up points iskeyinprovidingashowroom
is required. For example placing designated collection
points in locations that necessitate customers following
specifc shopping walkways, or placing ftting rooms next which delivers an outstanding
to the Click & Collect desk - enticing customers to try the
items on before leaving the store, reducing the number service and an attractive and
of returns, and acting as a cross-selling opportunity.
memorableretailenvironment.”
James Tilley, KPMG Supply Chain Director
© 2017 PK MG LLP, a KU limited liability partnership and a member frm of the PK MG network of independent member frms affliated with PK MG International Cooperative PK“( MG International,)” a Swiss entity. All rights reserved.