What's Inside

Issue 29 | 2017 Non-MemberEdition What’s inside... 5 Shopper Investigation Discount stores are used by many shoppers but what are they offering in-store? Sector Report 7 Capturing shoppers on their travels. We take a look at the growing travel retail sector from duty-free to rail. in-store Storedits 12 Is there more to the health and beauty sector than meets the eye? We delve a little deeper. 14 Global Retail Trends Is it time to consider the customer journey outside of insights channels – are we in an era of post-channel retail? Dedicated to enhancing the total shopper experience

Attracting a wide range of Travel hubs attract high footfall shoppers, discount stores have and offer a unique environment Are we in an era of well and truly hit the mainstream for brands and retailers post-channel retail?

Latest insights from leading brands and The health and beauty sector is big business in the UK, and looks retailers at the POPAI Retail Marketing really do matter when communicating to shoppers in-store Conference 2017

1992-2017

serving the P-O-P industry www.popai.co.uk Email: [email protected] Tel: 0116 234 2600 POPAI WELCOME CONTENTS As we turn our thoughts towards spring, it’s clear that this year Issue 29 has started with a degree of uncertainty across the globe. But in these changing times, POPAI is proud to stand firm. We are celebrating 25 years of serving the P-O-P industry, and we’re planning to continue our dedication to enhancing the What’s inside... shopper experience and sharing best practice across the industry.

In this first issue of 2017, we open with our latest shopper SHOPPER INVESTIGATION investigation into discount retailers on page 5. Following their 5 rise in recent years they have well and truly hit the mainstream DISCOUNTERS – but what are they offering shoppers today and to what Attracting a wide range of shoppers, discount stores have well extent do they feature in our shoppers’ baskets? and truly hit the mainstream. Our shopper investigation talks to discount shoppers to find out more about their shopping habits, their The beginning of May will see us exhibiting, along with many experiences in-store and which displays and messages appear in-store. other POPAI members, at Retail Design Expo. The show’s success continues to grow and this year will offer inspiration, ideas, innovation and a conference programme. Check out 7 SECTOR REPORT page 10 to find out more. TRAVEL RETAIL You may have already planned your summer holiday, but will Travel hubs are increasing in popularity, from airports to railway stations. you be tempted into the retail haven of travel hubs before you These destinations attract high footfall and a shopper here is often set off? On page 13 we find out which trends are shaping the looking for something out of the ordinary. These are spaces that sector, and what brands and retailers should be considering embrace creative activations, so we take a look at the trends in turning for successful in-store activations. travel into a customer journey. Our second Storedits report focuses on health and beauty – is there more to this sector than meets the eye? It seems that EVENT REPORT looks really do matter when brands are communicating to 9 shoppers across different stores. Find out on page 19 what RETAIL MARKETING CONFERENCE we discovered when we visited 50 stores and analysed 300 POPAI’s annual flagship event kicked off an exciting year of activity, images of P-O-P. bringing together attendees to hear insights from leading brands, retailers and agencies. We have had the days of multi- and omni-channel, but maybe now is the time to consider the customer journey outside channels. GDR Creative Intelligence examines this in 12 STOREDITS its latest Global Retail Trends report, Post-Channel Retail, on HEALTH & BEAUTY page 25. Is there more to the health and beauty sector than meets the eye? It is Finally, on page 29 we round up with a review of the POPAI big business in the UK so we delved a little deeper, carrying out 50 store Retail Marketing Conference which took place in February visits and analysing over 300 displays to find out what it really has in- and brought together leading brands, retailers and suppliers store. We investigate which promotions lead the pack and how brands to hear retail marketing insights from recent campaigns and are communicating with this often appearance-led shopper. activations. We look forward to seeing you during this our 25th year of 14 GLOBAL TRENDS serving the P-O-P industry. POST-CHANNEL RETAIL Phil Day The customer journey has changed and thanks to advances in mobile POPAI there is no such thing as a non-retail space. Post omni-channel, should 1992-2017 we now be looking beyond shoppers moving through channels at all?

