©2012, Cognizant

2012 Shopper Study OverviewRetail Without Boundaries

| ©2012, Cognizant

Study Summary

| ©2012, Cognizant

Male

Female

18-33

34-45

46-64

65 and over

Our third annual, 2012 Shopper Experience Study respondents reflect the typical mix of retail shoppers

On-line survey conducted April 12 – April 22, 2012

US

Canada

UK

Australia

Hong Kong

China

Low Income

Middle Income

High Income

Respondent Income Group

Respondent Age Group Respondent Gender

Respondent Geography

4,000 Shoppers Around the World

Adobe Acrobat Document

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Retailers must devise their shopper experience strategies based on the shoppers they serve

4

ONE size does NOT fit all

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Retail without Boundaries is about knocking down the walls.

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Shoppers love to shop anytime, anywhere and through any channel, but especially at stores

6

4 out of 5puchases occur in stores

andthe most influential factors are:

#1 Price

#2 Product

“Showrooming” (browsing in a store and then purchasing online through a smart phone, tablet or PC) is the number one risk facing retailers today. The key to winning with shoppers today is to enable “Retail without Boundaries”.

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Shoppers have high expectations for in-store execution

Some of the highest scores across the study are related to how much customers dislike when stores fall short on execution.

“How much do you dislike each of the following when shopping in a store for products?”

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Sales in digital channels are growing— varied by category—and influencing in-store sales.

Although the lion share of sales still take place in stores, retailers must create digital experiences that both support in-store purchases as well as digital commerce.

“What percentage of your annual purchases for each of the following types of goods do you make through the following channels?”

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Higher income shoppers are most inclined to use digital channels

9

The highest income shoppers are more likely to use digital

channels

House

hold

Groce

ry

Health

and

Bea

uty

Appar

el

Elec

tronics

0%

20%

40%

60%

% of Purchases by Channel Split by Type of Product for High Income Shoppers

In-Store Online Mobile Other

Lower Income Middle Income Higher Income0%

20%

40%

60%

80%

% of Purchases by Channel

In-Store Online Mobile Other

They are most likely to use digital channels for the purchase of specialty

products

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The basics for creating digital experiences that shoppers want are similar to stores

You can't find the product you want using the website's search engine navigation

The product information you need is not available

Ability to compare different products is not available

Purchase price not communicated clearly or early enough

Online price or promotions/discounts are different from what's available in-store

No order online and pick-up in store

The shipping options you prefer are not available

Too many steps or too much information is required to check out

Payment method you like is not available

Cannont return the product to a store

1 2 3 4 5

3.9

4.0

3.4

4.0

3.8

3.1

3.3

3.7

3.6

3.8

“How much do you dislike each of the following experiences when shopping online?”

Shoppers increasingly expect online and in-store experiences to be consistent.

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Key Shopper Study Themes

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There are four themes essential to becoming a retailer without boundaries

12

Retail Without

Boundaries

Showrooming can be a retailer’s

“frenemy”

Store associates are

a retailer’s brand

ambassador…for better or

worse

How personal can you get

without being creepy?

Are you keeping up

with the Jones' or

investing in the future?

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With the right shopper strategy showrooming can become your “frenemy”

Retail without Bounda

ries

Show-roomin

g

Associates

Personalizatio

n

Jones’?

Differentiated Experiences

Customer Service

Product, Price, Promotion

Location

13

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Factors that influence purchase decisions are consistent across segments and channels

14

Rank OrderCompetitive price, promos, etc. 1Right product selection 2Customer Service (quality/access) 3Fast, easy check-out 4Compelling loyalty program 5

The top five influencers of in-store purchase decisions are unanimously agreed upon by all shopper segments:

Online shoppers value the same retail fundamentals. However, they rank return processing higher (#3) and compelling loyalty programs lower (#8).

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How purchase decisions are being influenced is changing and varies based on product type

“In a typical month, how often do you use the following resources to help you make informed purchase decisions of products in the following category(s)?”

Significant differences between specialty and consumables for traditional resources

Mobile and tablet are still nascent

TV is continuing to lose ground

Specialty product purchases are more influenced by digital experiences

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The two essential elements to combat the risk of showrooming is to match prices and provide exceptional customer service.

The best way to stop showrooming is to give shoppers what they want.

