The Shopper Story 2017 UK A global study of the changing nature of retail from the viewpoint of over 10,000 shoppers. 1 Copyright 2017 Criteo

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1 The Shopper Story 2017 UK A global study of the changing nature of retail from the viewpoint of over 10,000 shoppers 1

2 What is The Shopper Story? Criteo surveyed nearly 10,000 omnichannel shoppers (who shopped both online and offline) across the globe to find out what they think about shopping. 2 Source: Criteo Shopper Story, UK 2017 n = 1515

3 Key Insights for the UK Omnishopping is ubiquitous and multi-directional Retail and brand websites drive awareness as well as consideration Search engines are not the shopping starting point for the majority Shopping between sites is the norm Impulse purchases are almost as prevalent online as in-store The empowered shopper demands relevance and respect Source: Criteo Shopper Story, UK 2017 n =

4 What is an Omnishopper? Shoppers who use a variety of devices, channels, and platforms to browse and buy products. 4 &

5 Omnishopping is nearly ubiquitous in the UK Omnishopping is a global phenomenon with the US and UK leading Omnishoppers (percent of total) In the UK, they spend +13% online +31% offline than non omnishoppers 90% 80% 70% 60% 50% 40% 30% 83% 83% 78% 72% 79% 78% 20% 10% 0% US UK FR DE BR JP Source: Criteo Shopper Story, US, UK, FR, DE, JP, BR 2017 n =

6 Omnishopping takes many forms It s all about enabling the shoppers to buy and get the product whenever, wherever they want. Showrooming See in a store, buy from that retailer s site Click & Collect Buy online, pick up at a store or kiosk Scan & Scram See in store buy it from another retailer online Webrooming Research online, buy in store Click & Ship See in a store but buy on your phone for convenience Source: Criteo Shopper Story, UK 2017 n =

7 Click & Collect is the most frequently done form of UK Omnishopping Frequency of Cross Channel Purchasing (percent of total) Order goods online and pick them up in a retail store 28% 60% Webrooming & Showrooming are also common Browse products online and then purchase them in a retail store Make purchases online after seeing the product at a retail store 25% 20% 63% 71% Make purchases on my phone from within a retail store on another retailer s site (Amazon, etc.) Make purchases on my phone from within a retail store from that retailer s website 19% 14% 38% 38% 0% 20% 40% 60% 80% 100% Regularly On occasion Source: Criteo Shopper Story, UK 2017 n =

8 What is the Role of Real World Retail? 8 &

9 Real-world retail is about the experience and discovery I look forward to shopping in stores when I have the time. I prefer to do as much online shopping as possible. I use my phone while in-store to research products online. I like to try new retail stores. I enjoy shopping in stores to understand what is in style. I like to shop online at new websites. Source: Criteo Shopper Story, UK 2017 n =

10 Location and immediate need drive store visits in the UK Omnishoppers seek convenience and immediacy from retail stores. Retailers also need to: Up the genius level of their staff Optimise product mix Enable better product experience Factors That Would Make Users More Likely to Shop In Retail Store (percent of total) Convenient location Immediate need for product Availability of in-store offers Knowledgeable salespeople Better ways to try the product Store design Displays that show how to use a product 27% 26% 34% 39% 45% 45% 55% More unique merchandise 22% The ability to checkout from my phone 10% 0% 10% 20% 30% 40% 50% 60% Source: Criteo Shopper Story, UK 2017 n =

11 What Influences the Shopper Journey? 11 &

12 Contrary to the old model, digital channels drive awareness across categories Digital has more impact than word of mouth and retail stores across all categories, but TV still scoops up ad spend. First Learn About New Product (percent of total) I typically find out about something new when I see it online. 100% 90% 80% 70% 60% 50% 40% 90% 82% 79% 75% 75% 73% 68% 67% 58% 45% 48% 49% 48% 43% 43% 44% 55% 41% 37% 37% 36% 36% 36% 35% 37% 30% 20% 10% 0% Websites/Apps Retail stores Advertising People in Real Life Social Media Apparel & Accessories Consumer Electronics Home Ware FMCG Health & Beauty Source: Criteo Shopper Story, UK 2017 n =

