the empowered customer in the home improvement world...best practices to purchase 4. the new...

TheEmpoweredCustomerintheHomeImprovementWorld

DavidMarcotteSVPCross-Border|Cross-Industry|TechnologyKantarMarketInsights

October30th2019

2

Agenda

1.  TheNewCustomer

2.  TheEmpoweredExperience

3.  BestPracticestoPurchase

4.  TheNewComplexity

3

The Retailer Matrix of 2030 and Planning •  Theoneconstancyofthefutureisthatitwillbemoreintegratedatfar

higherspeedsofconnectingdataandinformation

Smartshopper

Smarttools

SmartsourcingSmartplanning

Smartdata

Smartcomplexity

Smarthome

Source:Kantar

•  Whatwilltheshopperbelikeandhowwilltheirchangedrequirementsforshoppingchangethestore?

•  Whattoolsdoweneedtoexplore,evaluateandinvestinforthatfuture?

•  Howwillcomplexautomationandartificialintelligence(AI)enableorcomplicatethatfuture?

•  Whatwillthestoreanditsvirtualextensionsintothecommunityandhomelooklikeinthefuture?

•  Howtocopeandleveragethehugeamountsofdatathatwillberapidlycreatedinthisnewenvironment?

•  Howcanwemanagetherequirementoftransparencyandvaluefromtheshopperviaproductoriginsandtracking?

•  WhatfinancialmovesdoIneedtoconsidernowforthetenyearjourneyaheadofus?

4

What will the shopper be like and how will their changed requirements change the store?

TheSmartShopperReality:Providingconnections,enablingflow,creatingexperiences,andseekingsimplicity…allatthesametime

CON NECT IONS FLOW

EXPER IENCES

SIMPL ICITY

Thedemandsshapingthefutureshopperareoverlappingandmutuallysupportiveoftheirneeds

Source:KantarMONITOR

5

The current customer is going in parallel paths

•  Shopperswillshapetheretailandshopperlandscapeoverthenextseveralyears

Experiences

Simplicity

Connections

Flow

THEFOURKEYDRIVERS

Source:Kantar

6

Three Key Variables that are the retail requirements Allofthemaredigitallyenabledacrossallchannels:omni-digital

VALUESRULE ROUTINES?WHOWEARE

Source:Kantar

7

Agenda

1.  TheNewCustomer

2.  TheEmpoweredExperience

3.  BestPracticestoPurchase

4.  TheNewComplexity

8

25%

51%

Describes me perfectly Describes me somewhat

19%

48%

Describes me perfectly Describes me somewhat

Source: 2017 Kantar Futures (U.S. Q3 Data), ShopperScape®, April 2018

As shoppers become more empowered, they are less willing to make tradeoffs in the shopping trip

Retailers and brands must align with new shopper demands

Shoppers are more time-strapped than ever, increasingly seek

convenience.

Shoppers adopt a more holistic view of value, put more weight on

engagement.

No matter how hard I try, I never seem to have enough time to do all of the things I need to do

I’m doing more of my shopping now at retailers that provide a gratifying experience, instead of ones that just get the job done

19%

39%

Strongly agree Agree

Shoppers seek more connections, transparency through

personalization.

I prefer to shop retailers/buy brands that I feel ‘get me

9Source: ShopperScape®, March 2018

In turn, digital tools gain traction across shopping activities, highlighting channel-agnostic mindsets Interconnected tools help ensure shoppers’ needs are met, no matter how they prefer to shop

Top 10 methods of using smartphone in shopping process (Among primary household shoppers)

34% 32% 30% 28% 28% 28% 26% 25% 23% 22%

Look at retailer's ads/ promotions

Download mobile coupons

to my phone

Shop on a retailer's mobile

app

Receive notifications from retailers about deals

Connect to/ manage my

loyalty program membership

Snap photos of items I'm

considering buying

Use a retailer's app to see if

items I want are available near

me

Make a purchase on a

retailer's mobile app

Use an app to make a

shopping list

Add items to a cart/ basket for an online/ "click

& collect" purchase

Convenience

Personalization

Engagement

10

Across the interconnected path-to-purchase, experience must execute in three key ways:

Create Convenience

Provide Personalization

Enable Engagement

Source: Kantar

11Source: Kantar, retailer websites

Home improvement has matured faster than other channels toward omnichannel Supplier, Retailer, Pro, Self-Contractor, DIY Project

DIFFICULT TO NAVIGATE REQUIRES EXPERTISE NATURAL FIT FOR SERVICES

Despitechallengesofchangingmodelsandcustomers,HomeImprovementmademosttransitionsinadvanceofotherchannels

12Source: Kantar, ShopperScape®, January 2015 – December 2018, January – April 2019

And home improvement shoppers are becoming more omnichannel Nearly one-third of Lowe’s and Home Depot shoppers are shopping online and 15% are shopping both channels

The Home Depot Shopper Penetration Across Channels (Among The Home Depot Past Four Week Shoppers)

Lowe’s Shopper Penetration Across Channels (Among Lowe’s Past Four Week Shoppers)

80% 70% 69% 71% 69%

9% 14% 14% 14% 17%

11% 16% 17% 15% 15%

2015 2016 2017 2018 2019 YTD

78% 69% 69% 70% 69%

10% 14% 14% 14% 17%

12% 17% 17% 16% 14%

2015 2016 2017 2018 2019 YTD

Both In Store and Online

Online Only

Stores Only

Both (15%)

Online Only (17%)

