Multi-channel Retailing - UK - October 2007

SUMMARY

Abstract

TABLE OF CONTENTS

Table of Contents

• Issues in the Market
• Main issues and themes
• Definition
• Retail Sales data
• Abbreviations
• Insights and Opportunities
• Exploiting the popularity of catalogues
• Leisure-oriented multichannel shoppers
• Closer integration of channels
• Convenience is king online as well as in-store
• It pays more than ever to shop around
• TV shopping sneaking through on the rails
• Market in Brief
• The impetus for multichannel driven by growth opportunities
• More people are online and broadband access facilitates usability
• Consumers want it
• Retailers have increasing confidence to invest in online business development
• Multichannel -- the synthesis of mail order and online technology
• Everybody uses shops but home shopping is also an important element
• Multichannel behaviour is becoming popular
• Solus channel use widespread
• Relatively few solely use online
• Multichannel shoppers are prime retail targets
• Multichannel shoppers attracted by flexible shopping options
• Give customers more options
• More people use catalogues in the selection and ordering process than use online
• Convenience and functionality are online's most attractive features
• Personal contact is currently an important feature of home shopping
• Many people, including those with access, remain distrustful of the online world
• Store offer has to adapt to changing shopping patterns
• Multichannel shopping behaviour contributing to increased competition
• Store offer to complement multichannel offer
• Stores to engage and excite as well as provide order fulfilment
• Multichannel businesses may not need so many stores in future
• Multichannel strategies doing well for leading retailers
• Usage rates show encouraging signs of take-up
• Online growing strongly at Argos
• Next has highest non-store contribution
• Tesco has high expectations of its non-store business
• Leveraging the power of high street brands online
• Usage patterns indicate receptivity to new channels
• Fast Forward Trends
• Trend 1: I want it all and I want it now
• Definition
• What next?
• Trend 2: Help, I need somebody
• Definition
• What next?
• Trend 3: Electric: Cool Vending
• Definition
• What next?
• Internal Market Environment
• Key points
• Broadband Internet access facilitating better usability
• Apparently insatiable desire for new technology
• Willingness of consumers to shop remotely even for comparison goods
  • Figure 1: Purchasing of clothing and electricals from websites in the last three months, 2002-07
• Increasing confidence to invest in online business development
• Fear of card fraud is a barrier to use
• Faster download speeds altering the market for music
  • Figure 2: Downloading of music and video files via home Internet connection, 2003-07
• Potential of home networking yet to be delivered
• Potential loss of control over promotional offers
• Increasing need for retailers to be cyber-savvy
• Green credentials being played but strength of some claims is tenuous
• Broader Market Environment
• Key points
• Falling cost and increased attractiveness of broadband
• Internet penetration high but levelling off
  • Figure 3: British Internet penetration at home/work/place of study or elsewhere, 2002-07
• Digital TV take-up increasing as analogue switch-off draws nearer
• Economy strong and unemployment trends positive
  • Figure 4: Trends in PDI and consumer expenditure, 2002-12
• Higher interest rates will deter spending
• Ageing population will stimulate demand for home shopping
  • Figure 5: Trends in UK population, by age, 2002-12
• Strengths and Weaknesses in the Market
• Strengths
• More people are online and broadband access facilitates usability
• Apparently insatiable desire for new technology
• Willingness of consumers to shop remotely even for comparison goods
• Increasing confidence to invest in online business development
• Multichannel delivers incremental business to strong brands
• Weaknesses
• Multichannel shopping behaviour contributing to increased competition
• Multichannel businesses may not need so many stores in future
• Many people remain distrustful of the online world
• Increasing need for retailers to be cyber-savvy
• Who's Innovating?
• Network connections
• User-generated content
• Film downloads to alter market for DVDs?
• Mobile connections
• Increased payment security
• More secure alternative to payment cards
• Getting it right first time
• Dell to open branded retail outlets
• The Multichannel Shopper
• Key points
• Store-based retailers need a multichannel presence
• Almost three quarters use at least one form of home shopping
• Use of catalogues features prominently
• Online usage gaining ground
• TV also gaining ground
  • Figure 6: Use of channels for selection and ordering, July 2007
