The 2015 Reality of Retail Report

April 2015
RealityofRetail
The
Report

2© 2015 InReality. All rights reserved.
The Reality of Retail Report: April 2015
It’s no secret that retail is being disrupted. And, with over 94% of all U.S. retail sales ($4.4T)
spent in store last year, InReality wanted to uncover the reality of what’s happening in retail. Our
study highlighted a definite tug of war between traditional and digital touch points in store. And,
although there was a high use of mobile in store, elements of traditional retail still proved to have
sway on shoppers—even the younger generation. However, one thing was clear, if brands and
retailers are to stay relevant to shoppers, they must start rethinking certain elements of the in-
store experience.
Throughout the report we provide the findings of our survey along with recommendations brands
and retailers can take note of—today—to start turning retail disruption into opportunity. These
recommendations can be found in the Summary of Key Considerations section of this report.
KEY FINDINGS:
Contrary to popular belief, the store is actually the preferred destination for researching/
gathering product information. But, is this trend different among the younger generation?
Find out in the Product Research section of this report.
Many Shoppers Are Researching In Store, Not Online.
Without a doubt, most shoppers are using mobile in store. However, the surprising find was that
shoppers aren’t just gathering product information and price shopping via their mobile—some
are actually purchasing via their mobile while in store. See the full breakdown of shopper use of
mobile in store in the Mobile Trends section of this report.
1/4 of Shoppers Are Using their Mobile to Purchase In Store.
With all the buzz around loyalty programs, it was surprising to find that most shoppers do not
yet consider these programs to be an important factor in influencing their purchase. Check out
the Loyalty Programs section of this report to learn who is using loyalty programs and its role in
driving today’s shopper to purchase.
Mobile Loyalty Programs May Not Be Driving Loyalty.
Shoppers haven’t turned into cyborgs just yet. Shoppers still ranked traditional in-store marketing
such as advertising and packaging as important in their decision to purchase. However, there were
some areas that definitely needed improvement. In the In-Store Marketing section of this report, we
dive into what’s working and what’s not working for shoppers inside brick-and-mortar.
Traditional In-Store Marketing is Still Important to Consumers.
Executive Summary

A total of 1,361 survey responses were collected from 461 respondents across 34 states
representing each region of the Contiguous United States.
RESPONDENT DEMOGRAPHICS:
A total of 1,361 survey responses were collected across 11 retail categories, with a minimum of
100 responses for each of the 11 categories.
RETAIL CATEGORIES EVALUATED:
• Apparel/Footwear
• Auto Parts & Accessories
• Consumer Electronics/Computers/Mobile Devices
• Health & Beauty
• Home Appliances
• Home Furnishings & Bedding
• Food/Perishable Items
• Kitchen/Bath/Plumbing Supplies
• Outdoor/Recreation/Sporting Goods
• Office Supplies
• Tools/Paint/Garden/Building Supplies
About The Survey
Gender Breakdown:
Female: 54% | Male 46%
Age Breakdown:
18-24 year olds | 9% of overall, 54% Female, 46% Male
The first Reality of Retail survey was conducted between December 3-8, 2014. Sponsored by
InReality, the survey invited 461 respondents to share their shopping experiences, within the last
6 months, along with the importance and effectiveness of various touch points along their path to
purchase. A total of 1,361 survey responses were collected across 11 retail categories, with a
minimum of 100 responses for each of the 11 categories. For the total survey of n=461 statistical
confidence is 95% ±5. And, for each vertical category where n=100 minimum, confidence is
90% ±5.
METHODOLOGY:

Inside The Report
Product Research 5
Mobile Trends 6
Loyalty Programs 9
In-Store Marketing 11
Key Considerations 13
Table of Contents

Shoppers Aren’t Just Researching Online,
then Buying In Store.
• Shoppers are researching products both online and in store, thus entering the store at differing
stages of the buy cycle. In-store marketing should therefore target shoppers based on where
they are in the buy cycle (pre-purchase, purchase, post-purchase).
• There also appears to be a difference in shopper buying preferences, i.e. those looking to
browse versus those looking to get in and out. This might explain why the time-pressed 25-35
year olds with young kids and early careers prefer researching online. The in-store experience
should also cater to these different preferences.
BRANDS & RETAILERS MAY WANT TO CONSIDER:
Product Research
But, is there a Difference By Age?
Both men and women
preferred researching
products in store equally.
Surprisingly, the 18-24 year old age group was only surpassed by the
50-65 year old age group in their preference for researching products in
store. And, it was shoppers ages 25-35 that preferred to research online.
50-6536-4925-35
18-24
—AND—
Of all shoppers surveyed,
53% preferred researching
products in store.
Generally, Shoppers Prefer to Research In Store.

