Outline of the retail trends for 2013 by BPN. 1. Tectonic Shift 2. C2C 3. Inconspicuous Consumption 4. Mansumerism

1. 2013
retail
trends

2. TECTONIC SHIFT:
Forget consumers. Forget customers.
Today it’s about the shopper.
C2C:
Consumers aren’t just talking to each other,
they are selling, trading, advising one another
INCONSPICUOUS CONSUMPTION:
Increasingly retailers and shoppers
are finding ways to lighten the load
MAN-SUMERISM:
The rise of male shopping behavior

3. Tec-tonic Shift

4. two states:
using & deciding
What drives shoppers to say “yes”?
USING: DECIDING:

5. rise of shopper marketing
$50B
ANNUAL SHOPPER MARKETING
AND GROWING
source: GMA/Booz

6. re-aligning around digital
shopper realities
Percentage of
brand marketers 67% 54%
who think:
need a more formalized need to establish better
process to measure digital planning processes for
shopper effects DSM campaigns
80% 45% 42%
excited at the new getting more data with better linkage
opportunities to DSM than with traditional between media results
measure DSM marketing efforts and sales results
source: SHS Digital Shopper Marketing Benchmarking Interviews of CPG Executives, 2011

7. the real purchase funnel
The real purchase funnel is chaos. But increasingly, we can reveal
where shoppers go at each stage of the purchase journey- and
identify where the greatest patterns are to engage them along their
decision path.
• Each green line represents one
individual shopper
• Clearly, shoppers do not behave in
programmed, linear modes
• Shopper path is NOT a funnel

8. the real purchase funnel
Brands must understand
the most common
purchase paths READ
CONSUM-
ER COMPARISON
REVIEW
Entry points reveal ONLINE
SHOPPED
ONLINE
where shopping begins
SPOKE
WITH
SPOUSE
Circles indicate most
used information sources
RECEIVED
SALESPERSON
Color indicates degree DEMO
of influence of information USED A
SEARCH
VISITED RETAILER /
sources ENGINE
STORE WEBSITE

9. C2C

10. the ecology of shopper dialogue
Social media has re-written the rules of trade, opening up a world
where shoppers can buy, sell, and trade... to each other.
B2B & B2C,
meet C2C

11. smart shopper platforms
Access to information is making shoppers smart – really smart.
Knowldege sharing sites are increasing in sophistication and number.
Forget Google or Wikipedia- these sites are the future of decision
making, accessible by shoppers at every step of the purchase journey.
Here, Decide.com tells
shoppers if they should
purchase or wait for
prices to drop.
Fooducate rates food
products based on
nutritioinal and expert
information.

12. consumer curated catalogue
Burgeoning photo sharing site Pinterest has been called a place to
“shop without money.” But it’s also a self created consumer catalogue
and showroom.

13. next gen marketplace
Online craft site,
Etsy has provided
artists and
craftmakers with a
thriving marketplace
to sell their goods.
Smart retailers like
WestElm are inking
deals to bring online
shoppers to their
stores by featuring
and selling Etsy
artist goods. Etsy is the 58th most popular website in
the USA
source: appapeal.com

14. pop up retail 2.0 “The maker economy
allows amateurs to
seamlessly become
A confluence professionals and test
their concepts before
of trends has investing in brick-and-
mortar.”
produced a thriving Nicholas Russel
CEO, Ephemeral Labs
“pop up” economy.
Whereas previously
pop up stores
and kiosks were
the domain of big
brands seeking
to expand their
foot print, today
they are led by
entreprenurial
mini-preneurs.

15. disintermediating brands
Shoppers aren’t just talking to each other about brands,
they are creating their own products and services - and
disintermediating brands in the process.
On any given night in NYC,
social travel site, AirBnb
has more rooms booked
than the largest hotel in
NYC.
- over 10 million nights booked
- 192 countries
- 168 million Social Connections
source: airbnb.com

16. C2C: the new sales force
San Francisco start up, Quri
enables brands to tap a
nationwide, shopper-powered
mobile field force that intends
to be a scaleable solution for
brands to measure and optimize
in-store. mobile computing + geo location + shopper field force = real time intelligence
Needle is a promising
Fan-sourcing Sales Platform that
recruits and trains passionate
brand fans to provide real-time
sales support via the cloud.

17. Inconspicuous
Consumption

18. loyalty, brand equity,
“keeping up with the joneses”...
What do they all have in common? They are all casualties of
the recession and the need for people to re-evaluate what
matters most. Inconspicuous consumption, where maximizing
resources is a primary driver of purchase decisions, is the reality.
average monthly two in five three in 10 one in four have
spend on shoppers respondents cut cut back on
groceries up $27 purchasing more back on bakery prime cuts of
from 2007 to store brand or items, candy, meat/seafood
2011. generic items desserts and
magazines/books/
DVDs
$27
source: MaxPoint Interactive, conducted by 3IGInsight

19. eco packaging
Reinforce differentiators. In
unexpected places. Ketchup
is ketchup… and a way to
conserve resources.
Puma’s sustainable shoe box
and reusable bag looks cool
and saves:
- 8,500 tons less paper
- 20 million Megajoules
of electricity
- 1 million litres less of fuel
oil used and 1 million litres
of water
- 275 tons of plastic

20. store brand equity
More than half of grocery shoppers now regularly
buy store brands across all categories of groceries.
Strong perception of store brand quality and fewer think store brands for those on tight budget
2008 2009 2011
good alternative 71
to name brands 74
74
quality as good 63
as name brands 65
65 the one exception:
usually extremely good 67
Pet Food
value for the money 70
69
some are higher quality 33
than name brand 37
38
for people on tight 20
budgets and can’t 18
afford the best 17
don’t feel 11
comfortable 11
serving to guests 11
source: Nielsen Homescan Panel Views Survey

