How Are Millennials Shopping Retail?

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An Invoke Xperience Takeaways Report October 2014 How Are Millennials Shopping Retail?

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2 Why did we do this research? Understand where Millennials prefer to shop – online or at brick-and-mortar stores – and why. Explore what attributes of online retail sites and brick-and-mortar retail locations appeal to Millennials the most?. Understand how Millennial shopping habits changed recently and what is driving change. What did we do? 45-minute Large-Scale Focus Group™ (99 participants). In-session Immediate Website Usability Test where respondents were asked to visit an online retail site and provide feedback on their experience. Coupled with a separate Mobile In-the-Moment retail shopping survey asking respondents to answer questions while shopping at a brick-and-mortar retail location. Who did we talk to? Millennial – 18-34 years Have shopped at Target brick and mortar in the past 3 months and target.com in the past 6 months For Mobile piece, plan on shopping at Target (an actual store) in the next two weeks and have a smartphone. Methodology

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3 Though reported likability and changes in frequency seem to favor online retail shopping, Millennials actually prefer brick-and-mortar when asked directly and actual “in-the-moment” feedback suggests higher marks for brick-and-mortar. While online does offer an easy way to shop without the crowds and long lines, brick-and-mortar does give Millennials a more “tangible” shopping experience (they can interact with items, see them with their own eyes, try on clothes, etc.) that online simply cannot give them. Additionally, brick-and-mortar is also preferred by some because it offers them immediate gratification as they can walk away with their items directly following purchase. While immediate gratification may be seen as something Millennials could achieve through something such as in-store pickup, they are split on whether they actually take advantage of in-store pickup. While this does enable them to cut shipping times (and costs), this goes against much of what seem to be core benefits of online retail – convenience, ease of shopping, not having to leave the house. While this is not explored in this report, something such as same-day shipping seems like more like something that can combine a true online shopping experience with the immediate gratification Millennials are looking for. Research Highlights

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How A Large-Scale Focus Group™ Works Participants Take part from the privacy of their homes or offices Answer anonymously, proving candid, unbiased responses Experience a fun and highly engaging process! Observers Watch sessions from any location with an Internet connection Analyze live feedback using a dashboard with built-in analytical tools Discuss and react to results with rest of the decision-making team Host Controls the session and leads back-room discussion about the results in real-time. Sends out questions and stimuli to participants Adds additional questions on the fly if necessary Large-Scale Focus Groups™ brings research to a higher level by creating an event that involves decision makers, researchers, and current and potential customers 5

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6 Though there is a decrease in reported frequency, Millennials are still positive towards brick-and-mortar 78% of Millennials have shopped at a brick-and-mortar retail location within the past week. 33% say they are shopping at brick-and-mortar more often than they were a year ago (top 2 box). 28% say they are shopping at brick-and-mortar less often (bottom 2 box). Brick and mortar retail fast facts Millennial Brick-and-Mortar Retail Likability 76% of Millennials like shopping at brick-and-mortar retail locations (top 2 box) and 44% love it.

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Millennials often like the tangible experience of brick-and-mortar and immediate gratification, but lines/crowds are negatives Often, Millennials like that brick-and-mortar offers them the chance to see products in person/interact with them. Immediate gratification is also a positive. “To actually pick up, touch, test or try on the products I am interested in as well as being able to get them that day.” “I like being able to view and touch things to be able to judge quality in person. No surprises that way.” “That you are able to get the products you need right away.” The crowds and long lines, however, are common dislikes when it comes to brick-and-mortar and a few Millennials dislike when items are out of stock. “I don’t like dealing with crowds of people.” “Standing in line for check out.” “Large crowds, things that aren't in stock when you made a trip for them.” “The selection is sometimes limited and the stores are usually crowded.” Brick-and-Mortar Likes Brick-and-Mortar Dislikes 7

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8 Reportedly, Millennials are shopping more online though past-week shopping is not as common as brick-and-mortar 62% of Millennials have shopped at an online retail site within the past week. 79% say they are shopping online more often than they were a year ago (top 2 box). Only 3% say they are shopping online less often (bottom 2 box). Online retail fast facts Millennial Online Retail Likability 93% of Millennials like shopping at online retail (top 2 box) and 67% love it.

