PwC’s Global Total Retail Survey

PwC’s Global Total Retail Survey reveals the need
for a unified, always-on consumer experience
February 2014

Achieving Total Retail
Consumer expectations driving
the next retail business model

www.pwc.ru/totalretail
#TotalRetail

Contents

Introduction 2

Executive summary

4

Eight customer expectations

12

A compelling brand story that promises a distinctive experience

13

Customized offers based on totally protected, personal
preferences and information

18

An enhanced and consistent experience across all devices

22

Transparency, real time, into a retailer’s inventory

26

Favorite retailers are everywhere

30

To maximize the value of mobile shopping, both store apps
and mobile sites must improve

34

Two-way social media engagement

38

“Brands” act like retailers, and we’ll treat them that way

42

Final thoughts on the next retail business model

46

Survey methodology

48

Contacts in Russia

49

Introduction
Internet and e-commerce are having
a large and lasting impact on retail
globally, disrupting the traditional way
of conducting retail business. This
trend is creating opportunities for new
entrants while demanding that
incumbent retailers adapt quickly –
or perish. Globally, this is one of the
key topics on the agenda of our retail
clients. That’s why my colleague John
Maxwell, PwC’s Global Retail &
Consumer Practice Leader, and his
team have launched this survey and
have been publishing the results on an
annual basis.
In Russia e-commerce is also growing
rapidly; we have participated in the
PwC Global Multichannel Survey for
the second year in a row. Our work with
retail clients shows that multichannel
shopping has become a part of everyday
life here. Not surprisingly, the survey
results confirm this. Among the 1,074
Internet users in Russia we interviewed,
1,006 have already made an online
purchase, with around 600 doing so at
least monthly. And, Russia’s Internet
users are not some obscure group of
tech-savvy young people, as may have
been the case just a few years ago.
The Internet has established itself as
an essential part of life in Russia. In
2013, for the first time more than half
of Russian households had broadband
Internet access. Penetration is projected
to grow further to 68% by 2017,
reaching 38 million households,
providing a solid basis for the further
spread of e-commerce.
But, what will probably have an even
greater impact on the lives of Russians
in the next couple of years is the rapid
spread of mobile Internet. Currently,
61 million people in Russia have mobile
Internet, which is 43% of population.
However, penetration is projected to
explode in the next several years to
reach 100 million users by 2017, or
70% of the total population. At that
point, mobile Internet penetration will
have exceeded fixed broadband
Internet penetration. Already in 2013,
over 40% of respondents reported using
their mobile devices for shopping; with
penetration growing at this speed, the
potential for mobile shopping is
immense.

2

PwC

Also of great interest are projections
that by 2016 Russian mobile Internet
penetration will have nearly caught up
with that of Great Britain (the gap is
forecast to shrink from 20 pp in 2013
to 2 pp in 2016). This will have an
enormous effect on e-commerce, which
currently in Russia still has a lower
impact on retailers’ sales compared to
some developed markets. Sales through
online channels account for around 3%
of total retail sales, while in the UK this
figure is around 12% already. Given the
rising penetration of Internet access and
the ever greater popularity and
convenience of shopping via mobile
devices, we can confidently predict that
the share of e-commerce in Russia will
swiftly move towards parity with
today’s UK figures.
Total Retail – a winning concept
for Russia as well
Quadrupling the share of e-commerce
in retail will have a disruptive effect on
the retail sector in Russia. In fact, this
process has already begun. Naturally,
the effect will vary among categories,
with consumer electronics, home
appliances and media content being the
most affected, and grocery the least.
But, even in the grocery category,
around 30% of Internet users prefer to
research products online. This means
that no retailer can afford to neglect the
relevance of interacting with its
customers through multiple channels
and, thus, must provide for a seamless
transition among them. At PwC, this is
what we call the Total Retail concept.
In working with clients and analysing
the Russian retail industry, we are
constantly observing trends that are
very much in line with the conclusions
of our study. For example, those
companies that have embraced the
Total Retail approach, with full
connections between channels, tend not
only to perform better in terms of
online sales but also in overall sales and
customer satisfaction. And, customer
satisfaction is a critical asset nowadays,
as the competition is always just a few
clicks away. Our survey shows that, in
spite of a growing number of shopping
options, Russian consumers tend to
shop with fewer and fewer different
retailers. Although there are differences

among regions, the key message is
clear: Once customers get over the
initial thrill of experimenting with
a wide range of different retailers,
driven by the diverse shopping options
available, most tend to favour a few
chosen retailers, which they have
grown to trust.
Our clients also tell us – and again the
survey confirms this message – that
online shopping does not necessarily
undermine the role physical stores play.
Eighty percent of Internet users still
visit a store at least monthly, meaning
that multichannel players have a
significant advantage over pure players.
And, it’s not just the technical aspects of
online shopping that drive people to
stores. The ability to touch and try out
products, as well as a consumer
preference for the in-store shopping
experience, are by far the most popular
reasons our respondents cited when
asked why they don’t shop online, while
reasons linked to payment methods and
security are decreasing in importance.
To embrace Total Retail, retailers will
need to offer more services like “click
and collect”, which is a typical example
of how the use of more channels can
provide a superior customer experience.
It’s not surprising that growth in this
service is surpassing home delivery
service in a number of markets. Our
survey shows that Internet users find
the option of picking up ordered goods
at a convenient location to be one of the
most important delivery features
(second only to free delivery). This
means that retailers can extend the
reach of their entire assortment to every
store, as any item they hold in the
warehouse can be delivered to any store
after it has been ordered. We can also
expect further collaboration between
online retailers seeking to expand their
reach and other businesses with
available space in a convenient location,
be it a local convenience store, gas
station, metro or bus station, or
something else. Such cooperation may
take the form of either a staffed pick-up
point or just operating an automated
pick-up machine. This also addresses an
issue that is quite relevant for Russian
shoppers regarding delivery: the ability
to pick up a product at any time that is
convenient for them.

Another way for traditional retailers to
leverage their stores is to use in-store
technology. A large majority of Russian
shoppers believe this can improve their
shopping experience. Interestingly, the
top-ranked in-store technologies are
those that embrace multichannel
shopping, featuring the ability to check
online (or another store) and stock
quickly, as well as in-store Wi-Fi with
easy login (enabling price comparison,
research, and peer-to-peer
communications). Forward-looking
retailers can differentiate themselves in
this area while at the same time
embracing the Total Retail concept.
Social media is an increasingly relevant
aspect of the new shopping experience.
Social media sites are very relevant in
Russia, not just for brand-building
purposes but all throughout the
customer purchase journey, including
the actual purchase. Fashion is the most
affected category in this regard, giving
fashion brands an enormous
opportunity to steer customer journeys
to their favour. What is especially
fascinating is the increase in social
media use for purchases – the
percentage of respondents who bought
products over social media more than
doubled in 2013 versus 2012 (up to
48%) while the share of those who
commented on their experience with a
product rose from 31% to 56%.

E-commerce also brings
challenges
Clearly, e-commerce is bringing not
only benefits to retailers, but challenges
as well. One of these is new
competition. Not only can other
retailers more easily expand to new
geographic areas and/or new
categories, but the Internet also lets
manufacturers sell directly to
consumers. The direct-to-consumer
approach is spreading rapidly in Russia
(in 2012 only 30% of respondents
bought directly from brands, whereas
in 2013 this figure had grown to 78%).
This rapid development has likely been
accelerated by the opening of branded
web-stores by such category leaders as
Zara in fashion and Apple in electronics.
For retailers, this presents a very
profound challenge: to offer a raison
d’être that will attract customers.
After all, if manufacturers can deliver
goods directly to end-consumers, then

why are retailers still necessary? The
answers will probably lie in exclusive
product offerings (private label or
designated production, such as in
fashion retail), impartial advice, and
the convenience of “one-stop” shopping,
among other things.

fulfilment method (e.g. from a near-by
store, from a distribution centre) and
delivery terms offered (time and price),
using various input data, such as past
user behaviour, cost of various options,
the current location of an ordered item,
and others.

Another issue is maintaining the
profitability of physical stores even as
more and more revenue is migrating
online. Operating physical stores offers
several benefits, but also carries the
burden of various costs, for labour, rent,
equipment, etc. To a large extent, such
costs are fixed and the more revenue
migrates online, the higher share such
costs represent in a typical retailer’s
revenue. Adding to this, price
transparency forces retailers to match
their off-line prices with online prices,
but margins online tend to be
significantly lower. So, not only do
retailers see lower revenues per square
metre because of growing online sales,
but they also earn less for each unit of
this revenue because of thinner
margins. Clearly, this is not an ideal
situation, but finding a solution will
mean that retailers must first define
the problem correctly. This begins with
adjusting the KPIs they use to assess
their stores’ performance. Measuring
performance separately, a store’s KPIs
might deteriorate, but it is crucial to
understand how much the specific store
contributes to online sales (through
customer service, store pick-up, etc.).
This is one of the key questions we are
helping our clients address, not only in
Russia but in more mature e-commerce
markets such as Great Britain and the
United States as well.

Another area where we advise retailers is
how to optimise their value proposition
by analysing the key decision points in
the customer funnel and comparing
their performance to best practice. The
most critical areas here concern website
functionality, stock availability and
delivery options (as well as price, of
course). Another challenge is coordinating communications within a
retailer’s corporate structure across all
communications media. In today’s
environment of radical transparency, it
is crucial for companies to be consistent
in how they communicate. This means
that a shop assistant in a store, an agent
in a call centre, and a social media
specialist should all answer the client in
a co-ordinated manner, which in our
experience is quite a rare achievement in
Russian retail.

