minute economy - shell · convenience cravers, with brazil (53%) and mexico (51%) being the markets...

HOW DEMAND FOR GREATER CONVENIENCE IS CHANGING THE FACE OF RETAIL

MINUTEECONOMY

BEYOND THE

02 Beyond the 5 Minute Economy How Demand For Greater Convenience Is Changing The Face Of Retail

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CONTENTSFOREWORD FROM ISTVÁN KAPITÁNY 04

EXECUTIVE SUMMARY 06

CONVENIENCE: A CONSUMER RIGHT NOT A PRIVILEGE 10

CONVENIENCE CRAVERS 12

THE ROAD TO CONVENIENCE 16

METHODOLOGY 18

GLOSSARY 19

ABOUT SHELL RETAIL 20

BEYOND THE5MINUTEECONOMY


At Shell, and indeed in the retail industry as a whole, there is no such thing as the status quo. As economies develop, incomes grow and technologies advance, the world is speeding up and people’s days are becoming increasingly full.

Having taken an in-depth look at how the retail industry is evolving and, in particular, the growing importance customers place on convenience in 2014, we wanted to further our understanding of the changing face of retail by building on this research in 2016. As before, our starting point was listening and responding to what new and existing customers are telling us. In particular, they continue to identify a gap between what shoppers expect from a convenient retail experience and what retailers are doing to meet those expectations.

As one of the world’s largest single branded retailers serving more than 25 million customers every single day, Shell is constantly innovating to meet these needs and close the gap. In particular, we are focusing on products and services, experiences and people to provide a high-quality and convenient retail experience.

That’s why we expanded our research to a number of new and emerging markets, including Indonesia, Malaysia, Mexico, Russia and Canada. This gives us an even deeper insight into the rise of convenience worldwide whilst building a fuller and more global picture of how customers are changing – as well as the potential risks and rewards for retailers trying to keep up.

What is most striking is that, for consumers, convenience has become intrinsically linked to how they are able to enjoy the rest of their day. With modern lifestyles busier and more compressed, time is more precious and valued than ever. And that means customers are willing to put a price on a shopping experience that integrates more seamlessly into their day-to-day and gives them back time to do the things that matter to them.

As our recent research confirms, this is about more than simply speed. Meeting customers’ holistic needs around service, quality and payment offers retailers an unprecedented opportunity to differentiate themselves from competitors and connect with customers on a more emotional and long-lasting level.

But how can retailers satisfy this demanding new breed of modern consumers’? What must we do to fit more seamlessly into their lives and deliver a true omni-channel experience? And how can we give them back time for the things they enjoy when product breadth and outstanding human customer service are just as important to them as getting in and out of store as quickly as possible?

In the report that follows, we explore these questions and consider how retailers of all shapes, sizes and geographies can deliver upon their customers’ expectations of convenience. But we will also argue that this is no longer enough on its own. That’s the convenient truth faced by today’s retail industry.

I hope you enjoy reading it.

István KapitányExecutive Vice President Retail, Royal Dutch Shell @Istvan_Kapitany

“MEETING CONSUMERS’ HOLISTIC NEEDS

AROUND SERVICE, QUALITY AND PAYMENT

OFFERS RETAILERS AN UNPRECEDENTED

OPPORTUNITY TO DIFFERENTIATE

THEMSELVES FROM COMPETITORS AND

CONNECT WITH CUSTOMERS ON A

MORE EMOTIONAL AND LONG-LASTING LEVEL.”

FOREWORD

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“CUSTOMERS ARE WILLING TO PUT A PRICE ON A SHOPPING EXPERIENCE THAT INTEGRATES MORE SEAMLESSLY INTO THEIR DAY-TO-DAY AND GIVES THEM BACK TIME TO DO THE THINGS THEY ENJOY.”


With consumers’ expectations of convenience changing rapidly, Shell commissioned independent research in 2014 and, most recently, in 2016 to learn more about the impact of this upon both its own business and the retail sector more widely.

The research considered the shopping behaviour of 15,125 consumers across Brazil, Canada, China, Germany, India, Indonesia, Malaysia, Mexico, Russia, South Africa, Thailand, The Netherlands, Turkey, UK and USA.

The aim was to better comprehend how the concept of convenience is understood across four retail sectors: fuel, convenience, technology and fashion. In particular, it sought to examine the value consumers place on convenience as part of their overall shopping experience, how their expectations are redefining ‘convenient experiences’ and the revenue opportunities available to retailers that meet their customers’ expectations.

