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UK June 2013

EXECUTIVE SUMMARY
Researching and Buying Technology Products

Its been a long time since the digital shopping revolution started, and yet retailers are confronting what seems like, at times, an insurmountable issue: how to effectively compete with cheaper, better-stocked websites. The worryingly swift collapse of a number of high street staples leading to 2013 from Woolworths to Comet is anything but encouraging, but as in previous years, hysteria over the end of the high street is much overdone. Many retailers are starting to realise that digital shopping channels can perfectly complement and enhance the bricks-andmortar proposition. The implementation of a thorough, comprehensive multichannel and multi-device strategy is the key to a healthy future.

SAMUEL GEE
Technology Analyst

Researching and Buying Technology Products Executive Summary


June 2013

THE MARKET
According to research carried out for Mintels Digital Trends Summer UK, June 2013 report, internet users are most likely to want to purchase a smartphone over the next three months; approximately 17% of consumers intend to acquire one. (See Figure 1) Tablet computers are also relatively popular with consumers, with an approximately equal proportion of consumers looking to purchase a tablet over the upcoming months as a laptop computer. The technologies with the lowest levels of interest as of April 2013 were televisions and games consoles. A lack of interest in consoles is almost entirely due to the upcoming release of the next-generation devices in Q4 2013, which will be stifling demand for end-of-life generations currently on the market at non-discounted prices. A lack of planned television purchases partially reflects the disinterest in newer features from consumers. Mintels Televisions UK, September 2012 report found that obtaining 3D capability or internet connectivity motivated only 4% of consumers each to purchase a new set.

MARKET FACTORS Internet access from smartphones and tablets increasing


In January 2013 for the first time, over half of all internet-using consumers accessed the internet from a smartphone, according to Mintels Digital Trends Spring UK, March 2013 report. In the same month, over a quarter of consumers (27%) accessed the internet from a tablet device. This represented a 10-percentage point jump from September 2012, as the tablet Christmas saw ownership of tablets rise from 24% to 33% of all internet users. Smartphones were owned by 66% of internet-using consumers during the same time period. The fact that more consumers are now accessing the internet through mobile devices will not only lead to an increase in m-commerce and t-commerce sales. It also suggests that both high street and online retailers will need to supply dedicated, device-optimised websites in order to present consumers with the best browsing experience.

FIGURE 1: PLANS FOR PURCHASE OR UPGRADE OF CONSUMER TECHNOLOGY PRODUCTS IN THE NEXT THREE MONTHS, JANUARY 2013 AND APRIL 2013 Base: 2,000 internet users aged 16+

Note: Comparable January 2013 data for static and portable games consoles do not exist SOURCE: GMI/MINTEL

Researching and Buying Technology Products Executive Summary


June 2013

Multichannel shopping on the rise


John Lewis reported for the year ending December 2012 that almost two thirds of all sales involved customers visiting both its shops and website. Orders using its Click & Collect service doubled over the year, and accounted for 35% of sales over the Christmas period. Dixons Retails 2012 interim results reported that for the year ending April 2012, multichannel sales had increased 28%, with 80% of all consumer shopping trips involving the internet at some point. Like John Lewis and Argos, the majority of multichannel sales for the retailer had come from a Click and Reserve service. Multichannel retailing has become significantly more important as widespread broadband access and increasingly more affordable computers have pushed consumers to shop more online as well as in-store. The unfortunate downfall of HMV is almost certainly due at least in part to a much-delayed embrace of an effective multichannel retail strategy.

to actively recruit other individuals in the process. In a similar attempt to bring person-to-person interaction and amateur reviews, the Reevoo Everywhere scheme attempted to pull usergenerated review content out of the digital space and into physical marketing, by either instantly pulling up consumer reviews whilst in-store by scanning a QR code or using nearfield communication (NFC) technology, or by integrating with a wide variety of traditional advertising models (including online video, banner and text advertising or television advertising). John Lewis instigated augmented reality advertising for its latest smart TV range, without consumers needing to download or use a smartphone application. Markers on the pavement outside of the ground floor display windows for the John Lewis stores in Oxford Street and Sloane Square invite consumers to stand in a particular place, at which point a three-by-three grid of Samsung smart televisions within the display window show a live mirror image of the user on the street, surrounded by four augmented reality plinths that the individual can interact with. Bringing augmented reality to potential shoppers without them needing to download and access a particular application is a potent way of engaging interest and broadening awareness of a particular product range amongst passers-by. Currys and PC World decided instead to focus on physical rather than augmented reality touch points for customers looking to acquire last-minute gifts by putting a trolley laden with technology on East Midlands Trains for Christmas 2012.