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Get in touch. We’re always keen to hear your views. Popai.co.uk: Membership: Email [email protected] Visit our website for the latest news, Becoming a POPAI member is simple: reports and events from POPAI. just go to popai.co.uk/whyjoin. You Follow us @twitter.com/popaiuki In addition, you will find a back will receive a personal account that catalogue of industry research and allows you to access all of our premium content with exclusive access to the 1992-2017 the POPAI Awards gallery. full POPAI research archive. in-store serving the P-O-P industry insights Editorial: Advertising: In-store Insights is published four times a year by POPAI UK & Ireland, [email protected] [email protected] 7a Lakeside Court, Maple Drive, Tungsten Park, Hinckley, Leicestershire +44 (0)1455 613 651 +44 (0)1455 613 651 LE10 3BH. All rights reserved. Reproduction in whole or in part without written permission is strictly prohibited.

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DISCOUNTERS

The rise of the discounters is continuing. Initially becoming increasingly popular during times of financial struggle, they have now well and truly hit the mainstream.

Overall, the discount sector grew a staggering 48% in the five years to 20151 and its growth continues, with 44% of UK shoppers shopping with a discounter in the last month.2 Price- sensitivity is expected to linger, with uncertain market forces which could well benefit the discounters.

Our latest shopper investigation saw 100 shoppers visit a number of discount stores including Aldi, Lidl, Home Bargains, B&M, Poundland, Poundworld and Poundstretcher. First, we asked them about their shopping habits, followed by their in-store experience, including promotional displays and messaging.

Record sales: 400, Home Bargains is nonetheless one of The split shopping basket the biggest privately-owned companies in All the shoppers who took part in our study the UK and has ambitious plans to grow to shop in at least one discounter per month. Lidl 40,000 lobsters 800 stores. A further 32% and 20% shop in two and three per month respectively. Poundland, and its smaller counterparts Poundworld and Poundstretcher, B&M 6 million It can be difficult to pin down a ‘typical’ have seen their own challenges with a discount store shopper as discounters Christmas crackers weakened pound leading many of these appeal to a wide range of shoppers previously fixed-price stores to offer a wider across socio-demographic groups. In fact, range at different, higher price points. 57% of shoppers in a survey say they ‘love Source: Guardian/Telegraph to hunt for bargains whether money is tight or not’.4 86% of shoppers wouldn’t mind Discounters: the major players being spotted in a disount store Top discount grocer, Aldi, is now Britain’s Sources: fifth largest supermarket holding 6.2%3 of 1 BBC, The unstoppable rise of the UK grocery market. It has transformed the discounters, 2015 its initial ‘cheap and cheerful’ reputation 2 Shoppercentric, Shopper Stocktake. 2017 by pushing its quality and sourcing in 3 Kantar Worldpanel, Aldi becomes UK’s fifth recent marketing campaigns, which largest grocer, 2017 has had a positive impact on consumer 4 Shoppercentric, The rise of the discounters, perceptions. Meanwhile, Lidl, which holds 2014 4.5%3 of the market, is planning to open 50 new stores in 2017.

B&M now has over 500 stores and has also READ THE FULL REPORT. been celebrating positive financial results Become a POPAI member. with an increase in UK like-for-like sales. Sign up online, visit: www.popai.co.uk Slightly behind in store numbers at over Source: Shoppercentric

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TRAVEL RETAIL

As we continue to enjoy global travel, retailers and brands can tap into the great potential afforded by retail space within airports, railway stations and other travel hubs. Using their creativity to the full, they can engage and capture shoppers, harnessing mobile technology to drive sales, and embracing shoppers looking for something different from a ‘normal’ retail experience.

This is an area they ignore at their cost, and is clearly not a sector to be overlooked – latest figures value the duty-free and travel retail sector at a staggering £50bn,1 a figure which is estimated to rocket to £90bn by 2025.2

In this report, we examine the sector and the trends within, and discuss how the travelling journey can become a shopper journey.

