MaxMedia Retail Labs Industry Report:

consumer electronicsOctober 2015

© 2015 MaxMedia | www.maxmedia.com

About Our Industry Reports:MaxMedia Retail Labs redefines shopper research. Consider the fact that 95% of shopping and purchase decisions are made non-consciously where emotions, memory, and instincts rule the day. We use a psychological approach to research with studies focused on accessing this “hidden layer” of data.

Our studies are carefully crafted to access non-conscious motivators of shoppers in different retail categories. We apply our proprietary Emotional Experience CENTER Model and the same cognitive analytics engine used by P&G and other leading retail companies.

of shopping and purchase decisions are made non-consciously where emotions, memory, and instincts rule the day.95%

2© 2015 MaxMedia | www.maxmedia.com

With statistical significance, our team determined which of the identified six experiential levers are most important to shoppers:

Shoppers need to feel mentally and physically safe and secure from the moment they enter the store until the time they leave.

Shoppers’ brains want to expend as little energy as possible. Intuitive, easy to navigate shopping environments are paramount.

Only the new, interesting, intriguing or surprising gets shoppers’ attention in a crowded, cluttered, and highly-distracting world.

Shopping physical stores should be a visceral, emotional, sensory-driven experience, delivering immersive shopping moments.

Shoppers want to be more than just a spectator; they want to be a player in the shopping game and look for opportunities to engage and become part of the story.

Today’s shoppers crave the personal satisfaction of making the right choices and being recognized for it. They seek a sense of accomplishment, confidence, or pride.

Comfortable

Easy

Novel

Tactile

Engaging

R ewarding

Methodology:Our Retail Labs team uses the CENTER Model levers to unearth quantitative data expressing shoppers’ expectation of an industry. Each factor is scored 0-5: 0 as least important, 5 as most important. We compare these results to the qualitative data (also represented 0-5) gleaned from the reality of how companies deliver on each of the six levers. This gap is the sweet spot for industry improvement and opportunity.

© 2015 MaxMedia | www.maxmedia.com 3

what we know

90% of retailers use or have plans to use in-store applied game theory (gamification principles and the effect of reward)2

90% of shoppers surveyed would prefer to buy in a brick-and-mortar store versus online3

• Over half of those surveyed are millennials

Consumer electronics carries the highest “in-store digital influence” factor (58%) among any other retail category1

Shoppers prefer their personal device or in-store digital displays over a sales associate to1:• Locate items• Get product information• Checkout

Study conducted by MaxMedia Retail Labs in August 2015Participants: 100 Americans, 18-65 years of age, who have shopped for consumer electronics in the past 6 months

MaxMedia Retail Labs Industry Report:consumer electronics

4© 2015 MaxMedia | www.maxmedia.com

what we found

InsightsIn considering how these participants reacted to the reality they encountered in three top consumer electronics retailers, we found many important insights.

Image 1.0Shopper expectation of the consumer electronics industry vs. shopper in-store experience.

RealityExpectation

Biggest drivers of churn:Engagement voidLack of ease

Biggest drivers of happiness and brand advocacy: RewardTactile interaction

Biggest contributor to comfort and ease: Employee interaction

The participants’ typical expectation of the consumer electronics industry leaned most toward factors of Engagement and Novelty.

However, the actual experiences these participants encountered skewed heavily to Comfort and missed the opportunity for Ease and Novelty.

comfortable

easy

novel

rewarding

engaging

tactile

5© 2015 MaxMedia | www.maxmedia.com

Shopper Expectations by RetailerAn exploration of specific retailers points toward the conclusion that shoppers don’t expect the shopping experience for consumer electronics to be Easy or Comfortable.

Walmart shoppers expect to sacrifice Ease for Novel products and an Engaging experience.

GameStop shoppers have relatively high expectations on all fronts, but are especially interested in their experience at the retailer being Engaging, Novel, and Tactile.

Best Buy shoppers mostly expect the retailer to provide an Engaging environment with much Novelty to explore.

ShopperExpectations

2.5

3.0

3.5

4.0

4.5

Walmart GameStop Best Buy All

Image 2.0CENTER Model levers against shopper expectations of specific consumer electronics retailers.

what we found

EngagingRewarding

NovelTactile

ComfortableEasy

6© 2015 MaxMedia | www.maxmedia.com

what we learned

7© 2015 MaxMedia | www.maxmedia.com

Based on statistical analysis of the qualitative data we gathered, the most important factor in the success of consumer electronics retailers is not the physical environment – but the employees within it.

The behavior of employees can make or break an experience in store. We found that employees of consumer electronics retailers are the biggest cause of failure on the Ease lever while also being the biggest catalyst for success on the Engagement lever. Poorly trained employees make the experience more difficult for shoppers. Yet employees that take pride in their job create a lasting, positive impression.

We discovered that shoppers most reported feelings of anger when there was also a reported failure on the Ease and Engagement levers. Customers were frustrated and upset when they found the shopping process difficult or when they were ignored. And these two levers are the highest indicators of churn.

Not surprisingly, a high rating on the Reward lever was correlated to reports of happiness in shoppers. With any retailer, it is important to make consumers feel valued and important.

Employees are no doubt a critical component when pursuing a retail strategy.

“I was trying to find the best external hard drive for my laptop, and the store employee spent 30 minutes with me. He answered all my questions and asked me a series of questions that I had not even thought about.”

“There was one time when I was being helped by an employee who seemed to be far less educated on video games than I was.”

“I had to wait 30 minutes for an employee to find their keys to open up the case to get my game.”

“The cashier gave me a special promo coupon, which allowed me to get $10 off. It was so nice and unexpected.”

Retailers of consumer electronics would benefit by creating an engaging and new shopping

experience inside the store. Use applied game theory to impart a sense of reward and

accomplishment for shoppers as they navigate different product options. Create plenty of

opportunities for shoppers to tactily engage with products inside the store without a heavy

sales push. Encourage shoppers to share their findings socially.

Ensure sales associates are well-versed on different product lines and features for those

shoppers looking to validate their impending purchase. For shoppers in the research phase,

provide self-guided, unbiased, peer-reviewed, interactive screens to help narrow down

the product set. Keep in mind these interactive screens should be supplemental to the

opportunity to physically explore products. Digital should support, instead of replace, the

tactile shopping experience. And lastly, ensure the employees hired are as irrationally loyal to

your brand as you want your shoppers to become.

1 Deloitte: The New Digital Divide, June 20152 Boston Retail Partners’ 2015 CRM/Unified Commerce Survey3 A.T. Kearney Omnichannel Shopping Preferences Study 2014

what we think

8© 2015 MaxMedia | www.maxmedia.com