Pop-up stores allow manufacturers and online pure-plays to connect to customers


Pop-up shops (temporary retail spaces which brands set up inside other high street spaces such as shopping centres, galleries or in selfcontained structures on the street) are likely to grow in popularity over the coming years. For consumers, there are a number of advantages including greater access to one-stop locations where new technology can be tested and purchased, with staff on hand to offer expert advice and assistance. For manufacturers, pop-up stores provide the opportunity to forge relationships with customers directly, and demonstrate the features of a new device at first hand. However, the outright winners are online retailers, who can enjoy the benefits of a high street presence but without the overheads that come with maintaining a permanent business location.

THE CONSUMER Where do consumers purchase their technology?


Almost eight in ten internet-using consumers have purchased technology in-store. Surprisingly, given the often lamented state of the British high street, this is 15 percentage points more than the proportion who have purchased technology online. (See Figure 2) Consumers who purchase big-ticket technology items such as televisions or computers are more likely than those purchasing portable technology like smartphones and tablets to shun shopping at pure-play online retailers. A seemingly strong preference amongst less affluent consumers for shopping in-store rather 2

COMPANIES, BRANDS AND INNOVATIONS


Fresh a website designed to allow consumers to vie for the right to acquire products they enjoy allowed manufacturers to choose the most ardent fans of their products to review new releases, spreading the word through a community of selfnominated evangelists. This not only leverages the desire amongst consumers to acquire new content as soon as possible, but also pushes them

Researching and Buying Technology Products Executive Summary


June 2013 than hunting bargains online is likely down to fewer purchases being made by those consumers, with those relatively expensive purchases that are made such as televisions for the living room tending to naturally occur in-store.
FIGURE 2: LOCATIONS FROM WHICH CONSUMERS PURCHASED TECHNOLOGY, APRIL 2013 Thinking about the technology products that you own, where did you purchase each of the following devices? If you own more than one device of the same type, please answer for the one you purchased most recently. Base: internet users aged 16+ who own the devices

How do consumers research technology purchases?


For more expensive purchases, such as televisions and computers, consumers are more focused on getting as unbiased an opinion as possible. This is being primarily sourced from friends and family, or retailers, whose greater levels of impartiality over manufacturers will lend their recommendations and the information they display in-store some credence. (See Figure 3) For big-ticket purchases like TVs, consumers are most likely to research using product displays instore, followed by websites and reviews. Bricksand-mortar retailers that can supply customers with tablets to read in-store that contain user reviews may be able to negate the need for those consumers to leave the retailers space in order to conduct further research. For tablets, older consumers especially the over55s are possibly unsure of what the devices may offer them, given their lack of contextualising experience with similar touchscreen smartphones, which they are less likely to own. This makes them more likely than their younger counterparts to rely on a retailers website for information. An unusual reliance from those researching smartphone purchases on salespeople likely speaks to purchases made within mobile network operator outlets, where the staff are able to be extremely knowledgeable about the handsets they sell, and are likely trusted to be dispensaries of sage advice more than the staff in generalist or even specialist retailers. Laptop/desktop research, like televisions, is mostly restricted to in-store research methods rather than online. Given the familiarity (for the most part) with computer features and interactions though, this in-store research is likely to evaluate the aesthetics of competing devices. The lack of consumers trying out cameras for themselves, as they research them, is particularly surprising given the importance that lens features and photo quality play. For consumers buying DSLR devices, comparing the captured photos of competing devices would seem to be a natural precursor to purchase. The low response rate may well be due to the lack of devices available

Static technology is a net of TV, Laptop/Desktop or Games Console Portable technology is a net of Tablets, Smartphones or Cameras In-store purchases is a net of Supermarket, Specialist electrical retailer, or Generalist retailer Online purchases is a net of Online-only retailer, Website of a supermarket, Website of a specialist electrical retailer, Website of a generalist retailer. SOURCE: GMI/MINTEL

Researching and Buying Technology Products Executive Summary


June 2013 at retailer stores for potential buyers to try out. A greater range of devices available in-store to test will prompt greater hands-on experience and, hopefully, a fuller appreciation of the differing technologies involved. Women are much more likely than men to seek advice from friends and family when buying games consoles. This will probably change over the latter half of 2013 and into 2014 as big new console launch events accompanied by extensive advertising campaigns lead potential buyers of both genders to feel more informed.