16

29% 35%

14% 10%

Of shoppers want store associates to match prices

Of shoppers want store associates to have better customer service skills

Of shoppers want store associates to be more available in the aisles

Of shoppers want store associates to have real-time access to product

information, inventory and ordering

Equipping store associates with mobile technologies is the second line of defense.

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Experimenting with new shopper experiences will endear shoppers and differentiate retailers

17

Social Networking/Media

Group Buying / Deals

Member Discount

Geo Location

Product Comparison Smartphone App

1 2 3 4 5

2.3

2.7

2.8

2.3

2.5

2.2

2.5

2.7

2.0

2.1

FemaleMale

“For the product category(s) shown below, how important it is for you that your favorite stores work with the following types of partners to provide you with better experiences,

more products, or more specials/promotions?”

Surprisingly, men are more interested in some of the newer mobile and social retail experiences. Shoppers are most interested in member discounts (e.g. Beyond the Rack and Ideeli) closely followed by group buying sites (e.g. Groupon and Living Social). These trends are consistent with 2011.

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Retail without Bounda

ries

Show-roomin

g

Associates

Personalizatio

n

Jones’?

18

Store associates are a retailer’s brand ambassador…for better or worse

Help with purchase decisions

“Go to” person for issues

Help find product

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Shoppers rely predominantly on traditional resources to help with purchase decisions, excluding store associates

19

11%

10%

22%

24%

13%

19%

Resources Used to Help with Purchase Decisions

Digital Resources Store Associates Store SignsProduct Packaging Word-of-Mouth Traditional Advertising

13%

10%

18%

25%

16%

18%

Age 18-339%

9%

23%

28%

12%

19%

Age 34-457%

9%

23%

29%9%

22%

Age 46-64

5%8%

27%

33%

7%

20%

Age 65 and over

Store associates is the only traditional resource that ranks very low across all

segments as a preferred resource

to help with purchase decisions.

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When shoppers can’t find what they want, most likely they’ll look elsewhere

20

At first glance, it’s affirming that nearly

50% of shoppers ask for help when they can’t

find what they’re looking for…on the

other hand more than 25% buy the product

elsewhere--13% of 18-33 year olds use their

mobile phones to do so.

18-33

34-45

46-64

65 and over

0% 10% 20% 30% 40% 50% 60% 70%

Ask an associate to help you locate the right item

20%

9%

49%

11%

5%

5%

What do you do when you can't find what you want?

Leave the store and look for the same product elsewhereLeave the store and look for the same product during a future visitAsk an associate to help you locate the right item Purchase an alterna-tive item available in that storeUse your mobile phone to identify the product elsewhereCheck the retailer’s in-store kiosk (if avail-able)

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When shoppers have a problem, retailers might never know about it.

21

Younger shoppers are unlikely to report

store issues

18-33

34-45

46-64

65 and over

0% 5% 10% 15% 20% 25%

21%

13%

10%

11%

“When you have a problem while shopping in a store (e.g. product availability, poor customer service, out of stocks, etc.) indicate whether you are unlikely to report it.”

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When shoppers do seek help, nothing beats a live person.

22

In-store associates are the most likely

resource for shoppers to seek when they

need help. Younger shoppers especially are increasingly gravitating toward digital channels

(e.g. social media, mobile text and chat)

for help

Call customer service #

Go to in-store customer service desk

Online chat

Video chatMobile chat

Mobile text message

Social media page

-

2.00

4.00

18-3334-4546-6465 and over

“When you need assistance while shopping, how likely are you to use the following customer service options?”

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Retail without Bounda

ries

Show-roomin

g

Associates

Personalizatio

n

Jones’?

23

How personal can you get without being creepy?

Personalized in-store experiences

#1Resistant to sharing personal information

- Versus -

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Personalization is a proven tactic to increase shopper engagement.

24

Personalized in-store

experiences (e.g. promotions,

offers, preferences customized

based on past purchases or

status etc.) was ranked the

most desired feature by

shoppers in North America

#1

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Above all, shoppers want to be recognized and uniquely appreciated while in stores.