Retailers are also struggling with
inventory management. The idea of
customers being able to order goods
anytime from anywhere is, of course,
appealing, but when customers expect
their purchases to be delivered the next
day at a specific time, and preferably
free of charge, the company’s backoffice systems must spring into action
quickly. We have worked with several
retailers worldwide, helping them to
address this issue by first configuring
the supply chain network to support
such delivery fulfilment, and then
using advanced methods to allocate
inventory based on projected demand.
Then, a decision must be made
concerning the most appropriate

In conclusion, the rapid growth of
Internet penetration and e-commerce
in Russia clearly presents a wealth of
opportunities for retailers. But, it also
brings some challenges, which retailers
must learn to manage. The first steps
in making the most out of this trend are
to understand customer behaviour
and learn from international and local
developments. I am confident that
research studies such as the PwC
Multichannel Survey can significantly
contribute to this process. I hope you
enjoy this publication and would be
happy to receive your questions or
comments.

Martijn Peeters

Martijn Peeters
Partner, Consulting, Retail
and Consumer products
martijn.peeters@ru.pwc.com
#TotalRetail The next retail business model

3

Executive summary

It’s a high bar
our survey participants
have set for retailers: compelling in-store
technology, an “always-on” 24/7 service
mentality, real-time insight into product availability at individual stores, and consistent prices
and offerings across a retailer’s assets. Within our
data we’ve unearthed eight expectations, which
you’ll find featured throughout this report,
along with their implications for the
next retail business model.

One unified
experience
4

PwC

5 continents, 15 territories, 15,000 online shoppers surveyed

Russia

Netherlands
Canada

UK

Germany
Switzerland

France

US

Turkey
Italy
Middle East

China and Hong Kong

India

Brazil

South Africa

A

s a student of history and
economics, I love to read
about the past with a view to
understand where the world is headed.
While no one has a crystal ball, understanding prior geopolitical, consumer
and economic developments helps us
to consider the probabilities of what is
most likely to happen in the future.
Whether I’m reading G-Zero, by Ian
Bremmer or The Age of the Unthinkable
by Joshua Cooper Ramo, the last thing on
my mind is how I actually purchased the
book. Maybe I was shopping in a physical
bookstore or maybe I made an online
impulse buy after reading a review. But,
as a book consumer, I’m not adjusting my
desires based on these two very different
shopping “channels.” I just want to find
a good book with a minimum of effort.

Maybe I’m in a hurry; can I complete
the transaction quickly? Can I find the
book I’m looking for? Is it a pleasant
interaction?
The key question is: Do I want to repeat
this particular shopping experience?

Today’s consumers
now view multichannel
shopping as a given.

It turns out that my desire for a seamess
l
customer experience is very similar to
other consumers around the world. This
report, our seventh in a series, is based
on our 2013 survey of more than 15,000
online shoppers in 15 different territories.
In it, we report that today’s consumers
now view multichannel shopping as
a given. Convenient physical stores, a
website capable of handling purchases,
a mobile site or app—these capabilities
are simply the price of admission for a
healthy relationship with a consumer.


5

It’s a high bar our survey participants
have set for retailers: compelling in-store
technology, an “always-on” 24/7 service
mentality, real-time insight into product
availability at individual stores, and
consistent prices and offerings across a
retailer’s assets. Within our data we’ve
unearthed eight expectations, which
you’ll find featured throughout this
report, along with their implications for
the next retail business model.

The legacy of multichannel
It is still very much in vogue among
retailers to celebrate shopping channels, as if the physical store and the
different devices through which online
sales are conducted—the laptop, tablet,
or smartphone—are standalone pipelines to the consumer.

Figure 1: A greater focus on the consumer and integrated, customer-focused technology
transforms the “channel” experience into a Total Retail experience

Connected
experience

Total Retail

2000s–
present

Omnichannel

More
channels

Product centric

Customer centric

Dot.com
Pre1990s

Brick &
mortar

1990s
–2000s

One-way
experience

6

PwC

50%+ increase in
weekly online shoppers
from 2012 to 2013
Source: PwC Global Total Retail Survey 2013

In many ways this fidelity to the channel
is understandable. The phrases “multichannel” and “omnichannel” have been
useful for retailers as a framework
to think about the different avenues
afforded by e-commerce and as a road
map for how to shore up their functionality. It makes sense that retailers
initially responded to the challenges
of digital commerce by attempting to
manage on a multichannel basis in the
back office. But the result today is an
expensive channel-focused model that
involves multiple marketing, merchandising, and supply chain teams; needlessly complex, individually broken-out
profit and loss statements; and even
different accounting methods based on
the channel from which sales originate.
Similarly, at the customer-facing end of
things, barriers have hardened among
sales channels. Trade promotions are
inconsistent across channels, products
are unavailable in-store because units
already were sent from distribution
centers to fulfill web orders, customer
loyalty information is haphazardly
applied across channels, and even basic
customer payment information has to
be re-typed again and again. The costs
and complexities of continuing on this
path are too great and offer too few
rewards for the customer experience.
It’s a faulty formula doomed to failure.

Thinking beyond channels
to Total Retail
Contrast this state of affairs with the
mindset of the digitally empowered
consumer as shown in Figure 2 on
the following page. Today’s non-stop

The costs and complexities of managing on a
multichannel basis are too
great and offer too few
rewards for the customer
experience.
customers have taken things into
their own hands and become more
tech-savvy than retailers. Customers
have embraced show-rooming, learned
how to exploit their own shopping data
for deals, and become experts at taking
advantage of online coupons and offers.
Consumers have the tools, literally at
their fingertips, to immerse themselves
in a retailer’s brand but also to skewer
that brand on blogs or social media
if the brand promise is broken, the
shopping experience disappoints, or a
purchase costs more than expected. In
this year’s survey, for example, 55% of
our global sample provided positive or
negative comments about their experiences with a product or brand on social
media. In other words, if customers feel
strongly enough about a brand, expect
them to spread the word.
To respond, retailers need to embrace
what we at PwC are calling Total
Retail. Total Retail means two things:
a unified brand story across all channels that promises a consistently
superior customer experience and an
integrated back-office operating model


7

with agile and innovative technology.
While retailers are fond of saying that
customers are educated and empowered
as never before, Total Retail entails
doing something about it by focusing the
retail business model on the customer.

In our experience, single-point solutions
for each separate channel are not nearly
enough. What’s needed is a Total Retail
business model transformation that
incorporates supply chain, marketing
and sales, and finance.

Figure 2: Digitally empowered consumers embracing social media to connect with brands
Q: Which of the following have you done using social media?

59%

58%

Followed favorite
brands or retailers

Discovered
brands

41%

52%

Interacted with
favorite brands

42%

59%

Researched
a brand

Base: 15,080

8

PwC

Yes

No

48%

41%

55%

Provided
positive or negative
comments about
experience

45%

48%

Bought
products

52%

Great expectations
The customer expectations we feature
in this report all have specific business
model ramifications for retailers. In this
year’s data, for example, we’ve noted
fairly strong growth in the number of
survey respondents who used tablets
and smartphones for shopping.
In this year’s research, 41% of global
shoppers who took the survey bought
products through tablets, compared
with 28% in 2012, and 43% of our
respondents purchased products
through smartphones, compared with
30% in 2012. One could reasonably
surmise that one of the customer expectations being expressed, then, is for an
enhanced and personalized experience
across devices. Online shoppers will
expect that product promotions, offers,
and other communications will be
available in the store and also work on
every kind of mobile device, from the
smartphone to the tablet to whatever
wearable technology becomes popular
in a few years.
A total retailer will have prepared for
this customer expectation by embedding digital marketing materials with
the appropriate formatting necessary
to be readable on all of these devices.
Sound easy? When we asked our global
survey respondents why they don’t
use their mobile phone for shopping,
more than 40% said the screen is
too small, illustrating the difficulties
in designing shopping features that
work intuitively on such a device. It’s
a good bet that many retailers don’t
have the technology processes or
in-house skills to design an elegant

Our eight consumer expectations
A compelling brand story that
promises a distinctive experience


Customized offers based on
totally protected, personal
preferences and information

To maximize the value of mobile
shopping, both store apps
and mobile sites must improve

An enhanced and consistent
experience across all devices

Two-way social media
engagement

Transparency, real time, into
a retailer’s inventory

“Brands” act like retailers,
and we’ll treat them that way

shopping architecture on a screen
that two out of five consumers believe
is too small to comfortably execute a
shopping transaction.
Another expectation we’ll examine in
this report is real-time transparency
into a store’s inventory. When we asked
which in-store technology our survey
participants most wanted, it was the
ability to transparently view—on their
own, without having to engage with
staff—a retailer’s stock to see where they
can get a particular product. Globally,
46% of our survey participants said that
they would like the capability to “check
other store or online stock quickly.” The
basic idea here is very simple, but the
inventory and operational ramifications
are enormous. Total customer visibility
into inventory means that whatever the
customer wants to buy, and however
that inquiry is made, retailers need
systems that talk to one another.


9

Figure 3: Building the next retail business model

1

3

Customer analytics
for easy, convenient,
personalized
transaction experiences

Supply chain
optimization
enabling transactions
anywhere

2

4

Integrated technology,
platforms, and systems
to provide seamless
transaction services to
anyone, anywhere

A customer-focused
organization, instead
of a channel-focused
organization

Building blocks for the next
retail business model
Retail CEOs know that action is needed.
According to PwC’s 17th Annual Global
CEO Survey, published in January 2014,
56% are planning aggressive action to
change their business model; but what
are the specific steps? The changes to the
retail business model that we highlight in
this report can add up to very significant
changes in how retailers operate. In fact,
the CEO Survey also finds that 53% of
retail CEOs have change programs under

10

PwC

way or planned for their organizational
design. In the area of organizational
change, the move away from a channel
focus to a customer focus can have huge
implications for the retailer C-suite and
how those executives interact with the
business units within a retail organization. As our firm works with retail clients,
for example, we see an increasing need
for a chief customer officer who “owns”
the customer experience and what we
call the “demand chain” part of the business, such as marketing, social media
or customer service centers. Another

welcome addition to many retail management teams would be a head of sales
responsible for all sales revenues, regardless of channel.
Also included in this report are profound
technology implications for the retail
business model. First and foremost is
that IT’s main purpose must evolve
from enabling operational efficiency to
driving a superior customer experience.
Second and closely related is how IT
generally is regarded by many: as a cost
center rather than as a strategic enabler.
In a recent survey of retail executives,
for example, 45% of CIOs report to the
CFO or the COO, whereas 65% of CMOs
report to the CEO or board.1
Integrated technology platforms, as
well as organizational change, are two
of the four business model building
blocks that lay the foundation for many
of the more specific business model
adaptions we talk about in this paper.
The other two are supply chain optimization (which probably comes as no
surprise) and customer analytics, which
is crucial for many of the business
model changes that relate to the new
power of the consumer.

with consumers outside the store or
factory walls; the analytic tools that
can help make sense of point-of-sale
and other proprietary data; a supply
chain rooted not in cost efficiency but
in getting customers what they want,
where and when they want it; and
the change management needed to
align the organization around its new
customer centricity.