13 Digital drives product consideration Omnishoppers are eager for information about products. Websites empower them to make product decisions. When I m deciding between coffee makers, I go online to compare. 100% 90% 80% 70% 89% 89% 86% 84% 86% 67% Learn More About New Product (percent of total) 65% 63% 60% 50% 40% 44% 43% 44% 40% 41% 38% 39% 39% 35% 37% 35% 34% 49% 38% 34% 35% 37% 30% 20% 10% 0% Websites/Apps Retail stores Advertising People in Real Life Social Media Apparel & Accessories Consumer Electronics Home Wares FMCG Health & Beauty Source: Criteo Shopper Story, UK 2017 n =

14 Digital is also a point of purchase driver, regardless of where the purchase is made I saw an offer on a retail site for just what I wanted. 80% 70% Last Influenced Product Purchase (percent of total) 60% 50% 53% 52% 50% 44% 46% 40% 30% 20% 10% 0% 36% 27% 24% 24% 18% 19% 11% 11% 14% 9% 8% 10% 10% 6% 6% 5% 6% 6% 3% 5% Websites/Apps Retail stores Advertising People in Real Life Social Media Apparel & Accessories Consumer Electronics Home Wares FMCG Health & Beauty Source: Criteo Shopper Story, UK 2017 n=

15 The omnishopper journey does not usually start at search Starting Points For Online Purchases (percent of total) 80% I know the exact item 80% 20% of shoppers who have a type of item in mind do not start at search I know the type of item I want 77% 23% I don't have a specific item in mind 69% 31% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other sites Search engine Source: Criteo Shopper Story, UK 2017 n=

16 Retail sites attract high intent shoppers Shoppers turn to retail sites when they are in market to buy. They typically know the item or type of product they want. Starting Points For Online Purchases (percent of total) A retail website Amazon.com Search engine A brand website Social media Fashion/lifestyle websites Source: Criteo Shopper Story, UK 2017 n= I don't have a specific item in mind I know the type of item I want I know the exact item 16

17 Retail websites are seen as increasing in influence even over search and social Resources More Or Less Influential In Purchase Process (percent of total) Retailer websites/apps Search engines Brand websites/apps Friends/word of mouth Social media from retailers/brands Retail stores TV advertising Online video advertising Online ad banners Magazine advertising Newspaper advertising 4% 6% 6% 6% 10% 13% 15% 16% 23% 18% 19% 20% 18% 22% 15% 24% 13% 27% 0% 10% 20% 30% 40% 50% 60% 33% 39% 38% 38% 45% 50% Less Influential More Influential Source: Criteo Shopper Story, UK 2017 n=

18 How ecommerce sites can improve conversion Percent of shoppers that say these website factors are very important. Free return shipping Appealing photos Discounts available 360 product images Reviews organized by relevance Online chat 18 Source: Criteo Shopper Story, UK 2017 n=1515

19 Digital vouchers are seen as most influential 7 in 10 are motivated by offers; 55% are motivated by discount codes through social media and half print out online vouchers yet most trade spend is still focused on in store tactics. Attitudes Towards Couponing (percent agree) discount codes/offers motivates me to make a purchase 70% I always take and use in-store coupons when they are available I look through and sometimes save coupons that I receive in the mail I often search for coupons online before making an online purchase 65% 64% 64% Discount codes/coupons on social media site motivate me to make a purchase I clip coupons and use them in store I print out coupons from the internet and use them in store 50% 55% 53% Source: Criteo Shopper Story, UK 2017 n=1515 0% 10% 20% 30% 40% 50% 60% 70% 80% 19

20 How Do People Shop Online? The journey is increasingly complex 20 &

21 More than half the time, shoppers do not purchase from the first site All categories show a high level of cross shopping. Purchase From The First Website Visited (percent of time) I check out more than one website to see what they have, when I can get it, and what it costs. Health & Beauty FMCG 50% 56% Homewares 44% CE 44% Apparel 47% 0% 10% 20% 30% 40% 50% 60% Source: Criteo Shopper Story, UK 2017 n=

22 Selection and stock availability drive site abandonment Product availability is more important in FMCG and Health & Beauty. Why Browse Different Websites (percent of total) 45% 43% 40% 38% 35% 30% 34% 34% 33% 30% 30% 25% 20% 15% 10% 22% 21% 19% 14% 24% 20% 13% 17% 9% 8% 9% 8% 14% 10% 12% 9% 9% 7% 5% 0% I want a better selection The product I want is unavailable I want more product information I want to compare shipping options I want to read product reviews Source: Criteo Shopper Story, UK 2017 n=1515 Apparel CE Home Goods CPG Health & Beauty 22

