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Transcript:

Thank you very much for having me join you today. I'm going to spend some time talking about a couple of things as it relates to the retail industry. First, I'm going to go through a little bit about how COVID has really left its mark on the shopping landscape. Then I'll talk a little bit more about some of the ways that shopping has gotten creative in terms of how it connects with consumers. I think all of this is really important to keep in mind to understand how savvy today's consumer really has gotten, not only through the COVID situation, but in general over the last couple of years. Before I talk about the content, I just want to tell you a little bit about where I'm getting my information. As Tammy mentioned, we have a couple of very big trend services that we offer at GfK.

Where is this information coming from?

                The first is our FutureBuy study, which looks at shopper attitudes and behaviors in 16 different categories. We cover 28 countries, although today, I'm focusing on the US and because it's a trend survey, I have data that I'll be sharing that was collected during the heart of the lockdown period, as well as what's going on today, post-lockdown experiences. I will also occasionally reference our GfK Consumer Life study, which is our flagship program that we've been doing for almost 50 years in the US, and is part of what helps us look, as a company, to forecast what we think we're going to see in the future. We have a lot of experience looking through the past to help understand the future.

                One last housekeeping piece I'll talk about is that this year for our clients, many of whom were really interested in sustainability and sustainability trends, we ran our Green Gauge segmentation, which looks at consumers on a spectrum from the most green to the least green. Several times throughout this presentation, I may talk about a couple of these groups, most particularly our Green inDeed and our Glamour Green groups, who are the ones that are most green-oriented and the ones who are really making certain demands when they go into the marketplace.

COVID-19 and its impact on shopping

                I don't think I need to tell any of you about what a crazy and unpredictable year this has been for many of us. Everything has been changing on a very rapid basis and just when we think we know exactly what's going to happen, next something else comes. Certainly, we're all aware of the impact that the Delta variant is starting to have and the additional twists and turns it's putting in front of consumers. However, despite all the unpredictable twists and turns, we've seen that consumers are actually acting in a pretty predictable way, and they're really making some changes that were not so much revolutionary as evolutionary. You're going to hear me say that a few different times.

                While the changes in the world have been unpredictable, they've really been acting the way we would expect them to act. Witnessed some of the pent up demand that we, and many others, were predicting what happened once vaccines were available. You see what kind of revenge spending was really going on in the spring and the start of the summer for both goods and very much for experiential services. Between dining out, and taking trips and going out to the stores, we see that people are spending anything from about 700 to $1,000 more per month than they were last year at this time, according to a Mass Mutual Consumer Spending study. We certainly have seen some predictable behaviors as people go out there in the marketplace. We certainly have seen, so far, a lot of expectations that the shopping season [inaudible] back to school and for the holiday, we'll still be living up to some of the expectations.

                Just looking a little bit deeper into the impact of COVID, we have really moved pretty quickly from the beginning of the crisis and the start of the lockdowns, where you saw extreme behaviors. You saw that hoarding, the stockpiling, the long waits to get an Instacart delivery and accidental trial, which is what we call. When people go to the marketplace, they try to buy something and their brand is not there, or the retailer is not open and they try something new. There was a lot of that happening early on, and some of that behavior did stick. We have a certain proportion of consumers who tell us they tried new brands or new retailers during the pandemic that they will continue to use in the future, but that real crisis moment evolved.

The crisis moment evolved two points

                The first is really related to digital lifestyles. As we all know very well, life moved into the home and online. That meant everything from schooling, to work, to entertainment, and of course, to commerce as well. The digital lifestyle has become something that all groups have embraced to certain degrees. You see one of the things that COVID did was it brought some of the laggards in technology, by necessity, more online, whether it was to be able to participate in the workplace or in schooling, or to purchase the goods and services they needed.

                The second thing that's very much related to that is the idea of omni plus that we, essentially, are no longer people who purchase things only in store or purchase things only online, but that we're really going back and forth and buying things as it most fits our lifestyle. Then the last piece, and that's where I will really talk about creativity, is the idea of personal connections. This has been a very difficult, stressful and in some cases, lonely year for many people and building personal connections, whether it be digitally or back in the marketplace when they're out there, is more important than ever for consumers. What we're finding is that those brands and those retailers who are able to deliver on personal connection are really finding very receptive audiences in the public.