The findings from the second round of research confirms what we discovered in 2014: namely, that the expectation of a convenient experience is increasingly sector-agnostic. Yet this latest research also adds a new dimension to the story, confirming that consumers’ demand for convenience is accelerating, driven by a desire for experiences that give them back time to do the things they enjoy. And that means retailers everywhere have a chance to improve market share and open up new revenue streams simply by meeting that need.

Yet, at the same time, the results uncover a notable gap between what consumers want and what they feel they are currently receiving when it comes to convenience. Closing that gap requires retailers to renew their focus on three key areas: products and services; experiences; and people.

EXECUTIVE SUMMARY

“WITH MODERN LIFESTYLES BUSIER AND MORE COMPRESSED, TIME IS MORE PRECIOUS AND VALUED THAN EVER. AND THAT MEANS CUSTOMERS ARE WILLING TO PUT A PRICE ON A SHOPPING EXPERIENCE THAT INTEGRATES MORE SEAMLESSLY INTO THEIR DAY-TO-DAY AND GIVES THEM BACK TIME TO DO THE THINGS THEY ENJOY.”

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78% of consumers claim convenience does not necessarily constitute a quick ‘in and out’ visit.

Instead, they want a convenient retail experience to give them back time to focus on doing more of the things they want to. This reaches beyond speed into areas like breadth of product choice and quality of service.

Convenience is important to nearly all consumers, with 94% saying that their lives are impacted by whether a store provides them with a convenient experience.

However, as demands for convenience change, retailers are struggling to provide the type of personalised, efficient and humanised experiences today’s customers desire. There is a 35 point gap between what consumers rank as important in a convenient retail experience and how they rate their current experience.

A new sub-group of consumers, known as Convenience Cravers, are emerging across all retail sectors.

Their view of convenience is amplified and they see it as an essential, non-negotiable component of any shopping experience. They are also willing to pay a premium for it.

30% of all consumers surveyed are Convenience Cravers, with Brazil (53%) and Mexico (51%) being the markets with the highest numbers of Cravers. In Asia, 31% of all consumers in APAC are convenience cravers. If retailers can deliver convenience, then Cravers can present a lucrative revenue stream.

20% will buy more products in-store as a result of good customer service.

33% are willing to pay more to check-out ahead of others.

However, not providing convenience can have negative consequences, with 56% of all consumers saying they would use another brand after an inconvenient experience, and 12% being willing to walk away from a brand forever…meaning revenues across all sectors are up for grabs.

Closing this gap presents both a challenge for retailers and a significant opportunity.

KEY 2016 GLOBAL RESULTS

CONVENIENCE: A CONSUMER RIGHT NOT A PRIVILEGE

For the vast majority of today’s consumers, more than 90% in fact, convenience is table stakes. Something they expect rather than hope for, whether shopping in store or online. That means it should be table stakes for retailers too. Indeed, any business hoping to keep up with the evolving needs of its customers must understand both the importance they place on convenience and, crucially, exactly what it means to them.

As our research shows, modern shoppers now see convenience as being about much more than simply speed. It reaches beyond a quick in and out store visit or a speedy smartphone purchase. Rather, it covers a far more holistic set of criteria across products and services, experiences and people. Among these, outstanding customer service from an actual human being and a choice of quality products delivered through smart brand partnerships index especially highly.


Likelihood of buying more as a result of good customer service

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As a result, the definition of convenience has become more than simply rational, even in traditionally low-interest purchase categories like fuel. With modern lifestyles busier than ever, customers are looking for retail experiences that give them back time to do the things they enjoy but that still meet their other convenience expectations around service, quality and choice, and ease of purchase. Thus, for an emotionally driven consumer no matter how time-poor, a robotic self-checkout may not be the answer. A welcoming and efficient store assistant might well be.

What’s more, 15% of consumers are willing to pay more for convenience. From fast track checkout lines, online price comparisons and mobile payment options, to strategic brand partnerships and customer service training for front line staff, this ‘price of convenience’ offers a potentially lucrative revenue stream for retailers who take action to deliver it.