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Millennials often like the price and convenience of online, but dislike waiting, shipping charges and/or the lack of interaction Millennials often mention price (or the ability to compare), convenience and/or ease of shopping as things they like about online retail shopping. “Getting better prices, the convenience, and no people.” “The beautiful clothes are the thing I love the most, at such good prices.” “I can compare prices without having to go to each store individually.” “I can do it from the convenience of my home.” “You don't have to leave the comfort of your own home.” Millennials often do not like waiting for delivery, shipping charges and/or the lack of interaction with product that comes along with shopping online. “Having to wait sometimes a long time for the product to arrive.” “I have to wait for delivery of my purchases.” “That you cannot get the product the same day!” “Shipping and handling charges, waiting for delivery.” “I can't physically see or touch the product. I don't know exactly what I am getting.” “Not being able to test or try the product.” Online Likes Online Dislikes 9

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When compared directly, Millennials slightly prefer brick-and-mortar shopping When asked what brick-and-mortar offers that online doesn’t, Millennials often point to interaction (with product and person). “The personal interactions, being able to ask questions to a real live human. Being able to see, touch, smell the product first.” “The ability to hold the product in my hands.” “The presence of live customer service to ask questions about products or in-store policies.” “Live assistance and testing a product in person.” “I like to try clothing on before I buy it.” “The excitement to try on clothes, and be hands on with it.” On the other hand, Millennials often think that online offers lower prices/deals and convenience over brick-and-mortar. “Better deals, better prices.” “More competitive pricing.” “Lower prices.” “Good deals like coupon code and free shipping.” “The ability to shop in the convenience of my home.” “Convenience of shopping without having to leave home or drive far.” “I guess just the convenience of not having to leave your house to buy things.” 10 When asked to compare them directly, 45% of Millennials prefer shopping at brick-and-mortar (top 2 box) while 30% prefer shopping at online (bottom 2 box).

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Millennials are split on using in-store pickup Millennials that use in-store pickup often say they do so to avoid shipping times and/or costs. “So I don't have to wait for it to be shipped to me.” “So I don't have to wait for it to be shipped to me.” “I do this because its best to get the product you want sooner without shipping fees.” “Sometimes I like to save on shipping.” “Because it eliminates shipping costs.” Those that do not use in-store pickup often say they are shopping online to eliminate the hassle of going to a store. “It seems easier to have items shipped directly to me. If it is convenient I use site to store.” “If I'm buying something online, I don't want to have to then go to the store to get it.” “Because I buy online to get something delivered and if I wanted to buy in person I would go to the store. online is for the convenience of it being shipped to my home.” 11 While 48% of Millennials use in-store pickup at least somewhat often (top 2 box), 52% say they hardly ever or never use it (bottom 2 box). How often do you use in-store pickup?

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13 Immediate website usability methodology After Millennials were asked exploratory questions regarding general brick-and-mortar and online shopping habits and attitudes, they were asked to click on a link that brought them to target.com. Target was used to ensure brand stayed consistent in both mobile and Live session exercises. Once at target.com, these Millennials were asked to complete a shopping trip there (they were encouraged to mimic a recent Target shopping trip) all the way to checkout. This was done within a framed window that enabled them to easily return back to the session and contained their instructions for reference. After they completed their shopping trip, these Millennial respondents were then asked questions about their experience to ensure feedback was gathered as close to the experience as possible.

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14 Many like shopping online and/or found it easy Online shopping likability Many Millennials like how easy it was to shop online, noting ease of navigation/use and ease of finding items specifically. “How easy it was to find things specifically for me.” “It was easy to find everything, it had what I wanted and in the size I needed.” “It was easy to navigate through.” “Easy to search for items, easy to find items, easy to navigate, great product descriptions.” “It was quick and easy to find exactly what I wanted.” “user friendly interface, it was easy to navigate While many dislike nothing, others point to a lack of selection as a negative and a few note the inability to physically interact with the items they were buying. “Random sizes not available online.” “They didn't have a great selection and took a minute to load page.” “Did not have everything I was looking for.’ “I was a little leery about buying the shoes without trying them on first, but I'm sure you're able to trade them in for a different size if they were wrong.” “if I cannot fit the clothes I would not know if it will fit to me.” Online ease of shopping 29% of millennials bought something they did not plan on buying.