The Total Retail
business model marries
a consistently superior
customer experience to
a back office with agile
and innovative technology.

With these building blocks and the
many retail business model implications we feature in this report, PwC is
hoping to offer a fresh perspective on
the store of the future. Within a few
years, we think the retail sector will
be talking a lot more about how retail
business models need to adapt. The
goal of this paper is to help companies
have that conversation today.
Thanks for reading, and I hope you find
this report helpful.

John G. Maxwell
Global Retail and Consumer Leader

If retailers can refocus on customer
expectations as the foundation of their
business model, the building blocks
they need will flow from there: the
technology needed to share customer
data across channels and engage

1

“The New Cost Structure of Retail IT,”
Q4 2013, EKN.


11

Eight customer expectations

Why have we linked consumer
expectations with the retail business
model? For too long, the customer has been
of interest mainly to the sales department or
to market research. But today, consumers
empowered bytechnology have enormous
expectations that raise the bar for every part
of a retail organization.

O

ur survey shows that
consumers have become
agnostic about channel and
want a unified customer experience:
consistent promotions across channels,
loyalty programs recognized in-store

12

PwC

and online, price consistency, and
stored personal credit card and other
ID information to speed transactions.
We’ve looked at our survey findings
and grouped them into eight overall
customer expectations.

A compelling brand story that promises
a distinctive experience

A compelling brand narrative can be as much a contributor
to retail success as the customer experience itself.

Several different data points from our
survey suggest that global consumers
are hungry for reasons to stay with a
particular retailer or set of retailers.
And while it wasn’t our intention at the
outset of our survey to measure online
shoppers’ reactions to certain brands,
it appears as if a compelling brand
itself—outside of the actual shopping
experience—can exert a strong pull on
consumers.

The consolidation trend
presents an opportunity
First, let’s talk about the enormous
opportunity for retailers that can
connect emotionally to consumers.
Our data show that a clear consumer
motivation exists to embrace a select
group of favorite “go-to” retailers.
Global shoppers, according to our
survey, are shrinking their shopping
footprint to just a few retail brands.
When we asked survey participants
to choose the number of retailers they
shopped with over the previous
12 months, from a list of 30 well-known
domestic retailers from their country,
15% of our global sample responded
that they shopped with just one
retailer, an increase of 7% from 2012.
That same trend held in the “2 to 5”
favorite retailer range, as 43% selected
this choice as representing the number
of retailers they shopped with in the
previous year.

Figure 4: Number of retailers shopped with over the last 12 months
Q: Have you shopped with any of the following retailers over the last 12 months
through any channel?

Only 1 retailer

8%

15%

2 to 5

35%
27%

6 to 10

14%

11 to 20

21+
0%

43%

35%

21%

1%
1%
5%
2013

10%

15%

20%

25%

30%

35%

40%

45%

2012

Note: Information was calculated from specified lists of specific country retailers and excluded online-only retailers.
Base: 15,080 (2013); 11,067 (2012)
Source: Global PwC Total Retail Survey 2013

On the other hand, the percentage
of survey participants who said they
shopped with 6 to 10 retailers fell from
35% to 27%, and the percentage who
shopped at between 11 to 20 retailers
fell from 21% in 2012 to 14% in 2013.
Online shoppers in Hong Kong were
particularly conservative with the
number of retailers they shopped
with; in Hong Kong 88% of shoppers
patronized five or fewer retailers in the
previous 12 months.


13

Figure 5: Number of retailers used by multichannel shoppers
over the last 12 months
Q: Of the retailers where you shop, please specify if you have purchased
something from them in-store and/or online. Select all that apply.

1%
5%
Only 1 retailer

46%
48%

2 to 5
6 to 10
11 to 20
21+ (0%)

Note: We have defined a multichannel shopper as someone who purchases from at least two
of the following channels: physical store; online via tablet /PC or via mobile/smartphone.
Base: 4,869

Brand trust is the number
one factor consumers
give for shopping at their
favorite retailers.

When we looked at the data from
another point of view—the number of
retailers used by multichannel shoppers (these shoppers are defined as
those who purchase from at least two
of the following channels: physical
store, online via tablet/PC, or online
via mobile/smartphone)—46% of those
shoppers frequented just one retailer,
and 48% shopped with between 2 to
5 retailers. Just 5% said they used 6 to
10 retailers.
Whatever is behind this consolidation
trend, the new normal in retailing is
that shoppers are searching for reasons
to consistently visit a small number
of retailers. The question is, which
retailers will they choose and why?

The pull of a strong brand
Certainly price and product availability
are time-tested reasons for choosing a
store. “Inexpensive/reasonably priced”
is an option that 85% of our survey
respondents chose when we asked
why they shopped at their favorite
retailers. But a closer look reveals that
the number one reason people shop
at their favorite retailers is this one:

14

PwC

“I trust the brand,” with 86% of respondents concurring. In addition, 81%
said they liked the “store, its location
and staff”; 64% said they shopped at
favorite retailers because of “different,
interesting marketing that catches
my imagination;” and 50% shopped
at their favorite retailers because of
interesting things the company is doing
on social media. In other words, a high
percentage of our survey participants
were attracted to brands that tell a
story in an engaging manner.
Many retailers have excelled at establishing a very strong brand promise
that solidifies a core of loyal customers.
Nordstrom’s shopper-friendly brand,
famously highlighted in business author
Jim Collins’ Good to Great, is personified in its employees, all of whom carry
a business card and are trained for
just about any customer contingency.
Whether the brand promise is centered
on employees (Nordstrom), granular
knowledge and a willingness to go
the extra mile or other attributes like
community involvement or low price,
living up to that promise can make all
the difference with consumers.

Similar to the global
trend, Russian
consumers also
patronized fewer
retailers in 2013 compared to the year
before. But, this development does not
appear to be linear, as there are two
factors in play here, which work in
opposite directions. On the one hand,
there is more competition in large
cities, especially Moscow, giving
consumers a choice of several retailers
offering a good value proposition.
This is probably why the consolidation

of demand in Moscow (which is
comparable to the UK) did not change
much in 2013 compared to 2012.
The other factor is the maturity of
shoppers; once modern retail starts to
spread, they like to experiment and
try different retailers, as they enjoy
the shopping experience itself. In
developed retail markets, shoppers
prefer the convenience of finding
everything they need with minimal
effort and, thus, once they find
retailers that consistently deliver this,
they remain loyal.

In Moscow, retailers that
can provide a consistent
value proposition are
rewarded with a high
degree of customer loyalty,
while in regions the focus is
on winning new customers.

Figure 6: Similar to the global trend, Russian consumers patronized fewer retailers in 2013
Q: Have you shopped with any retailers over the last 12 months through any channel?
China

9%

Only
1 retailer

12%

26%

9%

3%
54%
52%

2 to 5

28%

7%
6%

21%
34%

0%
2%

1%
0%

1%
2%

10% 20% 30% 40% 50% 60%
2013

22%
32%

40%

7%
3%

0%

52%
53%

21%

16%

11 to 20

17%

38%

29%

6 to 10

21+

Russia

UK

0%

10%

20%

30%

40%

50%

0%

20%

40%

60%

2012


15

Looking at various Russian
regions, we can assume
that a number of regions
are still at the early stage
of this development trend, with little
consumer choice limiting the number
of retailers visited. As retailers begin
spreading and providing better value
propositions, however, shoppers start
experimenting and using more retailers
– a development similar to that seen in
China. Later, when shoppers
themselves mature, they start valuing
convenience more and again limit their
shopping to fewer retailers. These
factors also shape customer loyalty.
When asked what they would do if their
favourite retailer closed its local store,
over 60% of shoppers in Moscow and St
Petersburg responded that they would
look for the next closest store of the
same retailer, while in the Far East only
42% chose this response.

For Russian retailers, this means that
they need to adapt their approach to
regional development. In Moscow,
consistent delivery of a promised value
proposition is crucial to retaining
customers. Retailers who achieve this
are rewarded with customer loyalty
that is strong enough to prevent most
customers from shopping elsewhere
even if some of retail outlets get closed.
In the regions, however, we assume
that the high percentage of shoppers
patronizing only a few retailers is
grounded more in a lack of
competition. Incumbent retailers in
such areas should focus on how to
retain their existing customers as their
shopping options expand, while such
retailers’ challengers should be focused
first on raising awareness and then on
delivering a superior value proposition
that would induce shoppers to switch
permanently.