Value of the Duty Free & Travel Retail Sector A flying visit: rising to the challenge and being engaging. Clear navigational of a time-poor shopper signage and good merchandising work together to maximise the all-important Travel retail space is highly unique, offering browsing time. something no other retail environment can. To this end, it has its own set of challenges As they are generally operating in smaller to overcome. Shoppers are there for all format stores, one challenge for retailers £90 kinds of reasons: panic-based for last-minute is how to provide an attractive offer to forgotten essentials; value-driven in their bn shoppers with a reduced square footage desire to bag a duty-free bargain or travel £50 from that of their high-street counterparts. exclusive; or a gifting mission for loved ones Many retailers manage to tackle this by bn at home or a treat for themselves. offering a capsule, or edited collection, often aiming to engage shoppers at a later Even with the advent of online check-in and 2015 2025 date via a store visit or online purchase. Source: m1nd-set relaxing waiting lounges, travellers are very This clever device gives shoppers the rarely time-rich. Most will have their eye on same high-quality customer experience, the clock and be ever conscious of their 75% of British passengers plan to at the same time extending their customer impending journey. journey. visit duty-free, with value as a top priority. Retailers need to be aware of the types of shoppers they are attracting. Sources: ‘Bleisure’ shoppers are the travellers who 1 Retail Focus, Land of Opportunity, 2017 are combining more leisure into their 2 M1nd-set, Forecast Report, 2016 DUTY FREE business trips. ‘Millennial’ shoppers have 3 an appetite for innovation, novelty and Counter Intelligence Retail (CiR), Beauty Report, 2016 individuality – they do not buy ‘stuff’, they buy experiences, excitement and entertainment, and represent more than READ THE FULL REPORT. half of shoppers.3 Become a POPAI member. Sign up online, visit: www.popai.co.uk Source: Counter Intelligence Retail Therefore, travel retailers must strike the delicate balance between being efficient

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RETAIL MARKETING CONFERENCE

Kicking off an exciting year of activity, POPAI’s flagship event of the year, our Retail Marketing Conference, took place in February 2017. Attendees from across the industry came together to hear insights from leading brands, retailers and agencies.

Harnessing technology to engage shoppers Western Union opened the event, discussing its move to digital point-of-sale and explaining how it is effectively using facial analytics to tailor its marketing messages. It is also using technology to speed up the customer journey for shoppers by removing unnecessary paper forms, and by making things more efficient for the retailer. The resulting in-store P-O-P is creating real engagement with its shoppers. of all cars to be electric Putting shoppers at the heart of the 5-10% vehicles by 2020 brand We also heard from Ireland-based Offbeat Donut Co about its concept of putting the shopper central to a new food and beverage concept. Understanding them, their habits, likes, desire to share and love of personalisation has allowed the brand A non-sales shopping environment to create a memorable personality and to Chargemaster, provider of on-the-go communicate effectively to its shoppers at charging solutions for electric vehicles, every touchpoint. Through this concept, introduced its move into shopping centres the brand is demonstrating its interest in its as part of a government scheme to shoppers’ emotional – as well as financial encourage take-up of electric vehicles. – responses. By bringing the message to the shopper in a multi-manufacturer experience centre, Source: Chargemaster Innovation: getting the right the brand is aiming to educate, inform balance and drive referrals to local dealerships, as The first panel session looked at what opposed to making instant sales. innovation means for suppliers, brands and retailers. The discussion focused on With this in mind, it has created a non- the different interpretations of innovation salesy environment, perfect for this goal, and how it can create disruption in-store, one which is child-friendly and has an as well as the challenge of making it appealing interior. Here, shoppers can scalable. It seems that finding the right listen to stories from existing electric balance between tight retailer guidelines vehicle owners, and are given the chance and glimpses of creativity is key for all. of a week-long test drive.