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15 While several are glad to shop online, there exists 1/3 that would have rather shopped at brick-and-mortar Ease of shopping/finding items are why Millennials often would prefer to shop online. “Online is easier to find your items then walking through a store in different parts of it.” “So much easier. Didn't have to drive, spend money on gas, and deal with people. much easier than walking through a whole store for a few items.” Those that would have rather shopped in an actual store often miss interacting with products online and/or want immediate gratification. “I would like to see a costume in person before I purchase it.” “I would want to try the clothes on before I buy them.’ “I would have had the product (shoes) right away.”

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17 Mobile methodology In addition to the existing recruit specs, a subset of millennials were asked if they were going to be visiting a Target physical store location in the next two weeks. Target was used to ensure brand stayed consistent in both mobile and Live session exercises. Once they got to the store, respondents were asked to sign into their survey. Respondents were asked a few questions before their trip, then asked to go about their normal shopping trip and answer a few questions afterwards. Respondents were also asked to upload a picture best representing their shopping experience and explain why that image best represents their shopping trip.

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18 Nearly all Millennials have an idea of what they are going to buy when they get to a brick-and-mortar location Some millennials making part of their decision in-store know the product category but not specifics, such as brand. “Know the products I want to buy, not certain of the brands I will end up purchasing, have a few brands in mind.” “I know generally what I'm looking for. I know the categories. I don't know which specific products I will purchase.” A few are sure they are buying groceries, but may make other decisions in-store. “Knew grocery items, wasn't sure about other items.” “Know that I am buying groceries and might but a Blu-ray depending on what's out.” 39% of millennials bought something they did not plan on buying.

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19 Nearly all liked their brick-and-mortar shopping experience and/or found it easy Brick and mortar shopping likability Often, millennials like how well-organized the Target brick-and-mortar store is. Some like the specials/deals available and a few simply like the overall experience. “The items were organized in an orderly fashioned manner!” “I liked the flow of the store, cleanliness, layout, easy to find the sections and products I was looking for, wide selection of products.” “I found some good deals on Halloween decoration items. Shopping was fast and easy.” “It got me out of the house.” “Target is much slower in the evenings so I like coming when there are less people here. It is also well organized and easy to find what I'm looking for. While there are some that dislike nothing about their experience, a few mention crowds/lines and/or too-high prices. “It was a bit busy today.” “Somewhat crowded. Couldn't find sponges.” “Slow checkout.” “Crowded.” “The long lines.” “A lot of things are more expensive than some other stores.” “I was shopping for clothes for my children and even the sale prices were a little high.” Brick and mortar ease of shopping

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20 In-store holds appeal over online for many millennials Often, millennials are buying food products such as produce they would not buy online. “I bought fruit so they don't sell that online.” “Because in the store I got fresh vegetables and fruits.” A few think they would have missed something, such as specials or other items. “Staring at a screen for only one item. Miss sales in store and while walking think of other things to look at.” The overall experience and immediate gratification are also in brick-and-mortar’s favor. “Nice to shop at the store than online - you could get the stuff right away. Less hassles.” “Because I could buy online, but in-store is fun.”

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21 When asked for images that best depict their shopping trip, respondents focus on… “Stock-up trip” …the aisles and displays... …and the products they buy... “I love Halloween because I love eating candy.”

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“Thanks for looking through the results. I hope you find this data as interesting as I do. Please let me know if you have any further questions about Invoke or our services.” Wayne Goodreau 22 ABOUT INVOKE Since 1999, Invoke has helped its clients better understand their customers’ perceptions of their brands, advertising and communications. 2013 Ogilvy Award for Excellence in Advertising 2013 “Hottest Companies in Boston” Award