Figure 7: In many regions little consumer choice still limits the number of
retailers visited
Q: Have you shopped with any retailers over the last 12 months through any channel?
5 retailers or less

85%
80%

Northwestern Federal District
(except St Petersburg)

84%

Far Eastern Federal District

59%
70%

St Petersburg

47%
59%
58%

Moscow

0%

50%
2013

16

PwC

2012

100%

Business model implication: To help strengthen a brand,
change how that brand is communicated, both internally
and externally
Retailers typically under perform in terms of brand value. For example,
in Interbrand’s 2013 “Best Global Brands” list, only two retailers—Louis Vuitton
and Amazon.com—registered in the top 20 based on brand value. That compares
with eight technology companies, four automotive companies, and four consumer
companies. This lack of brand heft particularly is true for those retailers that could
be considered aggregators of other brands.
“A lot of retailers don’t have a brand of
their own, so it’s hard for consumers
to really put their hands on their hearts
and say, ‘Why should I spend money
with you?’” said Matthew Tod, a PwC
UK partner who specializes in working
with retail and consumer packaged
goods companies. “Retailers must
develop a very clear proposition and
a brand that means something to the
consumer.”
Building that brand often starts
internally. For example, most of
Nordstrom’s employees probably don’t
come to work on their first day with
a clear vision of the retailer’s brand
In-store WiFi and sales associates who can take payments away from registers were two
promise. Through training programs,
popular in-store technology choices in our survey.
the company instills both its brand
promise and the freedom to creatively
delight customers. Emphasizing the brand promise during the hiring and training
process is not a complicated change to most retailers’ HR models—but it’s one
that could pay big dividends to brand health.
Externally, retailers need to greatly improve how they communicate their brand.
PwC US principal Sean O’Driscoll, who helps clients engage with customers more
successfully through social media, advised, “Many organizations still ‘broadcast
out’ what they want people to learn about their brand. It’s not about broadcasting
out to customers, it’s about engaging with customers.” For many retailers, that
could mean a dedicated social media staff to run campaigns and competitions, a
formal process to respond to customer comments left on social media, and less
traditional advertising rather than other kinds of branded content such as social
media blogs from company executives and placed articles in trade publications.
On the flip side of brand building is reputation management, which retailers also
need to improve. Social media, for example, does not only offer opportunities for
brand communication and building customer loyalty, it can be a powerful tool for
protecting the brand. Negative publicity or remarks about the company’s brand
or its services can be quickly addressed by responding via various social media
tools. By approaching social media as a way to engage with customers about
brand value, retailers are not only able to build brand power, but to manage
reputation risks as well.


17

Customized offers based on totally protected,
personal preferences and information

While cyber-security still is a major online shopping concern,
online shoppers also want personalization.
It’s human nature—people like to
be accepted and want their needs
understood.

the opportunity to compete in various
brand-sponsored contests, up from 16%
last year.

Online shoppers, for example, like
to be known and recognized at their
favorite retailers. We found that 71%
of our survey respondents shopped at
their favorite retailers because of a great
loyalty points or reward program. This
desire to be known and understood by a
favorite brand manifests itself in social
media as well. Just over half (51%) of
our global sample used social media to
interact with a favorite brand, leading
them to like the brand even more than
before the interaction.

In another example of online shopping
personalization, 66% of our global
sample used a coupon received on
their smartphone to make a purchase,
in-store, at home, or in transit. As PwC
US partner Tom Johnson explained,
“The opportunities to further personalize the shopping experience through
mobility are huge, and we think
personalization is the ultimate goal
of mobile services. A great example is
the daily deal and personalizing those
daily deals on what you’ve purchased
over the last couple of years.”

the highest percentage

Up front and digital

seen in any of our

Shoppers also increasingly said they
want personalization based on their
past purchases, and retailers are
getting better at delivering it. In fact,
in our latest survey research, we see
a major jump in the percentage of
participants who visited brand social
media sites because of personalized
promotions via email or text message.
In this year’s survey, 21% of our respondents who visit brand social media
sites were drawn to a site because of
such a promotion; last year, just 9%
of our respondents were attracted by
a similar offer. The opportunity to
engage in a competition also is a form
of personalization, and this year, 23%
of our sample who visit brand social
media sites said that they did so for

Big Data analytics helps. Storing lots
of information about their customers
allows retailers to offer customized,
more enjoyable shopping experiences.
By employing predictive analytics, many
retailers have been able to use customer
data to increase marketing and sales
effectiveness. Customization can take
the form of digital coupons, mobile
loyalty programs, exclusive branded
content, and social media contests or
promotions that can all be used to drive
traffic toward online purchases. Many
retailers and CPG companies are now
using hyper-targeted emails to home in
on narrow bands of consumers, typically in a specific geographic locale
or demographic strata, with special
offers designed to appeal to their
personalized interests.

In China, 53% of our
respondents shopped
online weekly via a PC,

surveyed territories.

18

PwC

The safety of personal data:
A common concern among
global shoppers
At the same time, cyber-security still is a
major issue for online shoppers in various
territories. For our survey respondents
who did not purchase items online, we
asked them why. Almost 43% said they
were worried about the security of their
personal data. This is slightly up but still
is consistent with the 41% who answered
similarly in 2012.

Brazil and South Africa were where the
online users most worried about the
security of their personal data. Of those
Brazilian online users who didn’t shop
online, 60% mention personal data
security concerns, the second highest
percentage answer. In South Africa,
that percentage was 61%, the most
common choice. For South Africa, this
mistrust of online security could be
rooted in the fact that this country had
the highest percentage of new online
shoppers in our survey. Twenty-five
percent of South Africans reported that
it had been less than one year since
their first online purchase, while the
global average was 19%.

Secure personal information, of
course, is a long-standing e-commerce
expectation. But now retailers need
to safeguard that data knowing that
customers want slick new options like
coupons electronically sent to them
when they are near a store, as well as
all the conveniences of having personal
payment and loyalty information accessible throughout a retailer’s channels.

Figure 8: Data security is a major concern keeping many from shopping online
Q: Why don’t you buy products online? Select all that apply.

54%
53%

I prefer to touch/try the product

52%

I just prefer to shop in-store

47%
43%
41%

I'm worried about the security
of my personal data

35%
32%

I don't trust online payment methods

25%
22%

I don’t have a credit/debit card
10%

0%
2013

20%

30%

40%

50%

60%

2012

Base: 1,234 (2013); 2,343 (2012)


19

In terms of a personalized
shopping experience,
Russian shoppers’
responses closely parallel
the overall global pattern. In 2013,
43% reported having used social media
to interact with a favourite brand,
leading them to like the brand even
more than before the interaction, while
59% said they have used a coupon
received on their smartphone to make
a purchase.

Technical factors are
becoming less of a barrier

The area where Russian shoppers most
differ from the global average is
concern about the security of personal
data. Whereas 43% of respondents
globally don’t shop online because of
security concerns, only 22% of Russian
respondents chose this answer in 2013,
down from 36% in 2012. Thus,
consumer worries about personal data
have become less relevant as a barrier
to online retailing. Additionally, the
percentage of Russian consumers who
don’t shop online because they do not
trust payment methods or they lack a
credit or debit card is decreasing. On
the other hand, however, Russian
consumers still enjoy in-store shopping.
Sixty-two percent of Russian
respondents answered “I just prefer to
shop in-store” when asked for the top
reason they don’t shop online.

This means that technical factors,
which prevented people from shopping
online (low trust in online payment
methods, concerns about personal data,
lack of credit or debit cards), are not
perceived as a barrier anymore. Those,
who still don’t shop on-line, do so
because they just like shopping and
prefer to try and touch the products
before buying them. For retailers this
means that the physical shop continues
to be relevant, even though it will be
used differently by different shoppers –
some will only use it as a place to
browse the offering and will then buy
on-line, while some will still make their
purchase in store. Hence, it is crucial
important for retailers to understand
there personal preferences of their
shoppers and adapt their value
proposition to them.

to online shopping;
shoppers, who still visit
stores, do so purely
because of their preference
for an in-store shopping
experience.

Figure 9: Consumers, who still don’t shop on-line, do so because they just like
shopping and prefer to try and touch the products before buying them
Q: Why don’t you buy products online?

74%
75%

I prefer to touch/try the product

62%

I just prefer to shop in-store

40%
38%
43%

I don't trust online
payment methods

22%

I'm worried about the security
of my personal data

I don’t have a credit/debit card

0%

20

PwC

36%
2013

7%
11%
10%

20%

2012
30%

40%

50%

60%

70%

80%

Business model implication:
A balance between customization and security
The business model imperative
will be upgrading cyber-risk
capabilities while still offering
a seamless experience to the
customer. In the current business
model, different channels own
multiple customer databases,
so there is no single view of the
customer. What’s needed to achieve
Total Retail from a cyber-security
perspective is a technological
renewal with customer-centric front
office systems, integrated customer
databases, and a leadership focus
on new, previously unforeseen
threats. The retail sector isn’t
the only one that’s facing these
unprecedented threats. The gaming
sector also has recently been
targeted by hackers in so-called
“denial of service” attacks.

South African shoppers are relatively new to shopping online, with 25% reporting that it had
been less than one year since their first online purchase.

With increasing cyber-threats possible and the potential vulnerabilities of mobile
devices in particular, retailers must decide if they can build out their capabilities
step-by-step, or whether their business model needs to quickly add an entirely
new set of skills and capabilities through acquisition. For example, according
to PwC’s latest global cyber-security mergers and acquisitions report, many
companies are hiring external, mobile-focused cyber-security firms to shore up
their defenses.


21

An enhanced and consistent experience
across all devices

Online shoppers are slowly but surely embracing a range of devices to
shop—and latent functionality issues must be addressed.

Chinese shoppers are
ahead of the curve in
terms of shopping over
multiple devices, with
49% shopping on a tablet
and 51% on a smartphone.

In 2008, e-book revenues constituted
just 1% of all US publishing revenues. By
2011, they made up 17%.2 That’s several
consecutive years of triple-digit growth.
Just last year, the percentage of our
global survey respondents who shopped
via smartphone was just as small as
e-book revenues were in 2008. Online
shoppers already had a favorite, trusted
electronic device with which to shop,
and it’s called the PC. Fast forward
to today, and, according to this year’s
survey research, the PC still rules when
it comes to executing online purchases.
For example, across all 11 of the shopping categories included in our survey,
purchasing via the PC was by far the
preferred method of online purchasing.