• Multichannel repertoires of choosing and ordering from home
• Two-channel usage is the main pattern of multichannel behaviour
• Overlapping usage of online and catalogues
  • Figure 7: Combinations of channels used for selecting/choosing, by those using home shopping channels, July 2007
• The multichannel shopper
• Dual use of catalogues and online skewed to ABC1s
• Dual use of catalogues and TV skewed to C1C2s
• Three-channel usage led by ABs and those in families
  • Figure 8: Profile of combined channel users, by socio-economic group, July 2007
  • Figure 9: Profile of combined channel users, by lifestage, July 2007
• The Multichannel Shopper -- Detailed Consumer Demographics
  • Figure 10: Profile of those using combinations of channels, by gender, age, socio-economic group and lifestage, July 2007
• Channel Usage Behaviour
• Key points
• Websites important for ordering but catalogues influence selection
• Catalogues widely used for selection
• Phones more widely used for ordering than online
• TV shopping slowly gaining new users
  • Figure 11: Use of channels, July 2007
• Who uses which channels?
• Online user profile skewed to ABC1s
• Catalogue user profile shows bias to ABC1s
• TV shopping skewed to C1s and less affluent
  • Figure 12: Profile of channel usage, by socio-economic group, July 2007
• Pre-/no family and family groups dominate use of online
• Families have prominence as multichannel shoppers
• TV user profile biased to third agers
  • Figure 13: Profile of channel usage, by lifestage, July 2007
• Catalogues an important element of multichannel retailing
• Importance of catalogues to store-based retailers
  • Figure 14: Use of catalogues, July 2007
• Traditional ordering methods remain popular
• Store-based retailers' catalogues influence pre-shopping trip selections
• Catalogues contribute to Web-based sales
• Catalogue users
• Traditional ordering methods preferred by ABC1 users
• Human contact remains a key factor
• Silver surfers still using phones
• ABC1 families leading the shift to online ordering
• ABC1 families also likely to use catalogues to aid store purchasing
• ABC1 catalogue users ordering online and by phone
  • Figure 15: Ordering methods of those choosing goods from printed catalogues, by Mintel's Special Groups, July 2007
• Websites popular for both choosing and ordering goods
• Informing as important as selling
• Far from all Internet users have turned on to online shopping
  • Figure 16: Use of websites, July 2007
• Websites are service as well as sales points
• Easy ordering features
• Lack of trust in website security
• Websites influence store purchasing
• Website usage in conjunction with other channels
• Multichannel behaviour most popular among ABs
• ABC1 pre-/no family and family adults lead the way in multichannel behaviour
• Phone ordering important to website users
• ABC1 families strongly store-oriented
• ABC1 website shoppers using phone ordering facility
  • Figure 17: Ordering methods of those choosing goods from websites, by Mintel's Special Groups, July 2007
• TV shopping companies mainly reliant on core customers
• Phone ordering dominates usage
  • Figure 18: Use of TV shopping channels, July 2007
• Use of TV shopping broad-based
• ABC1 third agers have highest usage penetration
• Channel Usage Behaviour -- Detailed Consumer Demographics
  • Figure 19: Use of channels, July 2007
  • Figure 20: Use of channels, netted responses, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 21: Profile of users of three main home shopping channels, by gender, age, socio-economic group and lifestage, July 2007
  • Figure 22: Use of catalogues, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 23: Use of online, netted responses, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 24: Use of websites, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 25: Use of TV shopping, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
• Use of Multichannel Retailers
• Key points
• Usage of store-based retailers' websites
• Argos leading in channel diversity
• Next website complementing its Directory
• Dual-channel strategy working well for John Lewis and HMV
• Electrical goods retailers failing to generate website traffic
• Supermarkets have highest usage but clothing and department stores close behind
• Usage of all categories skewed to ABC1s
  • Figure 26: Use of named retailers, by stores and websites, July 2007
• Usage of store-based retailers' catalogues
• Argos and Next dominate
• Tesco Direct gaining ground
• Minimal usage of The Big Red Book requires further investment by Woolworths
  • Figure 27: Use of named retailers, by stores and catalogues, July 2007
• Usage of online specialists and TV shopping channels
• Use of store-based retailers' websites comparable to usage of online specialists
