Synchronous Selling Seema Williams Analyst, Consumer eCommerce Research

Synchronous Selling

Seema WilliamsAnalyst, Consumer eCommerce Research

Theme

Synchronizing channels will win

customers

Agenda

Consumers shop across channels Traditional retailers face challenges Creating a synchronous customer

experience

The on-line retail growth spiral

$ $

3More categories become available

$ $More retailers sell

22

More people shop1

On-line shopping takes off

33

3944

5156

60

1013

1823

31

38

0

10

20

30

40

50

60

70

1998 1999 2000 2001 2002 2003

Millions of U.S. households On-line

households

On-lineshoppinghouseholds

Three stages of Web buying

Convenience spending Small-ticket, low-risk items

Examples: books, music, apparel, gifts

Researched purchases Information-intensive big-ticket items

Examples: travel, appliances, computers

Fulfilling essentials Low-information habitual purchases

Examples: groceries, prescription medication

In his first year . . . In his second year . . .In his third year . . .

Total: $300 to $350Total: $1,100 to $1,300

Total: $1,500 to $1,700

Convenience

Researched

Replenishment

Convenience Convenience

Researched

Today (1998) customer profile: Joe Shopper

First-time shoppers accelerate spending

In five years -- profile: Suzy Shopper

In her first year . . .Convenience

Researched

Replenishment

Convenience

Researched

Total: $1,250 to $1,400Total: $1,700 to $2,000

First-time shoppers accelerate spending

Retail Spending Growth

3 6 10 15 23 324

1120

31

43

56

12

3

6

11

20

0

20

40

60

80

100

120

1998 1999 2000 2001 2002 2003

$Billions

Convenience Researched Replenishment

$108

Consumers shop across channels

Convenience

Where did you purchase products in the last six months?

Store

Catalog

Web

Researched Replenishment

Source: Forrester’s Consumers & Technographics Retail & Media Study of 10,000 on-line consumers. *Note: Consumers who buy researched goods generally do not buy again within six months.

(multiple responses accepted)

89% 91% 98%

31%

14% 11%

29%17%

8%

Consumers will shift spending to the Web

How much do you plan to spend in the next six months in each channel?

Source: Forrester’s Consumers & Technographics Retail & Media Study of 10,000 on-line consumers. *Note: Consumers who buy researched goods generally do not buy again within six months.

(multiple responses accepted)

-63%

-4%

-23%

-20%

-28%-24%

16%4%1%

Less

More

Convenience Researched Replenishment Store

Catalog

Web

The Net is not just another channel

Theme

Synchronizing channels will win

customers

Brick-and-mortar retailers fall short

Different product= unmet expectations

Variable pricing= engenders distrust

Incomplete service= forces inconvenience

Pure-play competitors set the standards

Infinite product selection Lower prices Superior service

The solution: center customer experience around the Web

The battle to own customers is on-line

The Net offers the best communication

Most robust shopper data found on-line

Synchronizing channels

Offer depth then breadth in core products

Eliminate regional pricing Limit on-line/off-line price differential Align marketing strategies and tools

Give stores a make-over

Add kiosks to extend shelf-space Consider stores a delivery option Proliferate points-of-sale

Synchronous channels will cycle consumers between stores and sites

The pay-off:

Protect existing customer base Recruit new customers Win the game of scale

Theme

Synchronizing channels will win

customers

Summary

Consumers are cross-channel shoppers

Web storefronts will lead

Brick-and-mortar assets come into play

Thank you!

Seema Williams617-520-5768swilliams@forrester.com

www.forrester.com