2

22

PwC

Forbes, April 11, 2013, Jeremy Greenfield,
“Ebook Growth Slows in 2012 to ‘Only’ 41%.”

A small but fast-growing
base of shoppers are using
a smartphone and tablet
to shop
Compared with last year, both tablets
and smartphones are gaining traction,
even as purchases via a PC continue
to dominate the online purchasing
process. A few examples of the positive
data for the tablet and smartphone:
When it comes to household appliances,
10% of our global sample purchased
online via tablet, compared with 1%
last year. As for the smartphone, 5% of
our global sample purchased using that
device, compared with 0.4% last year.
In clothing and footwear, smartphone
and tablet growth in purchasing was
even more evident. Our latest results
show that 11% of our global sample
purchased online via a tablet and 7%
via a smartphone. This compares with
last year’s results of 1.5% and 0.5%,
respectively. In fact, overall, 41% of
global shoppers who took the survey
bought products through a tablet,
compared with 28% in 2012, and 43%
of our respondents purchased products
through a smartphone, compared with
30% in 2012.

As for individual territories, China
continues to be in a class of its own
in terms of its adopting different
devices for online shopping. Perhaps
that’s not surprising given the
country’s demographics. As of June
2013, Internet penetration in China
had reached 44%, and the country
boasted 591 million Internet users,
a user base far larger than the
entire US population. In terms of
our survey, Chinese shoppers led
the way in using new devices, with

49% shopping on a tablet and 51%
shopping on a smartphone at least
once a month, compared with 22%
and 21%, respectively, for our global
respondents.
Other countries, albeit with much
smaller bases, are following this trend.
In France, for example, 25% of our
respondents said they shopped with a
smartphone or a tablet in 2013 versus
16% in 2012.

Figure 10: Top regions for mobile phone shopping
Q: Do you buy products using a mobile phone/smartphone?

23%
42%
China

Middle East

58%
77%

31%
India

43%

Global
average

57%
69%

Base: 15,080 (Global), 900 (China), 1,006 (India), 1,000 (Middle East)

Yes

No


23

Russian consumers like
to use both smartphones
and tablets for shopping,
a trend that is rapidly
growing. In 2012, 28% of Russian
respondents shopped via smartphone;
in 2013 this figure was already 41%.
Similar trends can be seen in tablet
usage: 31% shopped via tablet in 2012
and 44% did so in 2013. Also
noteworthy, and indicative of further
opportunity for Russian retailers, is
that smartphone ownership does not
appear to be a barrier to the spread of
mobile shopping. While 20% of
respondents globally answered that
they don’t use smartphones for
shopping because they don’t own one,
in Russia only 4% chose this answer.

With Russian consumers
increasingly using
tablets and smartphones
for shopping, they expect
retailers to provide
a consistent shopping
experience across
all devices.

If we compare Moscow to the Russian
regions, it’s not surprising to find that
shopping via mobile devices is more
widespread in Moscow. For example, in
2013 57% of Moscow shoppers bought
items online using tablets and 52%
shopped using smartphones, while in
the Southern Federal District the same
figures were 24% and 30% of
respondents, respectively.
For retailers this means they need to
adapt not just the user interface to
different devices, but also the content.
While being at home behind PC
shoppers will tend to do more research
and will therefore expect a lot of
information and media content about
the offering, somewhere on their way
using mobile device, they will be more
keen to receive location-based tips and
special deals, relevant for that moment.

Figure 11: Russian consumers like to use both smartphones and tablets for shopping with smartphone ownership
representing no barrier to the spread of mobile shopping
Q: How often do you buy products
using the following shopping channels?

Q: Why don’t you use your mobile/smartphone
for shopping?

Russia

Don’t own a smartphone

41%

Through smartphones

Global

28%
44%

Through tablets

Russia

31%
0%

10% 20% 30% 40% 50%
2013

20%
Don’t own a
smartphone

4%

0%

10%

20%

2012

Figure 12: Use of smartphones and tablets for shopping varies across Russian Regions
Q: How often do you buy products using the following shopping channels?

57%
52%

Moscow

33%
31%

Urals Federal District

0%

PwC

through smartphones

24%
30%

Southern Federal District

24

through tablets

10%

20%

30%

40%

50%

60%

30%

Technical agility across
all devices
While the percentage of global shoppers
using a mobile phone or smartphone to make
purchases still is very small, it would be a
mistake for retailers to ignore the increasing
use of these devices from a business model
point of view. First, with just a few territory
exceptions, this growth is not happening at
the expense of more traditional shopping
such as in-store shopping or online shopping
via the PC. The pie is growing, and it makes
perfect sense to prepare to take part in this
growth.
Second, some of the handicaps that the
mobile phone currently suffers from will be
addressed in the next few years, simply
due to the evolution of the product and its
accompanying services. Among our global
sample who didn’t use their mobile phone
or smartphone for shopping, for instance,
41% said the screen was too small, 39%
were worried about security, 20% didn’t own
a smartphone, 16% didn’t have a data plan,
and 13% said they had a slow connection.
Does anyone really believe that five years
from now, a significant portion of any online
user group will have a slow connection? As
screen size gets bigger, speed and graphics
improve, and people get better data plans
and faster Internet connections, the move
to mobile shopping likely will accelerate.
The only truly difficult long-term obstacle
to tremendous growth in mobile shopping
may be the security issue. But even that
can be overcome over time; for example,
some of the territories in our survey with the
most long-time online shoppers (UK, US,
Netherlands) also have a lower percentage
of online users worried about mobile security
than the global 39% number.
To prepare for customers who, no doubt, will
want the same shopping experience whether
they are shopping via the PC, tablet, or
mobile phone, a Total Retailer
will need to have the technical agility to
provide a shopping experience that is appropriate to the device but still allows customers
to be able to access as much information

as they could using other means. Digital
marketing offers must be consistent across
devices. The ability to interact with individual
stores and corporate management should be
intuitive across devices. Customer information must “travel” with the device and still be
secure. The architecture must be in place to
track customer interactions at every conceivable point in the purchase journey, whether
customers are sending an email inquiry via
their PC, commenting about a negative store
experience on a social media site on their
smartphone, or physically returning an order.
Perhaps most important, agile technology
implies an ability to adapt to devices coming
out in the next month or year.

Traditional Turkish bazaars like the one above likely will remain an important part
of the retail scene in Turkey. For Turkish consumers who didn’t shop online, the
primary reason was that they liked to touch or try the product.

Notice that no one is saying the experiences
have to be identical. Mobile shoppers still
will love to receive personalized coupons,
PC users always will expect more bells and
whistles than the mobile shopping site or app,
and in-store shoppers, no doubt, will appreciate tablet toting associates who can provide
product advice or a different idea for a product
that might suit better. For that day in the future
when retail sales are relatively equally spread
among physical store sales, PC sales, tablet
sales and mobile phone sales, retailers will
be happy that they planned ahead to enhance
each of the different avenues that customers
take to buying products.


25

Transparency, real time, into
a retailer’s inventory

Turning the tables, consumers want to benefit
from retailers’ Big Data capabilities.
In some quarters, in-store technology
has long been seen as the Holy Grail of
retail. That’s never been truer than in
our current age of in-store technology
support and teens paying for coffees
with their smartphone. From virtual
dressing rooms that enable shoppers
to digitally “try on” outfits (which
then, no doubt, are shared on social
media), to QR tags on products that
connect to videos on that product, to
sales associates armed with tablets,
the prevailing belief is that consumers
never can get enough technology.
Interestingly, our survey research
doesn’t fully support this notion. When
we gave our survey participants an
array of different options for a question asking which in-store technologies would make for a better shopping
experience, 20% chose “none of the
above.” That’s a significant group of
shoppers who either can’t get excited
by the in-store experience anymore—
remember that our survey sample
is composed of online shoppers—or
simply want to be left alone when they
do choose to shop at a physical store.
An issue for another day is whether
retailers are pushing unwanted technology options into stores or whether
it’s consumers driving the technology
discussion through direct appeals to
retailers via social media and other
communications.
This question delivered a raft of
additional customer expectations in the
making, depending on the geography of
the survey participant. For instance, our
data shows that Brazilian consumers,
next to Indian consumers, desire new,
cutting-edge in-store technologies.

26

PwC

In each category of in-store technologies,
consumers from both these countries
wanted these technologies at a higher
rate than every other country in the
survey. In particular, two technologies
stood out as being desirable in Brazil as
opposed to the global average: “sales
associates with tablets to show you
alternative products,” and “sales associates who can take payment without
going to the cash register.” PwC, in fact,
is working with a global technology
company to help Brazilian retailers
meet these demands, using a model that
combines virtual catalog solutions with
a mobile payment platform.

Our survey participants
stated a clear desire for one
particular feature
Of our respondents who did choose
a number of technologies, the most
popular choice by far was, the “ability
to check other store or online stock
quickly,” at 46%; followed by in-store
WiFi with a fast, simple login, at 31%;
and sales associates who can take
payment without going to the cash
register, at 27% (see Figure 13).
With all the reams of data that
customers provide retailers through
point-of-sale data, social media activity,
location-tagging technology, and
searches for products on the retailer’s
website, perhaps it should be expected
that consumers want to turn the tables
on retailers and demand actionable
inventory information. But pinpointing
inventory throughout a store network,
right down to the pallet, store, and
shelf, is hard enough for retailers to
do as part of their own supply chain

management, much less in real time for
actual in-store customers. Although Big
Data offers many ways the front office
can customize marketing and sales, the
back office of most retailers still faces
a serious challenge in managing an
increasingly complex supply chain.
In fact, it’s debatable that retailers
would even want to offer customers
this kind of power. What if a long-time
customer checks a store kiosk for an
out-of-stock item and sees it in another
store 12 miles away, journeys to pick
it up, and then finds that someone else
just bought the last one? The retailer is
left with a very unhappy, very aggravated, very motivated customer. Some
of the customer expectations in this
report brought up very sticky issues
for retailers, and this is one of them.
In this case, retailers would have to
weigh whether it’s worth the effort to
make their supply chain, distribution

network, and product replenishment
processes visible.

