Retailers should note and adjust to five trends shaping the consumer experience: A 2nd big bang is taking shape and concerning personal and domestic equipment products; Smart phones are taking over the shopping experience; consumers "channel-surf" with increasing ease; Social is becoming a critical part of the buying journey; Big Data excellence is a critical capability for growth.

1. McKinsey on Marketing & Sales – Slideshare Brief
20 June 2012
Any use of this material without specific permission of McKinsey & Company is strictly prohibited
Five major trends in digital
consumption: challenges
and opportunities for
retailers

2. McKinsey & Company |
The McKinsey iConsumer panel offers a unique vision of web user
behavior in 15 countries
1
15 countries
+ 100 000 participants qualified by socio-
demographic criteria
USA: 2008, 2009, 2010, 2011
Europe: 2010, 2011
▪ Equipment, brands, models,
service providers
▪ Usages and time spent:
– communication
– reading, browsing
– searching
– games
– social networks
– video, audio
– on-line shopping
▪ Spending and attitudes

3. McKinsey & Company | 2
The 2nd Big Bang in e-commerce1

4. McKinsey & Company | 3SOURCE: McKinsey - iConsumer 2011
A 2nd big bang is taking shape and concerning personal
and domestic equipment products1 Trend
2010-2011
2011
On-line searches¹
% of buyers on-line over the past 6 months, Europe
Decoration
Hygiene-
beauty
Food
Furniture
Shoes
High-tech
IT
Clothing
Books
Office suppliesHousehold
products
Video games
DVD / videos
0
5
10
15
20
25
30
35
40
45
50
55
60
65
0 5 10 15 20 25 30 35 40 45 50
On-line spending²
% of on-line spending, Europe

5. McKinsey & Company | 4
10
7
15
13
21
27
25
14
24
46
41
52
41
47
Food
Household products
DIY
Hygiene-beauty
Shoes
Furniture
Office supplies
Decoration
Clothing
High-tech
Books
DVD/Videos
Video games
IT
3
3
5
18
15
10
13
12
19
32
27
27
27
42
The share of purchases made on-line varies per category
1
Still in-
store
Already on-
line
Digital
battlefield
GB France
SOURCE: McKinsey - iConsumer 2011
Share of purchases on-line over the past 6 months, per category (declared)
2011, Percentage, Europe

6. McKinsey & Company |
The new consumer expectations
5
1
Categories Digital maturity
Main drivers of on-line
buying
Digital
battlefields
Personal and
domestic
equpment
Still in-store
Food and
household
Already on-line
Media and
entertainment
▪ Price
▪ Availability
▪ Choice
▪ Experience
▪ Service
▪ Practicality
▪ Time saving

7. McKinsey & Company | 6
In 2011 42%
In 2010 33%
2009
or before
25%
SOURCE: McKinsey – Food survey in Spain, France and GB, Q4-2011, sample of 1500 persons per country
17%
28%
55%
1
Date of 1st on-line purchase of food
Share of buyers of food on-line
Some on-line markets are still very “young”

8. McKinsey & Company | 7
Mobile migration2

9. McKinsey & Company | 8
55
35
29
27
24
18
5
Smartphone
Reader
Basic telephone
Laptop PC
Tablet
Desktop PC
Television
2x
SOURCE: McKinsey - iConsumer 2011
Smartphones are the first truly personal screens
2
Proportion of screens used “only for me”
% of smartphone users, Europe

10. McKinsey & Company |
Throughout Europe, tablet sales are rocketing
9
Tablet penetration ratio
% of web users
15
1
20112010
2
Tablets are still
primarily a tool
for the home:
80% of
connections
were made via
wifi¹
11
3
17
4
20112010
16
5
22
3
16
3
14
2
18
5
SOURCE: McKinsey - iConsumer 2011
1 tablet connectivity mode, % of tablet users, Europe 2011

11. McKinsey & Company | 10
50%
+22%
2011
2010 41%
12%
21%
+75%
2011
2010
On-line
searches¹
On-line
searches on
mobile phone²
SOURCE: McKinsey - iConsumer 2011
Significant growth in on-line and mobile searches
2
Proportion of respondents who made on-line searches before an off-line purchase
% of web users, Europe

12. McKinsey & Company | 11
Buying via a mobile is still in its infancy
Mobile
On-line
SOURCE: McKinsey - iConsumer 2011
2
Purchased
on-line
Purchased
via mobile High-tech
DVD/video
Books
Video games
IT
On-line spending
% of on-line spending, Europe
0
10
20
30
40
50
60
70
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75
On-line searches
% of on-line buyers over the past 6 months, Europe
Video games
High-tech
DVD/Video
IT
Books