                I want to take you through, first, a question that we ask in our FutureBuy study that looks at the last time you shopped across 16 different categories, whether you shopped for that product exclusively in store, whether you shopped online only, or whether you did omni. What you'll see is that across the board, the proportion on the bottom, which are our in-store only, has declined across multiple categories, where the proportion who purchased online or omni, has really grown.

                When you look across, it's the types of things that you would expect to have on the far left and that are least likely to be omni, are some of the food and beverage things, but you see a pretty large decline happening last year in that. The things on the right are really a lot of those durable products where omni is really becoming the dominant way of purchasing things. As I mentioned earlier, a lot of the laggards, whether they be particular customer groups, so older Americans who might've been less inclined to be online, or categories where people were less likely to purchase them online, such as food and beverage, we all saw a shift in them to start to be more online. Now, it doesn't mean that all groups of consumers are acting in exactly the same way.

Considering ethnicity in shopping behaviors

                One of the things we did was we looked at this by different ethnicity groups to see what the changes were for them. While you'll see that all groups had a decline in just being in store, that Hispanic consumers are the least likely to be doing all of their shopping either Omni or online. We see Asian consumers are leading in online. Now, another interesting thing that we see among the Hispanics is really a lead towards a receptivity to click and collect methods. Really, that on the idea of ordering something online and picking it up in a locker or somewhere on site. We see one in five Hispanics have used click and collect, and want to continue to use that. That's a greater proportion than we see for Americans in total, and that one in three actually prefer retailers who offer click and collect services.

                Now, something else that we did was we lined up the reasons why people choose different purchase channels for in-store and online. What we really wanted to see is the role that some of the things very specifically related to COVID would have compared to the tried and true things that influence shopping behavior by a different channel. One of the things we saw here is that it really is the tried and true that influences behaviors more than something like avoiding getting sick, or products consistently being in stock, which might be more COVID-related. Things such as getting products sooner, which you have for in-store or ease of shopping and free delivery, which you see for online, remain much more important than some of the COVID-related factors.

The impact of different touchpoints

                Another thing that we looked at was the impact of different touchpoints on purchasing across different categories. I have three categories here for illustration, smart phones, packaged foods and beverages and small home appliances. Some of the touch points that had the largest change year over year are the digital ones, not surprising giving that people are sitting online in many cases for other parts of their life, whether it be entertainment, or work or school. You see online advertising and brand websites really growing in terms of impact, price comparison, and discount websites, as it relates to small home appliances. However, when you actually look at the most influential touch points, not the ones that grew the most, but the most influential overall, it's really a mix of both the digital and the in-store elements. The opinions of family and friends, or assistance and advice from a salesperson in the store are still among the top three influencers in smartphones. Packaged foods and beverages are still driven more by in-store displays, product packaging and information at the shelf. There really is a mix of things influencing people's lives.

Mobile phones as an important shopping tool

                The last thing I'll mention before I move more towards some of the creative ways that people are shopping is the continued growth of the smartphone as the key influencer of people's shopping behaviors. We ask this every year and it grows year after year. The proportion who say that my smartphone tablet is my most important shopping tool has grown to nearly half among the entire population and among our greenest consumers. Remember, the Green Indeed and the Glamour Greens are two most green-oriented groups. You see well over half were really using their smartphone to drive their purchases. I'll use just a couple of examples of why this is so important in the omni world. We look at the role that omni starts to play in the apparel world, where when you need something very specific, it's sometime very hard to go to a store and find that black cardigan that you're looking for. Sometimes you really have to go shop for that online to find exactly what you need.

                On the other hand, when you don't know what you need, such as my daughter who had to try on a dozen pair of jeans this week to find the right pair of jeans, you really need to go to a store to start. However, in her case, when you found the jeans you wanted and they were only available one pair of them and you needed to purchase more of them, that's where Kohl's omni experience was really critical because she bought the jeans in the store and then was immediately able to, using her smartphone, purchase them online in a couple of other colors in her size. The omni experience and really leaning on the cellphone as a way to help connect it is really critically important for our retail partners.