“In-store technology
will become increasingly

The answer is that it might be. Because
by searching for these products in-store
at whatever computer kiosk or computer
station retailers conjure up, customers
would be contributing yet more data
about their buying preferences. Various
industry studies have estimated that
retailers would see significant margin
improvements if they could capture all
the customer data they theoretically
could access.

important in making
the shopping experience
consumer friendly.”
Sergio Alexandre, PwC Brazil partner

The more information about customer
buying habits, the more retailers know
who their customers are, what they
want, when they want it, and where
they want it. So while customers rightly
think they are getting a service from
the retailer, real-time customer requests
into inventory actually are another data
point for the retailer.

Figure 13: Consumers value inventory transparency over other types of in-store technology
Q: Which of the following in-store technologies would make your shopping experience better?

46%

Ability to check other store or online stock quickly

31%

In-store WiFi with fast, simple, login
Sales associates who can take payment
without going to the cash register

27%

Sales associates with tablets to
show you alternative products

23%

Using your mobile phone to
pay for your shopping

21%

Pay for an item through the store's app

20%

None of the above

20%

0%

10%

20%

30%

40%

50%

Base: 15,080


27

Shoppers believe that
in-store technologies
can significantly improve
the in-store shopping
experience, thus presenting
an opportunity for retailers
to differentiate.

Russians shoppers
embrace the use of
in-store technology to a
higher degree than their
global peers, on average, and especially
when compared to shoppers in mature
markets. Looking at the percentage of
respondents who don’t think any of the
listed in-store technologies would make
their shopping experience better, we
see that only 10% of Russians chose
this answer, compared to the global
average of 20%. In this respect, Russian
shoppers are much more similar to
their Chinese peers than to shoppers
in more mature markets, such as the
United States or Great Britain, who
appear more sceptical regarding the
use of in-store technologies.

This certainly presents an opportunity
for Russian retailers, and early adopters
are likely to enjoy significant firstmover advantages in this area.
At the moment, several retailers are
introducing various in-store
technologies, particularly ones that
allow consumers to check product
availability at other stores or online.
Such technologies are helping make the
Total Retail concept a reality; in Russia
most successful “total retailers” now
offer such them to their customers.

Figure 14: Russians shoppers embrace the use of in-store technology
to a higher degree than their global peers
Q: Which of the following in-store technologies would make your shopping
experience better?
None of the listed

33%

US

29%

UK

10%

Russia

7%

China
0%

28

PwC

5%

10%

15%

20%

25%

30%

35%

The back office needs to move at the speed of the customer
Until now, the technical agility we’ve been talking about relates to the front-end
technology of online coupons, real-time mobile offers and speed of web
transactions. But this particular expectation raises a completely different
challenge: the back office working real time with the customer. For many retailers,
this will mean a serious upgrade in the technology of how products are tracked,
warehoused, and distributed across a retail network.
On the plus side of making such an
investment, if a retailer actually can
fulfill this customer expectation for
quickly checking the latest physical
store and online stock levels, it likely
has developed an architecture that
can lead to better and faster decision
making across the whole supply chain.
Take returns, for example. In many
of our survey territories, returns are
a huge concern. For example, in
the fashion industry, return rates of
more than 50% are common practice
in Germany. These problematic
customers and their habits need
to be tracked somehow. The same
capabilities that can help customers
find what they want in a network of
stores also would help identify such
customers.
In other words, robust inventory management systems can not only find items on
the demand end, they can also help promote effective and accurate supply chain
processes and efficient distribution networks.


29


An “always-on,” 24/7 experience.

Today, consumers are perpetually
connected via various devices rather
than sporadically tethered to a home
or work computer. With consumers
“always-on,” that also means that
retailers need to present their brand
story across every channel, 24/7.
But “always-on” means more than just
open stores or an operational website,
it means that the retailer is always
“on its game” and open for engagement and interaction in every way the
consumer is—social, email, online
shopping, telephone, and in-store visits.

Consumers quickly
fill the vacuum
Given this imperative for increased
engagement, it’s worth investigating
what happens when companies actively
disengage with consumers in one very
specific way: when a favorite retailer
closes down a local store. True, physical stores remain popular because
consumers can get the product immediately, touch and try the merchandise,
and be more certain about the suitability
of the product. These are the top three
reasons that this year’s survey participants buy in-store instead of online.
But the reality is that retailers’ future
brick-and-mortar stores likely will be
fewer and smaller, carrying a more
targeted assortment of goods. For
example, in the Netherlands, even
as the retail e-commerce market has
exploded over the last five years to an
estimated 10 billion Euros in 2013, 6%
of all Dutch retail locations sit empty,
and in some cities up to 20%. Retailers
in the Netherlands and elsewhere
likely will continue to close stores in
the future as the search for the right
mix of e-commerce and physical
stores continues.

After a store closure,
consumers look to that
retailer’s next closest
physical store—and then
go to the website.

So what happens when business
circumstances dictate that a retailer
close down a local store? Given a chance
to choose as many as six options, 59% of
our global sample said they would find
the retailer’s next nearest physical store,
44% would order more from the company’s website, and 42% said they would
turn to an alternative retailer’s website
and start buying similar products there.
Fewer than 10% of our respondents said
a physical store closing would result
in them generally spending less on a
product. One of our most intriguing
pieces of data is that 11% of our global
sample said they would go onto social
media and join a discussion about the
store closure.
Clearly, the message from our survey
participants was that since they assume
retailers are everywhere and always
connected like themselves, shoppers
will find that retailer’s next physical
store enough or, failing that, there’s
always the store website. For retailers
perhaps worried that they may one day
have to downscale their physical store
footprint, it’s good news that the two
most popular options have customers
staying loyal to that retailer.

Figure 15: When faced with a local store closure, most shoppers decide to stay with the brand
Q: What would you do if your favorite retailer closed down your local store?
Find its next nearest
physical store and go there

59%
44%

Start/increase ordering from its website
Find an alternative retailer’s local store
selling similar products

42%

Find an alternative online retailer’s
website selling similar products

21%

Go onto social media and join
discussion about store closure

11%
9%

Generally spend less on this type of product
0%
Base: 14,734

30

PwC

10%

20%

30%

40%

50%

60%

70%

In Russia, the online
channel is especially
relevant for three product
categories: 1) consumer
electronics; 2) books, music, movies and
video games; and 3) household
appliances. Around two-thirds of
Internet users prefer to research those
categories online and around half prefer
to buy such products online as well.
Of course the preference for buying
products on-line does not necessarily
transfer to actual behaviour.
For example, around 30% of our
respondents answered they bought at
least half of their purchases in consumer
electronics category on-line last year.
This difference presents a significant
potential for expansion of on-line trade.
For retailers this means possibility to
target new customer segments and to
increase spend of existing customers,
who are usually spending more if they
shop through multiple channels with the
same retailer.
Russian Internet users still like to visit
physical stores, with 80% doing so at
least monthly. By comparison, in the
Netherlands only 57% of respondents
answered that they do so, and in France
56% do so. Thus, we cannot claim that
Russian consumers are deserting
physical stores, but they are
increasingly using multiple channels
during their shopping journey. The
level to which Russian retailers have
adapted to this varies significantly
among categories, with electronics
category leading the way. But there are
also significant differences within the

categories. More than half of the
customers of Russia’s most advanced
electronics retailers report that they
bought goods from such retailers
through at least two channels in 2013,
while this figure was around 30% for
some other retailers in the same
category.
Regarding delivery, Russian
consumers, similar to their global
peers, on average, value free shipping
the most, with 71% of respondents
choosing this answer when asked about
the most relevant delivery options
when shopping online. The second
most relevant delivery option is the
ability to pick up goods at a convenient
location, for example a local
convenience store, which is much more
preferable to picking up goods at a post
office or courier service office. Also
very relevant for Russians is the option
of agreeing on a specific delivery
timeframe, although there are
significant differences among regions
in this respect, with shoppers in
Moscow and St Petersburg placing
much greater value on this option
compared to other regions of Russia.
Similarly, Russia’s big-city shoppers
value same-day delivery much more.
For retailers, this means they should
segment their delivery options. While
big-city shoppers are becoming
increasingly demanding, expecting
free, same-day delivery and in a
convenient timeframe, their peers in
more distant regions are more willing
to wait and adapt, but do, however, also
highly value free delivery.

Russian shoppers are
still avid visitors of
physical stores, but are
also increasingly using
the Internet during their
purchase journeys.


31

Rising expectations of
customers in respect of
delivery options and speed
of delivery bring
challenges for retailers in the area of
inventory management. They need to
strike the right balance between trying
to satisfy the customers expectations
and having inventory at optimal
number of locations in optimal
quantities. Failing to do so means
either increase in cost to serve (in form
of warehousing, transportation and
stock holding costs) or reducing

service levels (availability, speed
and convenience of delivery), causing
lost revenue. This is a difficult task, as
customer demand depends on a variety
of factors. To address this, the most
advanced retailers use complex
predictive analytics models, which
support the fulfilment decisions in real
time and drive the whole supply chain
management. Our experience in
working with them shows that the
benefits in form of both lower cost to
serve and higher revenue, are
significant

Figure 16: In Russia, the online channel is especially relevant for electronics, books, music, movies, video games,
and household appliances
Q: Which method do you most prefer for researching and buying your purchases?