25

Special treatment in the store based on loyalty

Offers delivered in a store that are personalized

Acknowledgement of status as a highly valued customer while in the store

Website recommendations based on other products you searched for

E-mails with personalized messages

Website recommendations based on products others have searched for

Personal greeting in the store

Offers delivered via a mobile phone that are personalized

- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00

3.44

3.17

3.15

2.91

2.88

2.76

2.72

2.26

“When shopping for specialty products, how much would each of the following techniques to personalize your shopping experience influence your shopping choices, if

available?”

The top three personalization techniques that will influence shoppers’ choices are about enhancing the in-store experience.

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Shoppers are skeptical about sharing information

26

Information tracked by loyalty number

Name, address, e-mail for website account

E-mail collected at point of sale

Phone number collected at point of sale

Have cookies placed on your computer to allow tracking

Locations you are at tracked using geo location service on your phone

Information tracked by credit card number

0.00

1.00

2.00

3.00

4.00

5.00

2.89

2.69

2.60

2.26

1.86

1.83

1.82

Shoppers are especially resistant

to sharing information when it is tied to their

personal property

“How willing are you to share the following information with stores in order to have a more personalized shopping experience?”

Although shoppers want personal experiences, they have boundaries around how much information they’re willing to share in exchange for those experiences. Highest income shoppers are most willing to share information where as older shoppers are least likely.

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Retail without Bounda

ries

Show-roomin

g

Associates

Personalizatio

n

Jones’?

27

Are you keeping up with the Jones' or investing in the future?

Digital assets as an enterprise resource is the next frontier

Everyone LOVES Facebook

In APAC social media is a leading

influencer of purchase decisions

Retailer mobile and tablet apps are the

least favored resources

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Store’s website

Store’s mobile smartphone app

Store’s tablet

Other Internet searches and websites -

2.0

4.0

ConsumablesSpecialty

Shoppers go to digital resources first when shopping for specialty products.

28

Retailer mobile and tablet apps are the

least favored resources

Other Internet searches and websites 1st

Store’s website 2nd

Print materials 3rd

Information provided on product packaging 4th

Television 5th

Shelf signs or interactive product displays 6th

Friends and family 7th

Store associates 8th

Social media 9th

Store’s mobile smartphone app 10th

Store’s tablet 11th

Rank order of resources used to make purchase decisions for specialty products

Retailers’ investments in mobile phone and tablet apps aren’t paying off…yet.

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Many digital trends are moving east to west--APAC has become an indicator of where to invest

29

Although North American Shopper’s social influence lags APAC, there’s every evidence that the influence of social will only grow in North America.

0

1.5

3

4.5

ChinaHong KongNorth AmericaAustraliaU.K.

012345

ChinaHong KongNorth AmericaAustraliaU.K.

Mobile payment ranks dead last by a large margin for shoppers in North America, yet shoppers in APAC are ready.

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Leveraging digital assets in stores is the next frontier

30

Although cross channel integration and interactive experiences are not yet demanded by shoppers, customers will respond to them—especially those who are ages 18-45.

2.7

2.93.1

3.33.5

All ShoppersShoppers Age 18-34

Unclear Information 1Cannot Find Product 2Undesirabel Policies 3Difficult to Purchase 4Lack Cross Channel Integration 5Lack advanced Web Features 6

Poor quality information is the leading dissatisfier for online shoppers. If retailers can cleanse their online data and extend it for use in stores, they’ll be two steps ahead

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Shoppers expect retailers to extend their brands through social media, especially Facebook

31

It is important for shoppers’ favorite stores to have a presence on social networking sites to provide better experiences, more products, and specials/promotions

Facebook is the only technology driven retail experience

where shoppers age 65 and over

expressed a strong interest

Facebook

Twitter

Pinterest

Blogs

MySpace

Other

1 2 3 4 5

4.2

3.2

3.1

3.4

2.8

3.0

4.1

3.2

3.1

3.4

2.8

2.9

SpecialtyConsumables

Rank OrderExclusive promotions/sales 1New products sneak peak 2

Feedback on products 3Customer Service 4

Fun, interactive experiences 5Social responsibility 6

Make a purchase 7

Shoppers want to engage with their favorite brands via social media, not shop on social site.

| ©2012, Cognizant 32

Thank You

Please contact Rachel Cosby at rachel.cosby@cognizant.com to request a customized briefing of the Shopper Study results

or a copy of the detailed global shopper research results.