                Just to sum up a couple of key takeaways before I move over to creative shopping, COVID's impact on shopping has absolutely been profound, but it's really accelerating existing trends. We're not seeing an enormous change that we weren't expecting to see as people matured through different parts of the process. The other is the spike in the importance of digital. Certainly, if people are online, they have more of an opportunity to see the digital, but it's not taking away from the really important aspects of the experiential and the in-person touch points. Then the really important role of the smartphone and helping bridge the omni world from the retail to the online, and the idea that... And this is why we call consumers really savvy, is they have really experienced a time where they've seen the best of all worlds and they don't want one or the other. They really want yes/and for the future. Really layering on the return to store with many online routines, such as click and collect that they've learned to like and want to continue to see.

Shopping gets creative

                With that, I'm going to move on to how shopping has really gotten creative. There are two pieces to this. It's really understanding and personalization, and connecting to people. The statistics that I'm sharing here on this slide are not from our study. The one on the left is from a Deloitte and Touche report on the most important things related to mass personalization. What we see is that one in four consumers are willing to pay more for something that's personalized.

                Then in some categories, over half of the people are really willing to pay more for customized products or services. Based on another blog from Salesforce, we see that according to consumers, catering to unique shopping needs is the number one thing that makes favorite brands stand out. Personalization is something that different consumer groups are really looking for. In this case, we're looking at our green consumers and how much they agree with the statement, I like when I get personalized offers from retailers and brands. What you see is that while the entire population, that's 54%, that number rose to 58% among our Green InDeeds and 62% among our Glamour Greens, so the real allure of personalization for those customers.

                Another thing that really helps drive loyalty is co-creation, so the idea that I'd be more loyal to a brand or retailer that lets me give input to help shape products and services. For consumers in general, you see 42% who agree with that and that number goes up for Green InDeeds and Glamour Greens. It also goes up among African-Americans, where you see 47% are interested in that concept as well. Now, one thing to really caution you about is that while personalization is important for people, they are concerned about their privacy.

Consumer concern for privacy – but desire for personalization

                Almost half of the population say they're uncomfortable with the amount of information that retailers and brands seem to have about them. That number goes up among the younger Millennials and the Gen X. What's really important to think about is how to strike that line between being creepy and really being personalized. We've all had that experience where you started to search for something and ads come up, and they pop up and you see things. Sometimes that makes people uncomfortable. One of the things we're really encouraging our clients to think about is the go-forward personalization, as opposed to the go backwards personalization. How do you personalize an experience in a more opt-in fashion with a customer to make sure that he or she is really getting that personalized experience?

                A couple of examples of that would be subscription services. That's an area where we've really seen some pretty explosive growth over the last year. While we see that among the general population, it's almost one in four who are getting a subscription services, it's over a third of Millennials and that's nearly doubled year over year. And when they get these subscription services, there are several things that really make them personalized. In some cases, they have the ability to go in and personalize their specific boxes and in other ways, they have the opportunity to really go through affinity companies that are really standing for causes or things that they believe in. Here are a couple of examples here with Alltrue that's really interested in socially and environmentally-conscious community. Planet Post, another one that enables people to really play to their green attitudes and behaviors.

                Another example of personalization moving forward are quizzes and surveys that engage consumers. We have 22% of the population who say they are trying and likely continue taking a quiz and a survey to get matched to the personalized product. A quiz is a great way for a company or a retailer to collect information about a customer on that customer's say so and their willingness to provide that. An example we give here of Care/of is where the entire experience for the customer and what they get out of it is driven by the information they put into this quiz, and the products are selected for them based on the quiz.

How social media gets involved

                Then the last area I just want to mention is social media networks. We have seen increase in social media buying and influence over the last several years. On the right, you see my social media networks are important information sources for shopping decisions, and that has grown five percentage points over a third of the population. You see very large proportions among Gen Z and Millennials in terms of that role, as well as among Hispanics. On the left, you see the people who have actually purchased something by pushing the buy now button through social media. That's now at 27%. that grew four percentage points over the last a year. Among Millennials, 44% have pushed the buy button.

                The last group that is very interested in the social media targeting `are your green groups. On my social media networks, I get targeted with the best products for me, so the idea of personalization and affinity. You see your Glamour Greens at nearly half saying that that offers the best products for them. On this, shoppers really crave personalization from the brand and retailers. When you're able to deliver on that, it commands a premium, larger baskets, engagement in things like ongoing subscriptions and services and offering a better experience for the greenest shoppers. Also, looking forward to look at things that don't rely on historical data, but more on forward-thinking ways to engage and lastly, the idea of social media as a engagement place, particular for Millennials.