BUYING
60%

Very high impact of on-line for
both researching and purchasing
Consumer electronics
and computers

Household appliances

50%

Books, music, movies
and video games
40%

High impact of on-line
for researching,
medium for purchasing

30%

Health & beauty (cosmetics)
Toys
Sports equipment/outdoor

Furniture and home ware
Jewellery/watches

20%

Clothing and footwear (incl. sportswear, kids and babies)
Do-it-yourself/home improvement

Low impact of on-line
Grocery

10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

RESEARCHING

32

PwC

Business model implication: Store portfolio management
needs to be elevated into strategic discussions
While it might be tempting to leap to the conclusion, based on the survey data above,
that a Total Retail model can succeed with far fewer physical stores, it should be
sobering to retailers that more than four in 10 of our survey participants were willing
to consider turning to a competitor when confronted by the closure of a local store.
The lesson in store-closing scenarios may be that if the next nearest physical store
is not near enough, or if the website is not attractive or useful enough, customers then
go to competitors.
And the larger lesson is that store portfolio
management needs to have
a seat at the strategy table. Closing a
store, or opening one for that matter,
is the kind of decision that clearly impacts
customers, makes headlines, and
reverberates throughout an organization.
In order to accurately assess whether
or not a physical store should close,
rather than just using store sales and
local demographic data, why not look at
online sales data as well? What does the
e-commerce data for that region indicate?
If there is very little, perhaps keeping an
underperforming store still is the way to
go. If there are heavy e-commerce sales,
perhaps opening a new store will only
cannibalize that digital business. “Most
retailers are taking a mono-channel view
Almost six out of 10 shoppers still want to shop in physical stores to see and touch
of portfolio management,” said Matthew
products, but is that enough reason to keep physical stores open?
Tod, a PwC UK partner who specializes
in digital transformation at retail and
consumer products companies. “They have to merge it with online data.” In fact,
some forward-thinking retailers largely have discarded focusing on individual store
profitability in favor of overall regional profitability, as that measure provides better
context into the contribution of individual stores.
Beyond brick-and-mortar store openings or closings, other related issues include
upgrading and improving technology in core stores and examining brick-and-mortar
alternatives such as pop-up shops—all very important to customers and the brand.
Another way a retailer can integrate “being everywhere” into a business model is to
actually expand beyond retail. Take health care in the US as an example. A fledgling
alternative health system is growing up alongside the current, inefficient, fee-for-service
system. Over time, this new health economy, led by non-traditional players—including
some retailers—will grab a significant market share of the health care industry. Walmart
and other grocery retailers moved into clinical medical services by building on their
pharmacy businesses.
Another example is insurance, an equally unfamiliar product to the traditional retail
landscape. Some retailers, such as Tesco in the UK and HEMA in the Netherlands, sell
travel, auto, and health insurance policies from local stores across the country, backed
by an insurance company. Whatever the service, the real point here is that powerful
brands, such as Walmart and Tesco, can leverage their brand to sell many seemingly
unrelated products.


33

To maximize the value of mobile shopping,
both store apps and mobile sites must improve

App versus browser? Right now, a split decision.
Earlier in this report, we discussed the
increasing year-over-year penetration
of mobile shopping among our survey
participants. In this year’s survey, we
also devoted an entire section of the
questionnaire to those respondents
who already were shopping on mobile
devices, and what we found bodes well
for the future of mobile shopping.

Our survey indicates the broad array
of shopping-related activities in which
mobile shoppers are engaging. While
on the move (not in a physical store),
two-thirds of our mobile shopping
sample (66%) compared product prices
with competitors, 65% researched
products, 57% located a store, 44%
checked their available funding before
purchasing, and 29% used a coupon—
all without ever setting foot in a store.

Figure 17: Online shoppers are evenly split in their preference for mobile
browsers versus apps
Q: How often do you use either an app or mobile browser on your mobile/
smartphone for shopping?

16%
17%

Daily

21%
22%

Weekly

23%
24%

Monthly

21%
21%

A few times
a year

Currently, negligible
differences between mobile
apps and mobile websites

7%
7%

Once a year

Never

8%
0%

5%

App

10%

12%
15%

20%

25%

30%

Mobile browser

Base: 6,506

Growing enthusiasm
for mobile shopping
Take the evident enthusiasm of mobile
shoppers. When we asked them how
often they used either an app or a
mobile browser for shopping on their
mobile device, 16% said they shopped
via an app daily, and 17% shopped via a
browser daily. When it came to weekly
shopping via these two mobile options,

34

PwC

21% indicated they did so with an app,
and 22% with a browser. Barely more
than one-fifth of our mobile shopper
sample chose the option “a few times
a year” for either an app or mobile
browser, meaning that once people
make the transition to mobile shopping,
the convenience turns them into
consistent customers.

With all the investments that retailers
are making in apps, we wanted to
find out what kind of ROI retailers are
getting. As can be seen from Figure 18,
our survey respondents did not have
a strong preference for either an
app or browser for mobile shopping.
While apps have a slight advantage
in speed over browsers (35% to 29%,
respectively), those perceived benefits
are more than negated by the fact
that mobile shoppers view browsers
as more convenient (48% to 37%,
respectively), most likely because apps
require the sometimes cumbersome
downloading process. In the final
choice shown below—“easier to use
on a smartphone”—the percentage
difference was fairly negligible.

Our findings echo much of the research
being done by consumer research
companies like Nielsen and technology
companies such as Google. If anything,
in fact, mobile apps fare worse in these
surveys. A February 2013 Nielsen Mobile
Consumer Report, for example, stated
that mobile browsers were 20% more
popular than apps. It also found that
during the 2012 holiday season, retailer
mobile sites were twice as popular as
apps. A Google survey from April 2013
found that 65% of US smartphone
shoppers preferred to use a mobile
browser, to just 35% for a mobile app.3

3

http://mobithinking.com/mobilemarketing-tools/latest-mobile-stats/
e#smartphoneactivities

Part of the issue for apps is structural.
It makes far more sense for mobile
shoppers researching a purchase to read
reviews on a third-party website and
then go to those retailers’ mobile sites,
rather than opening a consecutive series
of apps from different retailers. Yet, ever
since Apple introduced the App Store
in 2008, there has been a market for
elegantly designed apps, and that goes
for mobile apps as well. When retailers’
mobile apps provide a more customized,
intuitive, and immediate experience
than their equivalent mobile browser—
whether it’s providing more loyalty
points or updating traffic patterns on
popular street routes to the physical
store—the percentages likely will start
skewing more toward mobile apps.

Globally, penetration of
mobile-Internet services
will reach 54% by year-end
2017 compared with 51%
for fixed broadband.
Source: PwC Global Entertainment and Media
Outlook, 2013–2017

Figure 18: Mobile browsers are viewed as more convenient than apps
Q: Why do you prefer an app over a mobile browser?

35%

Speed

37%

Convenience

28%

Easier to use on smartphone
0%

10%

20%

30%

40%

50%

60%

Base: 5,572

Q: Why do you prefer a mobile browser over an app?

29%

Speed

48%

Convenience

23%

Easier to use on smartphone
0%

10%

20%

30%

40%

50%

60%

Base: 5,604


35

Russians have a more
positive attitude towards
using retailers’ apps for
shopping, which is a great
opportunity for retailers
to foster loyalty.

Russian Internet users
tend to make less frequent
use of both apps and
mobile browsers for
shopping than the global average.
Another divergence from the global
average is Russian shoppers’ clear
preference for mobile browsers over
apps. This is probably a result of the
fact that many Russian retailers do not
have dedicated apps for shopping. But,
of those that do use apps for shopping,
51% state convenience as the main
reason for doing so, which differs
significantly from the global average,
among which mobile browsers were
seen as more convenient.
Thus, it seems that while Russian
shoppers currently prefer mobile
browsers over apps, they obviously

do not see the main obstacles usually
noted by global peers regarding
retailers’ apps (i.e. the need to
download and above all the inability
to compare offerings) as an
inconvenience. This may mean that
retailers should not face much difficulty
in getting customers to use their apps.
Such apps can serve as a strong
loyalty-building tool because once
a customer starts using a retailer’s
app for shopping, he or she can get
personalized offers and tailored
communications, and would have
less enticement to compare such offers
with others. Not surprisingly, mobile
shopping is more widespread in
Moscow than in some Russian regions.
We can expect this to change, however,
with better mobile Internet penetration,
which should reach 68% by 2017.

Figure 19: Russian consumers clearly prefer mobile browsers
over apps for mobile shopping

Figure 20: Mobile shopping is more widespread
in Moscow than in some Russian regions

Q: How often do you use either an app or mobile browser on your
mobile/smartphone for shopping?

Q: How often do you use either an app or mobile
browser on your mobile/smartphone for shopping?

Russia

Never

11%
11%

Daily

Siberian
Federal District

16%
19%

Weekly

24%

Monthly

23%
25%

A few times
a year

7%
9%

Once a year

Never

5%
App

PwC

19%

7%

0%

36

28%

10%

15%

Mobile browser

20%

25%

30%

34%

Northwestern
Federal District
(except St Petersburg)

32%
14%

Moscow
0%

20%

40%

Business model implication: If the business can afford it,
ramp up apps to improve the experience but make sure
the mobile site is optimized
Companies still are testing the waters in terms of how much to invest in mobile
apps. One refrain we have heard from some clients is that since their mobile
web presence is doing the job, they don’t have a major incentive to build out
mobile apps.
From a business model point of view, the answer is that companies need to invest
in both platforms, because they largely appeal to different segments of customers.
Brand loyalists deem it worthwhile to download a retailer’s app because they are
particularly eager for that retailer’s
content, personalized promotions,
speed, and loyalty reward points.
Casual shoppers, on the other hand,
are unlikely to make the effort to
download an app and will shop online
with that store only if the store
website is optimized for their devices.
Shoppers want to know that the size
resizes correctly for the screen, the
graphics don’t break up, it’s clear
how to purchase and pay, and one
can make the transaction quickly and
painlessly. In a sense, one could say
that the mobile site is more about
acquiring new and casual customers,
and the app is more about
appealing to loyal online customers.
For those in our survey who identified themselves as mobile phone shoppers, 89%
Most large retailers do offer mobile
compared prices on their devices, and 91% researched products.
apps but, precisely because current
customer sentiment wavers between
apps and the mobile browser, haven’t
invested as much as they otherwise might. Of course, a lack of investment
undermines the various innovations that, in turn, would help drive consumers to
the mobile app. So what is the bottom line? Optimizing the website for mobile
shopping is the first priority, but make sure the store app is world class as well.