9 | ISSUE 29 | www.popai.co.uk EVENT REPORT A convenient conversation with EE brand messaging. Perfect for the millennial shopper, and as a sales tool for Our second panel session focused on staff, the experience has not only built trends in convenience and the increase awareness of the brand, but has also of the top-up shop. It quickly became resulted in significant uplift in both network apparent that one size certainly does sign-ups and average spend. not fit all and there are plenty of opportunities for those willing to embrace the sector. P-O-P displays are often focused on large grocery multiples, but carefully considering the footprint in local convenience stores, along with the opportunity to educate shoppers on their Modernising Mamas & Papas multiple repeat visits, could be key to the future of this sector. Another retailer to create its new concept based on a shopper type is Mamas & Papas. The previously family-owned

business is updating to become a brand 35% of shoppers never do a that not only appeals but excites today’s main grocery shop millennial parent. With a high expectation from retail, and a constantly refreshing customer base of new parents, creating experiences that aid the customer journey with solutions rather than just gimmicks is essential.

Beautiful expectations 30 is the average age of a mum-to-be The day ended with a look at what the skincare category currently offers Source: Mamas & Papas in-store, through the eyes of Beiersdorf. The expectations of beauty-conscious shoppers go far beyond that of great Source: HIM Shopper Research and Consulting Its new flagship concept caters for pricing, but what more is being offered? different shopping missions, from impulse Gift with purchase, extra quantities, in clothing to informed in transport. It has limited editions, and scientific and user Getting the message across also introduced a smaller format boutique testimonials, all help to make displays high street store in the London suburbs, A short time window to engage with stand out, but for a truly successful which focuses on experience above shoppers is a problem for many retailers, campaign it needs to tick the boxes of the product range, using online integration to and EE has addressed this with its latest shopper, the brand and the retailer. widen the offer. display in Carphone Warehouse stores. Competing with promotions for new Collaboration and communication handsets, the messaging for a phone Providing solutions for shoppers was a network may struggle to cut through in- 63% of households own a common theme throughout the day store. Using insights to drive the solution, Nivea product with Yale and Philips Lighting taking a the brand created an augmented collaborative approach to make this reality game system to encourage happen. In the emerging connected shoppers to engage and fully interact home category, collaboration is proving vital for educating not only the shopper but also the retailer in how best to 67% of users agreed that the showcase and communicate these EE bay was superior to the other products. This joint-working approach has resulted in a display that provides bays in that specific Carphone the customer with a solution as well as a Warehouse store holistic view of the products available.

Source: Beiersdorf

This is just a flavour of the day; POPAI members can download presentations from this event and others at Source: Vividbrand popai.co.uk/events.

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HEALTH & BEAUTY

The health and beauty market is one which most shoppers use at some point. But is there more to it than meets the eye? While we all want to look and feel good, the rise of department stores within this sector means we no longer need to turn to the same retailers for the same products. Different price points, in-store layouts, displays and messaging make this one of the most inconsistent categories to shop, but also one with huge choice. So, when it comes to health and beauty, are shoppers feeling good – or are appearances deceptive? We investigate.

‘Storedits’ [stor-ditz] is an £284m The analytical qualitative survey (or average weekly store audit) of a retail space spend on health and beauty in carried out by POPAI. the UK