21. recycling at retail
Thrifty IS mainstream.
Goodwill Industries and Savers are aggressively expanding
nationwide, causing reluctant retailers to take notice.
- Number of resale shops has
increased by 7% in past year
- Goodwill hit $4 billion in
revenue in 2011 (10%
growth since 2007)
- 20% of people shop in thrift
stores regularly, compared
with 14% in 2008
source: USA Today

22. invisible but powerful
Retailers are using lightweight and invisible technologies like
Euclid Elements to better able their sales associates to engage
with their best customers.
Saks Fifth Avenue teamed up with
start up Euclid Elements to create a
smartphone app that would be loaded
on associates’ phones and would
identify when loyal shoppers (who
had opted in) entered the store, and
would tell the associate where in the
store they were located using the
customer’s mobile wifi signal.

23. loyalty is not a free t-shirt
Shoppers want more than just free ‘stuff.’ Savvy retailers and brands
are shifting from extrinsic to intrinsic rewards - rewarding all shopper
interaction, instead of just purchase.
average number of loyalty
programs per US household:
18 8
less than half are active:
Most loyalty members are unsatisfied with the value of loyalty programs
(grocery/drug most satisfied at only 42%).
THE NEW LOYALTY:
SOCIAL
CURRENCY
A VOICE
IN BRAND
EXCLUSIVE DECISIONS
VIRTUAL ACCESS
GOODS
PROGRAM
OPT-IN
RECOGNITION/FAME
source: Colloquy: The Art and Science of Building Customer Value, April 2011

24. Man-
sumerism

25. recessionary residuals
While the job market for men has recently improved, the
lasting effects of the recession, have altered the traditional
“provider” paradigm.
At the height of the recession, unemployment
was more than 2% higher for men3
of women out-earn
39%
men women
their male spouses1
10.4 10.5
9.4
8.6 8.4 8.3 8.1
8.1
6.1
5.4
4.6 4.6 4.7 4.5
80% of men are
OK with it2
2006 2007 2008 2009 2010 2011 2012
sources: 1: Bureau of Labor Statistics, May 2012; 2 Men’s Health ManScan Study, conducted in
partnership with GfK Roper Reports, released March 2012; 3: Bureau of Labor Statistics

26. “renaissance man” revisited
Whether by choice or need, being exposed to new roles such
as child care, shopping and household activities has created
a new generation of men who embrace their new roles and
the impact they can make.
40% 44% 86%
of men are the primary of men say they of men agree being a
grocery shopper in equally share in man = doing what is
the household1 house cleaning2 necessary to keep the
household running3
sources: 1: KSDK, St. Louis, MO study released Feb. 2012; 2: Men’s Health ManScan Study, conducted in partnership with GfK
Roper Reports, released March 2012; 3: Spike Network’s “State of Men” study, released April 2012

27. beyond the 9–5 grind
Men increasingly evaluate their successes in life in areas
beyond career and finance.
feel their LIFE is the feel their FINANCIAL
same or better than situation is the same or
67% it was prior to the 42% better than it was prior
recession to the recession
source: Spike Network’s “State of Men” study, released April 2012

28. men shop differently
“Subscription Commerce” sites such as Trunk Club, Mr. Porter and
Manpacks address men’s expanded interest in style and grooming,
while P & G is setting up “Man Aisles” within physical stores. All
focus on conveniently solving a need.
SHOPPING ACTIVITY:
functional
PURPOSE:
solve a problem/need
PRIORITIES:
convenient, informative

29. men don’t just shop.
they buy.
Whether by choice or obligation, men are doing more shopping
than they have in the past. Disenfranchised no longer, they are
empowered by technology and a growing recognition of the
contributions they make.
average spent increase in men’s clothing increase in men’s facial
“yesterday” in stores, gas sales last year2: care sales last year…
stations, restaurants, yes, facial care3:
or online1:
8%
$59 $81 2%
11%
WOMEN MEN WOMEN’S MEN’S
sources: 1: Gallup, June 2012; 2: IBM Global Business Services, 2012; 3: NPD Group

30. men research,
women share
Males use more sources on average than females, but tend
to share less than females after purchase.
MALES (n=2004) FEMALES (n=2999)
average source node
usage: 17% 15%
average number
used: 11.6 10.2
SMOT participation
i.e. sharing information
about purchase with 56% 61%
F&F or via Facebook,
Twitter, etc:
source: Shopper Sciences, Google ZMOT study, 2011

31. marketing to men
At home and in store... men are increasingly shopping for themselves
and their families. Empowered by technology, men have embraced
mobile and social media to conveniently inform their decisions.
MAKE IT EASY:
research price online
Shopping is need based for most men. 72% before making
The process should be simple and direct. a purchase1
BE INFORMATIVE:
Product info, reviews, comparisons, more likely than
availability and store information. 26% women to scan a
barcode in store2
HAVE FUN, BUT DON’T INSULT:
A recent Huggies campaign backfired
men are favoring digital
for implying Dads were unfit parents.
sources—and not their
76% televisions—when
looking to be entertained3
sources: 1: Spike Network’s “State of Men” study, released April 2012; 2: Scanbuy, 2012; 3: AskMen.com “The Great Male Survey” May to July 2012

32. LIZ ROSS DOUG JOHNSON
President, North America SVP, Customer Experience & Shopping Insights
BPN BPN
101 E. Erie, 10th Floor 101 E. Erie, 10th Floor
Chicago, IL 60611 Chicago, IL 60611
312-799-4101 312-799-4104
Liz.Ross@bpnww.com Doug.Johnson@bpnww.com

33. conclusion