37

Two-way social media engagement

Modern consumers don’t want to just shop—they want to be heard.

Social media and its effect on society is a
subject about which everyone seems to have
an opinion, even those who never post on
Facebook or get around to tweeting their
reaction to the current news stories. With
social engagement now a cultural preoccupation in many countries, global consumers
simply expect their favorite retailers to be
active online, ready to interact at any hour.

The thrill of discovery

4

GMA/PwC 2013 Financial Performance
Report, page 45

This situation might seem a daunting
prospect to retailers, but it’s actually an
enormous opportunity. Social media
enables companies to create meaningful,
connected experiences for both long-time
and—even more important —would-be
customers. For example, 59% of our
global sample told us that they discovered
a brand on social media in which they
subsequently developed an interest (for
our survey, we identified “brands” as
manufacturers, in order to differentiate

them from retailers in some specific
questions).
The fact is, consumer packaged goods
companies, generally, are a little
further along on the continuum than
retailers when it comes to social media
engagement. They particularly are
good at engaging consumers in ways
not necessarily limited to specific
products or services. Red Bull’s extreme
sports videos on YouTube are a classic
example of a brand using an experience to market its products. Another
example is Miller Lite’s sponsorship of
NASCAR driver Brad Keselowski, whose
Twitter activity famously included an
in-race tweet when a competition was
briefly halted.4 But retailers, too, can
engage in this manner. Even centuryold retail brands can be new brands to
someone, and those discoveries drive
business in the form of increased brand
awareness, preference, and loyalty.

Figure 21: Electronics and apparel top social media shopping categories
Q: Have you researched, browsed, or bought products using social media in any
of the following product categories? Select all that apply.

55%

Consumer electronics and computers

54%

Clothing and footwear

48%

Books, music, movies and video games

35%


32%

Health and beauty (cosmetics)

25%

Jewelry/watches

24%

Toys

21%

Furniture and homeware

19%

Grocery


17%


17%

0%
Base: 9,476

38

PwC

10%

20%

30%

40%

50%

60%

In terms of engagement
with retailers and brands,
social media has arrived
This year’s survey data illustrates
just how engaged our global survey
sample is with their favorite brands
and retailers via social media. Out of
more than 15,000 global online shoppers, 59% said they followed favorite
brands or retailers via social media.
When it comes to interacting with
those retailers or brands, 51% said
they did this. Some of those interactions likely were comments about an
experience with a product or brand,
as 56% of our global sample said they
provided such comments. And social
media even seems to have gotten traction as a transactional “storefront” of
sorts, as 48% of our global sample said
they bought products via social media,
which is an extraordinary change from
our last survey, when just 12% said they
purchased products via social media.

Russian Internet users
are active users of social
media; and the way they
use social media is of
increasing interest to retailers. In 2013,
51% of Russian Internet users followed
their favourite brands or retailers on
social media, up from 37% in 2012.
Around half of them also used social
media for interacting with brands and
commenting on their brand
experiences, as well as buying the
brand’s products – a significant
increase over the year before.

But customers can purchase their
products in any number of ways; the
purchasing aspect of social media
really is beside the point. The real
point is that enthusiasm for social
media is driving consumers to engage,
comment, and even effect change at
retailers and brands. When we asked
our survey participants what attracted
them to a particular brand’s website,
15% wanted to provide feedback on an
experience with the brand, up from the
11% who answered similarly in our last
survey. So while most companies have
entered the social media arena, they
will discover that launching Facebook
pages, opening Twitter accounts, or
building a YouTube presence won’t
be enough to meet this consumer
expectation. Companies must think
about their investments in social
media as a journey toward increasing
internal capability and true consumer
engagement.

This means that social media is
becoming crucial at all stages of the
purchase journey – from creating
initial awareness to after sales –
and thus Russian retailers will have
to focus on systematically addressing
social media management.

Instead of simply doing the
minimum when it comes to
social media, retailers need
to invest where they can
make the truest customer
engagement.

Social media is becoming
crucial at all stages of
the purchase journey;
no retailer can afford
to ignore it.


39

Figure 22: The relevance of social media varies among product categories
Q: Have you researched, browsed or bought products using social media in any of the following product categories?

60%


48%


43%

Books, music, movies and video games

36%

Health & beauty (cosmetics)

34%

Toys

31%


24%

Jewellery/watches

22%


22%
19%


15%

Grocery
0%

The relevance of social
media varies among
product categories,
however, with clothing
and footwear topping the ranking in
Russia (which differs from the global
average), followed by consumer
electronics, and books, music, movies
and video games. As relatively few
online users actually buy apparel
online, we can assume that they rely
on social media mainly for browsing
and researching clothing products
and probably sharing their experiences
with peers. Therefore, fashion blog
editors and other opinion leaders in
the fashion industry, who are active
in social media, seem to have a
particularly important role and
retailers should make a concerted
effort to engage them.

40

PwC

10%

20%

30%

40%

50%

60%

Figure 23: Social media is becoming crucial at all stages of the purchase
journey in Russia
Q: Which of the following have you done using social media?

51%

Follow favourite brands or
retailers via social media

37%
43%

Interacting with favourite
retailers or brands

17%

Comments about an experience
with a product or brand

31%

56%
48%

Bought products

20%
0%

30%
2013

2012

60%

70%

Business model implication: Most retailers need to reverse
their organizational approach to social media
Despite the growing degree of engagement with retailers and brands that we
document in this survey, we believe that retailers, so far, are doing much too
little to take advantage. The typical retail social media strategy today, not
surprisingly, actually mirrors the traditional marketing strategy: broadcast a new
product through social media channels, send out promotions and coupons, gather
data on the relative success of the product launch, and then, last, listen to—and
address—individual customer comments and complaints.
We think retailers should be taking
these actions in the reverse order.
Really using the power of social
media involves listening to customers
commenting on similar brands and
products; transforming portions of
that commentary into actionable data;
using that data to spark product ideas;
reaching out to customers via social
media to see what they think of those
ideas; and, finally, “broadcasting out”
that new product selection. That’s the
end state. To get there, a retailer’s
social media plan should, broadly:
•

Support brand objectives but
at a realistic level of investment
to which management can fully
commit. In other words, the entire
marketing team can’t become the
social media team; that’s an over
investment.

•

Engage consumers with one, centralized brand voice. At some companies,
both retailers and CPG companies alike, social media management still is
done through multiple, location-based channels.

•

Specify which employees in the organization will participate in the online
conversation on behalf of the brand, and then train them in the centralized
brand voice.

•

Decide what kind of premium the company will put on responding to both
positive and negative comments. Some retailers engage third parties to track,
monitor, and even respond to social media comments from a carefully crafted,
approved menu of responses.


41

“Brands” act like retailers, and we’ll
treat them that way

The “last mile” is moving out of the store, and that’s where
manufacturing brands are making their pitch.
From our data, it’s clear that, in the span
of one year, the gray area of overlap
between manufacturers and retailers
has virtually been extinguished. When
it comes to actually making a purchase,
consumers make few distinctions
between manufacturers and retailers.

Direct-to-consumer
comes of age
When we asked direct-to-consumer
questions in this year’s survey, we
explained in our questionnaire that

manufacturing companies “are increasingly offering products directly to
consumers, bypassing retailers,” so
we could be confident that our survey
respondents understood the context
of our questions. With this background, just 22% of our total global
sample told us that they didn’t shop
directly from manufacturers. As one
country example, last year, 52% of
our US survey sample said they made
purchases directly from manufacturing
brands, while in this survey, 70% of US
participants said they did so.

Figure 24: Shoppers increasingly are willing to bypass retailers
Q: Please indicate if you have bought directly from the manufacturer online in each product category. Select all that apply.

51%


47%


36%

Books, music, movies, and video games

27%
21%

Health and beauty (cosmetics)

Toys

16%

Jewelry/watches

16%
14%

Grocery

12%


11%

0%
Base: 15,079

42

PwC

9%
10%

20%

30%

40%

50%

60%

The reasons our survey participants
gave for shopping at brand websites
ran the gamut.5 Fifty percent noted the
lower prices, 37% said there was more
choice, and 29% chose “good stock
availability.” A couple of worrisome
data points for retailers suggest that
some of these direct-to-consumer
shoppers did so for intangible, brandrelated reasons, with 12% saying “the
brand has everything I need” and 11%
selecting “love of brand/loyalty.”
Why is this worrisome? Because brand
is where manufacturers tend to hold

5

an intrinsic advantage over retailers;
after all, the items being shopped
for generally are associated with
the brands that produce them. If an
excellent online shopping customer
experience can be developed by
manufacturers, retailers potentially
face relegation to permanent
second-class status.

Survey respondents could choose as many
of the 11 reasons as they wanted.

Russian Internet users are
in line with the global
average in terms of buying
directly from brand
websites, with only 22% saying they
don’t do so. This is a highly significant
change compared to last year, when
70% of Russian respondents claimed
they never buy directly. So, it is clear
that “direct-to-customer” is a very
significant trend, accelerated by
launches of proprietary web-stores
by category leaders, such as Zara
in fashion or Apple in electronics.

Among the factors driving this
behaviour, Russian consumers point
to reasons that are similar to the global
average, with “full range or more
choice” being almost equally as
important as “low prices”.

Among the reasons Russian
shoppers give for buying
directly, a full product
range or greater choice are
almost equally as important
as low prices.


43

PwC’s Global Total Retail Survey

PwC’s Global Total Retail Survey

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (17)

Similar a PwC’s Global Total Retail Survey

Similar a PwC’s Global Total Retail Survey (20)

Más de PwC Russia

Más de PwC Russia (20)

Último

Último (20)

PwC’s Global Total Retail Survey