23 Impulse purchases almost as prevalent online as in-store FMCG, Home Goods and Health & Beauty brands need to adopt ways of incenting impulse purchasing online in ways similar to what they do offline. Frequency Of Making Unplanned Purchases (percent of total) 100% 90% 80% 78% 77% 73% 87% 76% 70% 60% 55% 55% 57% 53% 62% 50% 40% 30% 20% 10% 0% Apparel Consumer Electronics Home Goods FMCG Health & Beauty Source: Criteo Shopper Story, UK 2017 n=1515 Sometimes/frequently Online Sometimes/frequently Offline 23

24 Nearly 2/3 of omnishoppers belong to loyalty programmes Loyalty programs are an important step to enacting shopper marketing across channels. Are You a Member of Loyalty Programs (percent of total) 100% 90% 80% 70% 44% 61% 17% 28% 29% 60% 50% 40% 23% 45% 30% 20% 10% 33% 19% 20% 55% 27% 0% Apparel CE FMCG Health & Beauty Source: Criteo Shopper Story, UK 2017 n = 1515 Yes, multiple retailers Yes, at one retailer No 24

25 What Do Shoppers Think About Advertising Relevance and Data Usage? Awareness is high: Omnishoppers demand respect and relevance 25

26 Shoppers recognise retargeting and understand the value Attitudes Toward Retargeting Ads (percent of total) I like it when I see ads for things I was shopping for yesterday. A deal can make me buy now. I like receiving them if I can get better discounts 37% I like receiving them as reminders about products I am considering 21% I don't mind them if they are on the same device that I used for my initial search 8% It encourages me to go to a store to find out more about the product 3% 0% 5% 10% 15% 20% 25% 30% 35% 40% Source: Criteo Shopper Story, UK 2017 n =

27 Omnishoppers want control, consent and transparency Data may be the way to drive ultimate relevance for omnishoppers, but publishers and retailers need to tread with caution and full disclosure. Attitudes Toward Publishers & Retailers Using Browsing Data (percent of total) I am concerned about these companies selling my personal data without my consent I feel that using my personal data invades my privacy I understand that my data is shared with advertisers and I'm OK with that I am interested in learning more about how they are using my data I am OK with them using my personal data because I get a valuable service in exchange 17% 18% 17% 35% 42% I am not concerned because I am in control over how my personal data is being used 13% I don't believe that publishers are using my internet activity data 3% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Source: Criteo Shopper Story, UK 2017 n =

28 Use data well but don t abuse the privilege Brands and retailers need to gain the broadest possible view of the shopper so that they receive the most timely, relevant offers and think about long term loyalty versus short term gains. Attitudes Towards Online And Offline Advertising (percent of total) 1/3 I am annoyed by offers for products I have already purchased 36% are annoyed by improper data use I feel advertisers care more about my money than my longterm loyalty Ads typically don't generate negative feelings for me 22% 31% I feel I am disrespected by the advertisers 19% I feel advertisers ignore my personal preferences 17% I am sometimes embarrassed by inappropriate ads 17% Source: Criteo Shopper Story, UK 2017 n = % 5% 10% 15% 20% 25% 30% 35% 40% 28

29 Takeaways for reaching the empowered UK Omnishopper The omnishopping mandate eliminates silos With the prevalence of omnishopping, marketers need to market to the shopper not the device or channel. Retail sites drive awareness and point of sale purchase Brands need to consider digital across the full funnel to ensure that they are capturing shoppers where decisions are increasingly made. Retail sites reach shoppers in buying mode Amazon does not dominate the omnishopper journey. Retail sites, building on long-time offline relationships, are a way to reach highest intent omnishoppers. 29

30 Takeaways for reaching the empowered UK Omnishopper It s an ecosystem Omnishopper journeys include multiple sites and sessions. A networked approach to commerce marketing enables brands to reach valuable consumers across every channel and device. Relevance drives impulse With impulse purchasing almost as prevalent online as in-store, brands and retailers need to use data to present the most relevant and complementary products to encourage click to cart. Respect the shopper Omnishopper data usage is a privilege advertising timeliness and relevance is the demand. Marketers who respect the shopper earn long time loyalty. 30

31 About Criteo Criteo (NASDAQ: CRTO), the leader in commerce marketing, is building the highest performing and open Commerce Marketing Ecosystem to drive profits and sales for retailers and brands. 2,700 Criteo team members partner with 16,000 customers and thousands of publishers across the globe to deliver performance at scale by connecting shoppers to the things they need and love. Designed for commerce, Criteo Commerce Marketing Ecosystem sees over $550 billion in annual commerce sales data. Contact: 31