• Multichannel reach among traditional mail order and TV shopping channels
  • Figure 28: Use of websites, catalogues and TV channels, July 2007
• Multichannel offer helps attract ABC1s to Argos
• Tesco Direct scoring strongly with AB shoppers
• Next website attracting broad base of users
• Online specialists usage biased to men and those in more affluent groups
• Littlewoods catalogue users biased to women and those in less affluent groups
• Online shopping repertoires
• Online repertoires can be narrow
• Strong site loyalty or fear of the unknown?
• Raising brand awareness
  • Figure 29: Use of named websites, July 2007
• Use of Multichannel Retailers -- Detailed Consumer Demographics
  • Figure 30: Use of Argos, by stores, websites and catalogues, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 31: Use of Tesco, by stores, websites, and catalogues, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 32: Use of Next, by stores, websites, and catalogues, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 33: Use of Amazon and eBay websites and Littlewoods catalogues, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 34: Usage of named websites, by type, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, working status, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 35: Usage of any named mail order catalogues and TV shopping channels, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, working status, region, ACORN categories, media usage and supermarket usage, July 2007
• Perceptions of Online Shopping
• Key points
• Convenience of over-riding interest to users
• Easy order facility attractive to convenience-minded users
• Price-comparison functionality a key attribute
• Time-saving appeal should be stronger
• Fear of fraud continues to feature in user thinking
• Lack of personal contact the highest-rated negative factor after fear of fraud
• Going the extra mile
• Issues with fulfilment generally a minor concern
  • Figure 36: Perceptions of online shopping, July 2007
• ABC1s looking for convenience in ordering and delivery
• Canny ABC1 third age shoppers using online to check out prices
• Fear of fraud widespread
• Silver surfers find it frustrating
• Perceptions of Online Shopping -- Detailed Consumer Demographics
  • Figure 37: Perceptions of online shopping, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 38: Perceptions of online shopping, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
• Attitudes Towards Shopping
• Key points
• Social attributes to sustain store-based shopping
• Touchy-feely sentiment a powerful motive for store shopping
• Social interaction with staff another key element of the purchasing process
• Lower prices a key draw of online
• Price-comparison sites a key entry point
• Known retail brand names have an advantage over lesser-known sites
• Online loyalty very strong
  • Figure 39: Attitudes towards shopping, July 2007
• Older affluent shoppers tend to favour physical experience of shopping
• Converts to online driven by low prices
• Online users highly loyal
• Reassurance required to attract first-time users
• Attitudes Towards Shopping -- Detailed Consumer Demographics
  • Figure 40: Attitudes towards shopping, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
  • Figure 41: Attitudes towards shopping, by gender, age, socio-economic group, lifestage, presence of children, Mintel's Special Groups, region, ACORN categories, media usage and supermarket usage, July 2007
• Retailer Profiles
• Food and drink retailers
• Tesco
• Sainsbury's
• Asda
• Other food and drink retailers
• Morrisons
• Waitrose and Ocado -- see John Lewis
• Majestic Wine
• Thornton's
• Mixed goods and department stores
• Home Retail Group, trading as Argos and Homebase
• John Lewis Partnership
• Woolworths
• Boots
• Other mixed goods and department stores
• House of Fraser
• Mothercare
• Clothing and footwear
• Next
• Marks & Spencer
• Other clothing and footwear retailers
• Debenhams
• Arcadia
• New Look
• Household and DIY goods
• DSGi trading as Currys/Currys.digital/PC World/Dixons/Pixmania
• Comet
• B&Q
• Other households goods retailers
• IKEA
• Dreams
• Books, music and entertainment retailers
• HMV
• Other books, music and entertainment retailers
• WH Smith
• Virgin Megastores
• Jessops
• Health and Beauty
• Toys
• Sports goods
• Jewellers
• Online specialists
• Amazon
• eBay
• Ebuyer
• Empire Direct
• ASOS
• Other online specialists
• Play.com
• Net-a-porter
• iTunes
• Catalogue-based home shopping companies
• Littlewoods Shop Direct including Great Universal
• N Brown
• Otto -- Freemans/Grattan
• Redcats Brands including Empire
• Other catalogue-based home shopping companies
• Findel
• TV shopping companies
• QVC
• Sit-up
• Other TV shopping companies
• Ideal Shopping Direct