Attitudes towards researching and buying technology


Some 43% of consumers buying portable electronics would prefer to buy the product instore rather than online. Pop-up stores could be instrumental in light of this in boosting the purchase rates of portable technology, as they provide consumers with clear and compelling hands-on experience. (See Figure 4)

FIGURE 3: RESEARCH SOURCES USED BY CONSUMERS WHEN BUYING TECHNOLOGY, APRIL 2013 Still thinking about the technology products that you own, which of the following sources of information did you find the most useful when researching and buying them? Select up to three. Base: internet users aged 16+*

Static technology is a net of TV, Laptop/Desktop or Games Console Portable technology is a net of Tablets, Smartphones or Cameras * all: 1,994 internet users aged 16+ who own technology Portable technology: 1,763 internet users aged 16+ who own portable electronics, Static Electronics: 1,975 internet users aged 16+ who own static electronics TV: 1,773 internet users aged 16+ who own televisions, Tablet: 692 internet users aged 16+ who own tablets, Smartphone: 1,331 internet users aged 16+ who have purchase smartphones, Laptop/desktop: 1,928 internet users aged 16+ who own laptop or desktop computers, Camera: 1,227 internet users aged 16+ who own a camera, Games console: 1,141 internet users aged 16+ who own a games console SOURCE: GMI/MINTEL

FIGURE 4: ATTITUDES TOWARDS RESEARCHING AND BUYING TECHNOLOGY, APRIL 2013 Thinking about researching and buying technology products, which, if any, of the following statements do you agree with for each of these products? Select all that apply in each column. Base: 2,000 internet users aged 16+

SOURCE: GMI/MINTEL

Researching and Buying Technology Products Executive Summary


June 2013 Those aged 25-34 are the most likely to multichannel shop, using a mixture of online and in-store. Creating a unified brand approachable either online or in-store (rather than having separate online and in-store retail approaches) will be critical to maintaining sales in the years to come, as these consumers age and their habits became standardised. Older consumers are as likely as their younger counterparts to want to purchase newer, smaller items in-store. purchase of new technologies. Those consumers who would be enticed to shop in-store if there were expert salespeople looking after them are the least likely to be swayed to shop in-store by lower prices. This validates retailer efforts to prove that the instore experience is what will prevent consumers migrating entirely online in seeking lower prices; those consumers focused on expertise are less concerned by price.
FIGURE 5: USE OF A SMARTPHONE OR TABLET TO RESEARCH AND BUY TECHNOLOGY

Researching and buying on smartphones and tablets


At the moment, smartphone and tablet owners are primarily shopping online using the same websites and discovery techniques (eg Google) as they do on desktop or laptop computers. A quarter of all smartphone owners have visited a retailer or manufacturer website on their phone to research their next purchase, whereas only one in ten have downloaded a specific application to help them research. (See Figure 5) Smartphone-owning internet users aged 1624 are nine times more likely than those aged 55-64 to have downloaded a specific app to help them research technology products. However, they are almost exactly as likely to have visited a manufacturers or a retailers website on their phone whilst researching technology. Some 23% of tablet owners have purchased a technology product through their device whilst at home, compared to only 16% of smartphone owners. Retailers should not go so far as to abandon the development of smartphone applications or mobile-optimised websites, but focusing on creating a well-structured shopping environment for tablet users should be a top priority as the devices continue to grow in penetration.

PRODUCTS, APRIL 2013 Thinking about researching and buying technology on smartphones and/or tablets, which, if any, of the following activities have you done and on which device? Select all that apply. Base: 2,000 internet users aged 16+

SOURCE: GMI/MINTEL

FIGURE 6: FACTORS THAT WOULD INDUCE CONSUMERS TO BUY MORE IN-STORE, APRIL 2013 Thinking about buying technology products, which, if any, of the following would encourage you to purchase the product in-store rather than online? Select all that apply. Base: 1,261 internet users aged 16+ who have bought at least one technology product online

What would make consumers buy more technology in-store?


Those aged 16-24, who are the most likely age group to shop online (with 75% doing so, compared to 69% of the next most likely group, 35-44s), are particularly enticed by the offer of a free or discounted delivery service. A sizeable 44% would be inclined to shop in-store if a free and speedy delivery service were available. (See Figure 6) Retailers could also appeal to younger consumers by supplying free or extended warranties with the

SOURCE: GMI/MINTEL

What We Think
Retailers and brands have been right to focus on the experience in recent years as the factor that will save them in the face of cheaper online alternatives. What needs to be understood though is that retailers own digital channels are as much a part of this experience as their store interiors, or their sales staff expert information. Building a multichannel shopping experience means having a website as well maintained as store interiors, but also now requires retailers to understand how consumer use of newer devices like smartphones and tablets will influence their journeys to a brand. Retailers that leverage the benefits of store experience and the reach of online product catalogues, as well as understanding the contexts of consumers coming from a PC, tablet or smartphone, will produce a comprehensive, positive shopping experience thats hard to beat.

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