Stores Only (69%)

13

Agenda

1.  TheNewCustomer

2.  TheEmpoweredExperience

3.  BestPracticestoPurchase

4.  TheNewComplexity

14

Home improvement retailers are capitalizing on these needs across the path-to-purchase

DISCOVERY CONVERSION ADVOCACY

Source: Kantar

15

DISCOVERY

Source: Kantar

NewTools

EngagingContent

Integration

16Source: Kantar, retailer websites, retailer apps

Digital tools create an easy source for inspiration in everyday life Remove friction, expand discovery phase beyond browsing or writing a list

17Source: Kantar, retailer websites

Home retailers leverage data to provide more personalized recommendations

Transparency helps shoppers make more informed decisions across channels

CURATED REVIEWS ENABLE TRUST ALGORITHMS GENERATE PERSONALIZED SOLUTIONS

18Source: Kantar, retailer websites

Interactive content helps shoppers discover products in a new context Create a more engaging, multi-touchpoint method of discovery

19

DISCOVERY CONVERSION

Source: Kantar

NewTools

EngagingContent

Integration

20Source: Kantar, retailer apps

Digital wayfinding tools and integrated promotions help reduce time searching for items Create a cohesive, fluid experience across all selling channels

WAYFINDING TOOLS EASILY NAVIGATE SHOPPING LISTS INTEGRATED PROMOTIONS CREATE COHESIVE CAMPAIGN

21Source: Kantar, retailer apps, websites, and earnings calls

Pro-Label calls out the DIY Create more a personalized shopping experience in a mass setting

22Source: Kantar, retailer websites

In-store services help educate shoppers, expand utility of products Create more productive use of space in stores

Source: Kantar, retailer apps, websites, and earnings calls

23

DISCOVERY CONVERSION ADVOCACY

Source: Kantar

NewTools

EngagingContent

Integration

24Source: Kantar, retailer websites

In-store fulfillment and return logistics speed access to products Evolving methods of driving convenience enhance lifetime ROI of shoppers

DEDICATED PICKUP LOCATIONS REDUCE CONGESTION CROSS-CHANNEL TOOLS REMOVE FRICTION FOR RETURNS

Source: Kantar, retailer apps, websites, and earnings calls

25Source: Kantar, retailer websites

D2C brands use personalized messaging to create more meaningful touchpoints post-purchase Enhance loyalty and advocacy by creating relevant experiences for any shopper

REMINDTHROUGHCUSTOMIZATION INCENTIVIZEFUTURETRIPS ENABLEONGOINGTOUCHPOINTS

26Source: Kantar, retailer websites

Retailer services create a complete solution, add value beyond the product level Extend relationships with shoppers beyond the initial point-of-purchase

27Source: Kantar

Actionable Insights

Understand what a multipurpose store asset means for supply chains as well as the role of product at the shelf.

Capitalize on data around purchase history and product lifecycles to encourage omnichannel behaviors through retailers’ loyalty programs.

Even on a small scale, consider relevant services that can enhance the value and lifecycle of products and ultimately create new touchpoints for shoppers.

28

Agenda

1.  TheNewCustomer

2.  TheEmpoweredExperience

3.  BestPracticestoPurchase

4.  TheNewComplexity

29

Itusedtobesimple:DIYorDoItRight

Contractor IndustrialSupply

DoItYourself

ProInstall

HomeImprovementTheCustomer

30

The current customer is going in parallel paths

Shopperswillshapetheretailandshopperlandscapeoverthenextseveralyears

Source:Kantar

31

TheHGTV,theInternet,theBathroomArmsRace…

Contractor IndustrialSupply

DoItYourself

ProInstall

HomeImprovementTheCustomer

32

Manufacture Showroom, Pro Supply, Home Improvement, Specialist ?

33

33

Example of New Need: Don’t sell nothin’ in the Bathroom… but they matter Note that most Millennials have never seen the infamous c-store “key”

Source:http://bathroomkeychronicles.blogspot.com/,KantarRetailResearch

34

The New Standards Emerged as Chains Ramped Up to Take the Lead Offered Food Service, Built in Multiple Entrances, Expanded Beverage and Bakery Selections

Source:CorporateSite,Arizonazoningdocumentation,KantarRetailResearch

34

35

Governmenthasmovedintoqualitymaterialsreflectingthesamemindsetsofbroaduse

36

New Transportation ‘Standards’ for Travelers

37

The newest wave is mass remodels and replacement for QSR

38

The Home and the Store continue to explore this “New Quality” of Smart, but now with extended requirements

Source:Kantar

39

40

The Industry as a whole is challenged and expanding into new complex and often surprising path-to-purchases

DISCOVERY CONVERSION ADVOCACY

Source: Kantar

NewTools

EngagingContent

Integration

41

David Marcotte SVP Cross-Border | Cross-Industry | Technology +1 413 847 1067 david.marcotte@kantar.com

42

Copyright © 2019 Kantar Consulting LLC. All Rights Reserved.

501 Boylston St., Suite 6101, Boston, MA 02116 T: +1 (617) 912 2828 howard.zimmerman@kantar.com

Notice

No part of these materials may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photography, recording, or any information storage and retrieval system now known or to be invented, without the express written permission of Kantar Consulting LLC. The printing of any copies for backup is also strictly prohibited.

Disclaimers

The analyses and conclusions presented in these materials represent the opinions of Kantar Consulting LLC. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion. These materials are not endorsed or otherwise supported by the management of any of the companies or organizations discussed herein.