Mobile Trends
Mobile In Store—It’s Happening Alright.
Both men and women used mobile
in store almost equally, with women
taking only a slight lead with 76%
usage versus men with 74% usage.
And, as expected, the younger generation (ages 18-35)
led the charge in use of mobile in store.
But, Who Uses It More?
• In recent years a huge focus has been placed on ecommerce. However, we know that over 94%
of all U.S. retail sales take place in brick-and-mortar, calling for an even larger focus on this
channel. And, given the extremely high adoption rate of mobile use in store (75%), developing
an in-store mobile strategy to help shoppers buy should be a key area for immediate focus.
Some ways to integrate mobile include mobile apps, real-time messages and offers through
beacons and digital displays that interact with mobile devices.
• Stores should also ensure that they are making WIFI not only available throughout the store, but
easy to access and supporting this marketing effort with more effective, mobile-friendly web-
sites containing valuable content that helps shoppers buy.

Mobile Trends
And, Social May Be Helping to Drive the Sale.
• While in store, shoppers are using their mobile devices to get price comparisons, get product
information and access social media, so why not facilitate this? Shoppers will go looking regard-
less, why not help them buy and control what they see and how they digest information?
• Social media appears to be helping to cement the sale via mobile. However, it can be used more
intentionally to drive sales in store. For example, establishing online social sites (branded Face-
book pages or specific twitter handles) that speak specifically to buyers in store, or integrating
social into in-store marketing, thus allowing shoppers to share/get opinions with friends and
family or find products they may have “liked” on their social media pages.
—BUT—
45%25%
Shoppers Are Using Mobile In Store For More
than Just Gathering Product Information.
Of all shoppers, 25% used their
mobile device to make a purchase
45% of shoppers who used their mobile device for
social media also used it for making a purchase
Of the 75% of Shoppers Who Admitted to Using Mobile In Store:

Mobile Trends
Mobile was used heavily in store across all categories, but interestingly the highest usage appeared in
Outdoor/Recreation/Sporting Goods (86%) and the lowest usage appeared in Health & Beauty (62%).
Mobile Usage In Store Differs Based on
What Shoppers are Buying.
BRANDS & RETAILERS
MAY WANT TO CONSIDER:
• Again, with such a large percentage
of shoppers using their mobile across
categories, there’s no question that
mobile needs to become a main part
of in-store marketing strategies.
• More complex or higher-ticket prod-
ucts also appear to have the highest
use of mobile in store. Categories
that fit here therefore need to start
acting as quickly as possible to offer
shoppers a better in-store experience
supported with mobile access to
whatever information shoppers need
before these sales move largely on-
line—as we’ve already seen happen
with consumer electronics.
Percentage of Shoppers Who Admitted to Using Their Mobile
Device While Shopping Per Category:

Loyalty Programs
Loyalty Programs
Mobile Loyalty Programs May Be Attracting
Deal Seekers Not Advocates.
71% of shoppers who used loyalty
programs on their mobile devices
still used it for price comparisons.
Only 55% of shoppers who did not use
loyalty programs used their mobile
device for price comparisons.
—WHILE—
• Mobile loyalty programs still appear to be in their infancy, but they have a huge potential to
provide more value to shoppers. Today, most shoppers that use mobile loyalty programs seem
to be mostly price-conscious shoppers looking for a deal, not loyal advocates. As such, most of
these shoppers are also doing price comparisons on their mobile devices. To increase the value
of these programs and subsequent impact and pickup, brands and retailers need to increase
the benefits of these programs by catering to specific demographics and offering additional
advantages such as early access to new merchandise, private showings and more.

Loyalty Programs
Loyalty Programs
Mobile Loyalty Programs Might Not Be
Meeting Shopper Needs.
And, as far as the age groups, use of
loyalty programs was low across the
board, with the highest usage only hitting
39% (shoppers ages 25-25), and the lowest
usage scraping 6% (shoppers ages 18-24).
Of shoppers who cited adoption of mobile
loyalty programs, 61% were women while
only 40% were men.
• Mobile loyalty programs are not yet enticing the majority of shoppers to enroll. And of those
shoppers that do enroll, only 46% view them as important in their decision to purchase. Done
right, however, loyalty programs can provide shoppers with great value and really “stick” with
shoppers, as we’ve seen today with programs such as Sephora and REI.
• It is also clear that mobile loyalty programs may not be having the desired effect, appealing to
mainly women and the most budget squeezed age groups—ages 25-49 juggling early careers
and young kids. Consequently, these programs need to start catering to specific demographics
differently, so that they are offering the majority of shoppers a unique value.
-VS-
Only 46% of shoppers who use
loyalty programs via their mobile
ranked it as an important in their
decision to purchase.
Of shoppers surveyed,
40% used loyalty programs
via their mobile while
shopping in store.
—BUT—
And, Who Is Using These Programs?