1. IT ALLOWS THEM TO CHARGE A PREMIUM FOR MORE CONVENIENT SHOPPING SERVICES

2. IT HELPS BUILD LONG TERM CUSTOMER LOYALTY AND ENCOURAGE ADDITIONAL PURCHASES

3. IT DRIVES CONSUMER ADVOCACY, A VITAL PILLAR OF SUCCESS IN TODAY’S HIGHLY INTERCONNECTED, GLOBALISED SOCIETY

Benefits of retail partnerships to Convenience Cravers

How Demand for Greater Convenience is Changing the Face of Retail12 Beyond the 5 Minute Economy How Demand For Greater Convenience Is Changing The Face Of Retail

While convenience has become an almost universal expectation among consumers, for a subset of shoppers, it is completely non-negotiable. Compared to the general population, these convenience cravers over-index on their requirements when it comes to product choice/quality, experiences and service.

Typically, they are aged 18-34 with a higher than average disposable income and significant influence on the purchase decisions of both each other and consumers more widely. Although present in all countries we surveyed, their prevalence varies from market to market. Across the board, their passion for convenience is unwavering.

CONVENIENCECRAVERS

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Convenience Cravers who are willing to pay more to check out faster

Good customer service is perceived to exist when it is rooted in human interactionImportance of staff interacting with customers

CONVENIENCE CRAVERS ALL OTHER CONSUMERS


Yet it also works both ways. There is an alarming gap between what consumers expect from a convenient retail experience and what they feel retailers are currently delivering.

Convenience Cravers feel retailers aren’t meeting their needs

EXPECTATION PERFORMANCE

EXPECTATION PERFORMANCE

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This convenience gap means thousands of businesses – both within the five minute economy of fuels retail and beyond it into other sectors like technology and fashion where customer interactions are longer – are missing out on the additional revenue on offer if they meet their customers’ needs. They could even be at risk of losing their custom altogether.

And while a large number of shoppers say they would walk away from a retailer for good as a result of an inconvenient experience, a more concerning fact is the number that claim they would tell at least one other person about it. With our increasingly connected lives, and the high influence consumers have online, this underlines a very real reputational threat too.

Consumers that would walk away from a brand

Consumers that would share negative perceptions

Likelihood of using another brand (as a result of an inconvenient retail experience)

Consumers who would not return to a brand (as a result of an inconvenient experience)


THE ROAD TO CONVENIENCE

Today’s consumers are looking for efficient, enjoyable retail experiences that give them back time to do the things they enjoy. Yet they are clear that this must not come at the expense of great products, seamless purchase experiences and outstanding, human customer service. Moreover, this is no longer simply a rational or logical need. It is a more personal and emotional one that can make or break a shopper’s relationship with a brand.

It means retailers must now constantly ask: how can we streamline and improve the experiences we offer in order to better fit into our customers’ busy lives? How we can meet their expectations in store and online? And what will be the cost if we don’t?

As the Shell brand enters its second century of retailing, a guiding principle of our business is that new ideas create new value. It is for this reason that we are investing heavily in innovative programmes that deliver the convenience our customers desire. These initiatives can be broadly placed into three categories – areas that we believe should form the blueprint of success for any retailer looking to keep pace with consumers’ evolving demands.

PRODUCTS AND SERVICESQuality fuels will always be at the heart of our offer. We’ve led fuels innovation for the last 100 years, and will continue to advance our technology for efficient fuels today and cleaner fuels for the cars of tomorrow. More than this, we are a beacon on the road for motorists. From fresh coffee to clean toilets, from good meals for truckers to integrated card services for fleet managers and drivers, we are committed to taking care of our drivers and their passengers wherever their journey leads them.

Investing in the quality of what we sell and how we sell it is at the heart of Shell’s Retail business – at our fuel pumps and inside our stores. A big part of this involves developing our own outstanding products (we have our deli2go products available in 17 countries). Yet, partnerships are key here too. Alliances with the likes of Starbucks, Costa, Red Bull, Unilever and Coca-Cola can help us extend our product offer and make our forecourts a convenient, holistic ‘service station’ for customers. A place they can fill up their tank, pick up a package, buy food for tonight or simply relax with a quality cup of coffee.

EXPERIENCESOur aim is to make the process of buying from Shell as easy and enjoyable as possible through innovations like mobile payments, the Fuels Rewards scheme and Connected Car API technology. We are also committed to treating every customer like a guest and are actively exploring intelligent store formats as we seek to transform our retail sites into a network of tailored, ‘convenience hubs’.

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Yet for Shell, as for any other successful business, innovation cannot and must not end at our own front door. We are determined to look at the world from the outside in, to listen to the thoughts of our customers and partners, whilst learning from the success of retailers across different sectors.

We believe there has never been a more challenging nor exciting time to be a retailer. So, whether you are in fashion or fuel, technology or FMCG, we want to hear your ideas and experiences on how the sector can meet consumers’ burgeoning needs and expectations around convenience.