The health and beauty market is big Source: Retail Economics, 2016 business in the UK, with a revenue of £4 billion and employing nearly 35,000 1 people across over 1,000 businesses. A changing landscape UK consumers are amongst the biggest While these UK shoppers remain fairly loyal spenders on beauty and personal care to the major high street health and beauty in Western Europe.2 Already a saturated retailers Boots and Superdrug, the retail Weighing up the costs market, there is nevertheless room for landscape is increasingly diversifying, with growth for more niche brands, premium supermarkets and discounters now taking Price remains highly important to cosmetics and natural organic products a bigger share. Boots is the clear leader shoppers, with research showing this to be with a focus on quality. of the specialist retailers, being the only the case even with those buying prestige player with a double-digit value share in brands.5 This presents both challenges and We surveyed 50 stores in the health and 2016 and accounting for an impressive opportunities, with the value-led retailers beauty sector along with the examination 42% share of the market.3 delivering impressive growth. Meanwhile, of over 300 displays to carry out in-depth department stores and niche specialists analysis of everything from window But there are external influences at work. are using unique experiences to drive displays to the use of technology. Launches from major fashion retailers shoppers in-store and encourage them to such as H&M and Primark mean tougher trade up to more premium products. competition, particularly within the beauty categories. Online offerings also pose The amount health and 8.7% a threat, as men – a growing audience Sources: beauty sales rose in January 2016 within the health and beauty sector – are 1 IBIS Word, Cosmetics & Toiletries Retailers in (year-on-year) more likely to search for and buy toiletries the UK, 2016 online.4 2 Euromonitor, Beauty and Personal Care in the United Kingdom, 2016 There are a still number of opportunities 3 Euromonitor, Health and Beauty Specialist within the sector. Fashion trends, an Retailers in the UK, 2017 increase in male grooming and the desire 4 Independent, Men’s grooming is now a multi- for wholesome living are inspiring new billion pound worldwide industry, 2016 product launches in-store. And social media influences such as the trend for READ THE FULL REPORT. selfies are driving the sale of make-up contouring products and celebrity- Become a POPAI member. endorsed items. Sign up online, visit: www.popai.co.uk Source: Retail Economics, January 2016

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POST-CHANNEL L’OCCITANE – FRANCE French beauty brand L’OCCITANE EN presented. The assisted path follows the RETAIL: PROVENCE has opened a tech-enabled, traditional L’OCCITANE retail model and experiential flagship store on Fifth Avenue customers are guided through the space Journeys that draw in New York to refresh its 41-year-old with clear way-finding touchpoints; brand image and engage with a younger product zones are signposted and on the best of all consumer base. thumbnails positioned next to products with staff on hand to offer consultation possible worlds By blending technology with human throughout the experience. The staff in ways that enhance the customer autonomous path is reserved for the journey, L’OCCITANE makes browsing ‘new’, younger L’OCCITANE customers as much of an event as the actual sale. who are experienced with in-store Inside the store, two customer paths are technology. The concept of the customer journey is changing, and the multiplication of channels has only obscured this. We are now seeing a world where, thanks to mobile, there is no such thing as a non-retail space – a development that is leading retailers to radically question the very purpose of their physical offerings.

The acquisition of disposable income by a generation of digital natives who cut their FOOT LOCKER teeth in a world where digital and physical have become increasingly blurred will place ‘AUDIO TOURS’ – USA its own demands on how the customer US sportswear retailer Foot Locker has experience is structured. Indeed, we would launched an audio guide service in 300 of go as far as to say that after the six years its stores to tell stories about the products where omni-channel retail has been the that customers are browsing. industry’s mantra, we are now obliged to move beyond even conceiving of customers Upon entering participating Foot Locker moving through channels at all. Consumers stores, shoppers can access the tours via now expect there to be no significant their mobile device at footlocker.com/ barriers between physical and digital when audiotour, where they can enter a code they shop. This requires new thinking on displayed next to a selected pair of shoes how to best harness the technology now to start the tour. Signage in-store alerts available, and when to allow the human customers to the audio tours but many touch to take the lead to best engage of the stores also use beacons to push both the techy and analogue customers. notifications to those that have the Foot Locker app.

INNISFREE – SOUTH KOREA A simple basket system implemented in-store by Korean beauty brand innisfree lets staff know if customers want to be approached by sales associates.

At the entrance to its stores, shoppers can choose between baskets with green labels and others with orange labels. A green label indicates to staff that the shopper does not need any help and should be READ THE FULL REPORT. left to browse in peace, while the orange basket signals that they would like staff to Become a POPAI member. assist them. This is a good example of a Sign up online, visit: www.popai.co.uk brand understanding the different needs of its different customers.

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“Obviously the speakers are a key reason for coming; and to see some of the Don’t miss out! new innovative stuff coming up, and engage with some people that I may have not seen in some time. I really enjoy it. I think it’s a good opportunity to see Free registration now open at what’s out there, to see what’s coming up, to see what other things are going on in the industry” www.retaildesignexpo.com James Swain, Lead Shopper Marketing Manager, Tesco PLC

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