Traditional in-store marketing still matters.
In-Store Marketing
Only 12% of shoppers cited the sales associates
as an important factor in their decision to
purchase in store.
But, Some Traditional Elements Aren’t Impressing Shoppers...
Even more surprising, only 9% of shoppers cited
interactive digital displays as an important factor
in their decision to purchase in store.
Percentage of Shoppers Who Rank Traditional In-Store
Marketing Tactics As Important in a Decision to Purchase:
• The traditional role of the sales associate doesn’t appear to be hitting the mark. Shoppers have
become more self-sufficient with accessing product information, and so their interest in what a
sales associate offers has changed. The sales associate is now more valuable to the shopper
later in the buy cycle—maybe at the point of decision. In this respect sales associates need to
change their tactics to become more consultative and knowledgeable to be helpful to shoppers.
• If done well, use of digital in store has the potential to really elevate a brand/store and drive sales.
However, given that only 9% of shoppers cited digital displays as important in their decision to
purchase, it seems that digital iterations in store are failing shoppers and have yet to be used in
valuable ways to really help the shopper buy. Digital for digital’s sake is never a good solution.
Digital in store should always support the shopper’s path to purchase and add unique value to
the experience.

In-Store Marketing
The Most Important In-Store Marketing
Tactic Varies By Age.
Across all age groups, promos/discounts proved to be the most important factor in helping shoppers make
a purchase decision. However, rankings for the remaining tactics varied by age. It is also important to note
that mobile use in store did not significantly alter the importance of these tactics to shoppers.
• Traditional in-store marketing still seems to hold value among shoppers in their decision to
purchase, regardless of whether shoppers used their mobile in store or not. Brands and retailers
therefore need to focus on not only mobile interactions, but on traditional in-store marketing tac-
tics as well. The in-store experience should be treated holistically to create a compelling experi-
ence for the shopper.

The Reality of Retail Report highlighted several shopper trends and
raised many questions that retailers and brands might want consider:
Summary of Key Considerations
• Shoppers are gathering information both online and in store, thus entering the store at differing
stages of the buy cycle. How can marketing give shoppers the information they need based on
where they are in the buy cycle?
• Shoppers also have differing buying preferences. For example, those looking to browse and
those looking to get in and out quickly. How can marketing better cater to these preferences both
in store and online?
IT’S NOT ABOUT ONLINE VERSUS IN STORE. IT’S ABOUT THE SHOPPER.
• Shoppers across the board are using mobile—including, men and women of all ages—primarily to
gather and share information. There’s been a huge push for ecommerce, but perhaps a large focus
also needs to be placed on incorporating mobile in store to help consumers buy?
• Shoppers aren’t using mobile in the same ways for the various product categories. Things such
as product complexity, level of familiarity and price point all appear to impact how mobile is used.
For your particular product category, what types of mobile capabilities make sense and might help
close the sale?
• Social is also helping to cement the sale. Can it be used more intentionally in store to drive sales?
MOBILE PRESENTS A HUGE OPPORTUNITY FOR THE STORE.
• Generally, loyalty program use was low, used mainly by the age groups most squeezed budget
wise. And, for those that did use these programs, the majority also did price comparisons. But,
there is a large opportunity for brands and retailers to rethink loyalty. How can loyalty be better inte-
grated into the shopper experience as more than just another discount outlet? And, should brands
look into integrating other functions into loyalty apps, such as, social sharing, etc?
LOYALTY PROGRAMS AREN’T DRIVING LOYALTY.
• Traditional marketing, such as, demos/trials, POP displays, advertising and packaging are still
important to shoppers. However, it is clear that some touch points, such as the sales associate and
digital displays need to start evolving to bring more value to shoppers. Perhaps it’s time to start
rethinking how these touch points are used in store?
TRADITIONAL MARKETING ISN’T DEAD TO SHOPPERS YET.

InReality transforms how consumers experience brands and retailers, turning consumer in-
sights into innovative in-store solutions for the reality of 21st century retail. For almost
20 years, we’ve worked with clients like The Coca-Cola Company, Tempur Sealy, and
The Home Depot to build stronger, more enduring customer relationships, while creating
measurable, meaningful results.
To view our full library of reports, ebooks and infographics, visit:
www.inreality.com/resources
Meet InReality
P: 770.953.1500
E: info@inreality.com

The 2015 Reality of Retail Report

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