Shell is calling on retailers and consumers to work together to help close the convenience gap. In 2016, Shell will enhance its global business programme to: explore the challenges, unearth the ideas and innovations, and invest in the people and partnerships that will ensure our customers don’t experience a gap.

Join the conversation at #ShellRetail or find out more about our views on the future of retail in the fuels industry and beyond at www.shell.com/retail.

PEOPLE AND COMMUNITIESConsumers are telling us that positive, human interactions remain a valuable part of the shopping experience. In other words, a customer-centric business is a successful one. Shell’s commitment is to treat everyone who visits or interacts us with us like a guest and to do it, we are rolling out the largest ever customer service training initiative in our history for front line staff. We also run the retail industry’s biggest global rewards and recognition programme called People make The Difference Real (PMTDR). It celebrates the achievements of people across our retail network, including those who work on the front line at our branded forecourts and stores. Each year, PMTDR also honours the best of the best in our business at an awards ceremony. Among this year’s global winners were Aslam Khoso, a Forecourt Champion from Pakistan, who delights customers every day despite not being able to hear or speak, and Tang Haiying from China, a Store Champion whose customer service skills are so good that she even found true love at a Shell station.

18 How Demand For Greater Convenience Is Changing The Face Of RetailBeyond the 5 Minute Economy

The research was conducted by Edelman Intelligence, an independent research firm, working with Shell.

As one of the globe’s largest single-branded retailers and the number one fuels retailer in the world, Shell commissioned research into consumers’ changing demands for convenience across four retail sectors: fuels, convenience, technology, and fashion.

In 2014 Shell and Edelman Intelligence conducted 35 qualitative in-depth interviews with retail experts and business leaders from around the world. The findings from these interviews were used to build a quantitative consumer questionnaire to test the hypotheses and trends. A 2014 consumer study was nationally representative across Brazil, China, Germany, South Africa, Turkey, UK and USA.

Following on from the initial survey Shell then conducted the research in eight additional markets (Canada, India, Indonesia, Malaysia, Mexico, the Netherlands, Russia and Thailand) in December 2015 – January 2016. A repeat study from 2014 was also conducted in China.

This report provides a detailed overview of the combined key findings from the research conducted in the15 markets that has surveyed the views of 15,125 consumers (2016 data for China has been included and China’s 2014 data has been excluded in this report).

METHODOLOGY

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CONVENIENCE

Historically, when shopping experiences are made quicker, simpler and easier. As discussed in this report, this is now being redefined by modern consumers.

CONVENIENCE RETAIL

The retail sector traditionally comprising stores that are open for long hours and that typically sell staple groceries, snacks and small household items.

RETAIL

The sale of goods to the public in relatively small quantities for use or consumption rather than resale.

GLOSSARY

Edelman Intelligence is the integrated research, analytics and measurement division of Edelman.

It is a global, full-service market research firm that provides corporate, non-profit and government clients with strategic intelligence to make their communications and engagements with stakeholders the smartest they can be. The firm specialises in qualitative and quantitative research, measurement, tracking and analysis in reputation, branding and communications.

To learn more about Edelman Intelligence, visit www.edelmanintelligence.com

ABOUT EDELMAN INTELLIGENCE

How Demand for Greater Convenience is Changing the Face of Retail

For more than 100 years, Shell has focused upon making customers’ fuels retailing experiences as convenient as possible.

From establishing our first fuel station to launching our first convenience retail offer, this focus has seen our network grow to become one of the world’s largest single-branded retail businesses.

Our reputation as the leading quality fuel brand has traditionally attracted customers to our Retail network. But in recent years Shell has begun to attract more customers for our food-to-go and coffee offerings and we have consistently grown in these categories in recent years. On an average day, we primarily serve customers on nine different shopping missions, seven of which are not associated with Shell fuels.

The aim of Shell Retail is to be not just one of the biggest but also the best retailer in the world. We want to deliver a more convenient experience to our customers in a smarter way, to a better standard than the competition, and we want to do this by working together effectively across our global operation.

With circa 43,000 Shell branded sites, operating across more than 70 countries, 500,000 empowered front-line service champions serve more than 25 million customers every day.

To find out more visit: www.shell.com/retail

THE NUMBER ONE FUELS RETAILER IN THE WORLD

ABOUT SHELL RETAIL

minute economy - shell · convenience cravers, with brazil (53%) and mexico (51%) being the markets...

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