13. McKinsey & Company | 12
21
42
73
Other
In-store
Home
42% of the consumers queried carry out web searches on their
mobiles in the store
SOURCE: McKinsey - iConsumer 2011
8
15
27
33
3
8
12
13
21
23
24
34
Page of retailer/manufacturer on
social networks
Price comparison application
Search for additional info.
Scan the barcode
User comments
Photo of product
SMS
Coupon on mobile
Visit site of another store
Visit site of same store
Professional comparisons
Manufacturer’s site
Location of search with mobile
% of respondents carrying out searches on a
mobile, Europe, N = 867 (2011)
Penetration of activities on mobile
% of persons searching on a mobile in the store, N = 363 (2011)
In France: 46%
In UK: 29%
2

14. McKinsey & Company | 13SOURCE: McKinsey
Price searches via mobile phone influence buying behavior
(declaration)
17
18
65
No impact
Buys, but next
purchase affected
Puts off purchase or
changes store
9
-1
-8
2
How does using a mobile change buying behavior?
%
Up on 2010
Down on 2010

15. McKinsey & Company | 14
The advent of multi-channel buying3

16. McKinsey & Company | 15
Choice of internet store as opposed to the store chains usually visited
% of respondents, France
SOURCE: McKinsey - iConsumer 2011
100%
Always different
Often different
Sometimes the same
Often the same
The same site as physical store
8
5
36
28
23
Multi-channel (in)-fidelity
“Faithful to traditional
chains”
“Open to the pure
players”
3

17. McKinsey & Company | 16
The first 3 buying criteria in the store: contact with the product,
verification of quality and pleasure3
SOURCE: McKinsey - iConsumer 2011
10
17
7
9
9
18
22
22
26
30
30
34Try / touch / feel
Other
Need within 48h
Talk to sales staff
No on-line payment
Instant satisfaction
Immediate need
Practicality
Easier to return item
No delivery charges
Pleasure of entering a store
Verify quality
Main reasons for buying in-store
Percentage of respondents

18. McKinsey & Company | 17
The consumers praise the practical nature of multi-channel buying
Share of consumers using the following services
% of respondents
10
10
37
21
33
47
55On-line check on product availability in store
Print coupon and use in store
Buy on-line, collect in store
Buy on line, return product to store
On-line access to more detailed content, buy in store
On-line personalization of the purchased product
Book an appointment in the store 12
10
28
28
50
44
67
France
N = 988
GB
N = 976
3
SOURCE: McKinsey - iConsumer 2011

19. McKinsey & Company | 18
32
Buy on-line and collect
in the store 42
Buy on-line and receive
delivery at home
26
Either
SOURCE: McKinsey
3
Example of food purchases in France
% of on-line buyers, 2012
The consumer preferences concerning the practical aspect of multi-
channel buying are different

20. McKinsey & Company | 19
A social iConsumer4

21. McKinsey & Company | 20
Facebook becomes a retailer portal
4
SOURCE: McKinsey - iConsumer 2011; web users aged 13 and over
34
25
20
1918
14
Follow retailers on Facebook
% of Facebook members
Most important Facebook information
% of retailer followers, Europe
10
6
7
8
15
44
14
47
2
11
11
11
Info about sales / events
User opinions
Videos, photos, etc.
Detailed product information
Update of availability in store
Promotions and coupons
FranceEU5

22. McKinsey & Company | 21SOURCE: McKinsey - iConsumer 2011
36.7Opinion of other store users
31.4Website recommendations
31.5
Products test bench generated by
the users
24.9
Recommendations from social
networks
18.6Videos generated by the users
1 By weight of all the respondents
Content generated by web users has become a major source of
information prior to a purchase
20.7
29.2
31.8
35.3
49.6
France
N = 988
GB
N = 976
27% of consumers left an opinion on the web in Europe in 2011
4
Recommendations trusted by consumers
% of consumers tending to trust the opinion1

23. McKinsey & Company | 22
Big data for bigger profits5

24. McKinsey & Company | 2323SOURCE: Bloomberg and Datastream; annual reports; McKinsey analysis
9
14
11
9
24
12
14
9
12
10
22
11
Income 1999-2009
(10YR CAGR)
EBITDA 1999-2009
(10YR CAGR)
Average for main competitors
Example of best practice
in client understanding
Grocers
Online retailers
Big box retailers
Casinos
Credit cards
Insurance
6
8
9
5
5
-1
2
-1
5
1
-15
3
A detailed picture of the customers is a crucial factor in making a
difference
Percentage
5

25. McKinsey & Company | 24
Two different versions of the
website for the same user for
two sessions 1 minute apart
Example: Amazon.com permanently runs tests and analyses on large
volumes of data to optimize the ergonomics of its website5

26. McKinsey & Company |
On-line buyers are receptive to targeted marketing
25
Off-line buyers
On-line buyers2.7
2.9
2.1
2.5
Acceptance of targeted publicity on the web
Index
2.3 Financial
situation
Declared
category
Very modest Modest Average Well-off Very well-off
Percentage of the population: 10%
SOURCE: McKinsey - iConsumer 2011
35% agree to communicate
information in return for discount
vouchers
28% would like to see TV
commercials adapted to their
centers of interest
5

27. McKinsey & Company | 26
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