1. Demystifying the online shopper Study results for further discussion April 2014 www.pwc.com/r&c

2. PwC A truly global piece of research Slide 2 April 2014 Demystifying the online shopper

3. PwC 1 Myth: Social media will soon become a primary sales channel Slide 3 April 2014 Demystifying the online shopper

4. PwC 60% use social media to follow, discover and give feedback on brands and retailers Q. 75% of online purchasers use social media, with various purposes… Sample : 8 376 social media users out of the 11 067 online shoppers responding Dont follow any brands / retailers Follow favourite brand / retailer Give feedback Discover new brands Interact with favourite brand Influenced my purchase Drove a purchase Slide 4 April 2014 Demystifying the online shopper

5. PwC 2 Myth: Stores as we know them, are dead Stores of the future will be more like showrooms Slide 5 April 2014 Demystifying the online shopper

6. PwC Online buyers still want to shop in stores – for some categories more than others... Q. Which method would you most prefer for researching and buying? Sample : Full sample of online shoppers (11 067) Research and buy in store Research online, buy in store Research and buy online Slide 6 April 2014 Demystifying the online shopper

7. PwC 17% of online users dont buy online - they simply prefer to shop in stores Sample : 17% of respondent out of 13 410, which corresponds to quasi non online shoppers « Never shop online » and « once ever » Q. What are the most important factors that attract you to shopping in a physical store? Sample : Full sample of online shoppers (11 067) Slide 7 April 2014 Demystifying the online shopper

8. PwC 3 Myth: The tablet will overtake the PC as preferred online shopping device Slide 8 April 2014 Demystifying the online shopper

9. PwC Device penetration for online purchases: tablet 28% vs PC 97% Q. How often do you go shopping using the following shopping channels? Sample : Full sample of online shoppers (11 067) Online - PC Stores Catalogue Smartphone Online - tablet TV Social media Slide 9 April 2014 Demystifying the online shopper

10. PwC Different maturity levels – or is it consumer appetite? Online shopping via tablet PC Online shopping via smart phone Q. What is the proportion of online shoppers doing online purchases daily-weekly or monthly via…? Sample : Full sample of online shoppers (11 067) Slide 10 April 2014 Demystifying the online shopper

11. PwC 4 Myth: As the world gets smaller, global consumers are getting more alike Slide 11 April 2014 Demystifying the online shopper

12. PwC Consumer behavior online and in-store is actually quite specific to each country Online behavior In store behavior Practical user Bargain hunter Social addict Shopping lover Bargain hunter Practical shopper Sample : Full sample of online shoppers (11 067) Slide 12 April 2014 Demystifying the online shopper

13. PwC 5 Myth: China is the future model for online retail Slide 13 April 2014 Demystifying the online shopper

14. PwC Global average : 28% and 30% Chinese shoppers are ahead of the curve in terms of new devices and social media usage 58% of Chinese online consumers have already shopped via PC tablet and 62% via smartphone Global average : 11% 24% of Chinese online consumers think they will use tablets or smartphones more in the next twelve months to shop Global average : 24% 56% of Chinese online consumers have already shopped via a social media platform Sample : Full sample of online shoppers (11 067) Slide 14 April 2014 Demystifying the online shopper

15. PwC However the model is not necessarily replicable: online shopping habits are very different and unique to China Global average : 36% Only 21% of Chinese online consumers use search results (Google, Bing) to visit a specific online store Global average :#2 and #4 For Chinese customers #1 and #2 factors of attraction on a given physical store are the fact they always enter the store when they are around and friends/experts recommendations Global average : 56% Only 36% of Chinese online consumers are attracted by free shipping when shopping on a specific online store Global average : 72% 95% of Chinese online shoppers have shopped with their local leading online pure player (Taobao in China) over the past twelve months Global average :#5 and #6 For Chinese customers #1 and #2 factors of attraction on a given online shop are vouchers/coupons sites and friends/experts recommendations Sample : Full sample of Chinese shoppers out of total sample of the survey (full sample and online only) Slide 15 April 2014 Demystifying the online shopper

16. PwC 6 Myth: Domestic retailers will always enjoy an intrinsic advantage over global retailers Slide 16 April 2014 Demystifying the online shopper

17. PwC In most mature markets, local multi-channel retailers are indisputably leading the way... Q. Who are your top 3 favorite multi channel retailers? Sample : Full sample of online shoppers (11 067) Mature markets UK France US Germany NetherlandsHong Kong Slide 17 April 2014 Demystifying the online shopper

18. PwC...and in most emerging markets, foreign players are gaining a strong foothold China Brazil Q. Who are your top 3 favorite multi channel retailers? Sample : Full sample of online shoppers (11 067) Turkey Russia Emerging markets (BRICs) Foreign multichannel retailers Slide 18 April 2014 Demystifying the online shopper

19. PwC 7 Myth: Global pure players always have an advantage over domestic pure players Slide 19 April 2014 Demystifying the online shopper

20. PwC Looking specifically at pure players, foreign leaders are mainly limited to Amazon and eBay Number of foreign online pure players among each countrys Top10 online pure players Number of foreign online pure players Slide 20 April 2014 Demystifying the online shopper

21. PwC Conclusion : a varied competitive environment across countries. Local and global players share the space Multi-channel players Online pure players Domestic champions only Leading foreign giants Domestic champions onlyLeading foreign giants Sample : Full sample of online shoppers (11 067) Leaders in each country… Slide 21 April 2014 Demystifying the online shopper

22. PwC 8 Myth: Retailers are inherently better positioned than brands, as they are closest to the customer Slide 22 April 2014 Demystifying the online shopper

23. PwC More than one in three consumers have shopped directly from a brands website Q. Have you ever bought directly from a consumer brand or manufacturer online? YES NO Global average 35% Global Sample : Full sample of online shoppers (11 067) Slide 23 April 2014 Demystifying the online shopper

24. PwC Brands selling direct attract both brand lovers and deal hunters Q. What made you choose to buy directly from the brand, rather than from a shop selling lots of brands? Sample : 3 871 respondent (=35% of Yes to prior question) Brand lovers Deal hunters Practical shoppers Slide 24 April 2014 Demystifying the online shopper

25. PwC 9 Myth: e-commerce is cannibalising retail sales Slide 25 April 2014 Demystifying the online shopper

26. PwC Over 50% of consumers spend more with those select few since they have started shopping across channels 58% 52% 48% Q. Do you think you have spent more with your favourite retailer since you started shopping across multiple channels? Sample : Respondents who provided their 3 favourite retailers (9 427, 5 122, 2 928, ) Slide 26 April 2014 Demystifying the online shopper

27. PwC 10 Myth: Lower prices is the best way to get customers to spend more Slide 27 April 2014 Demystifying the online shopper

28. PwC Price is high on the list of consumers reason to shop at a retailer in the first place Q. Why do you shop at your top 3 favourite multi-channel retailers/brands? Sample : Full sample of online shoppers (11 067) Slide 28 April 2014 Demystifying the online shopper

29. PwC No impact on spending Increase spending a lot more (> 10%)Increase spending a little more (1-10%) Negative impact on increase in spending However, if you look more closely, increasing your share of wallet should be sought in other attributes Cheap/reasonably priced I like the products Always items in stock I trust them Easy to use website I like the store I like the staff Loyalty programme Click & collect Fast and reliable delivery Innovative products Innovative marketing Website(and-shop) stores my information Exclusive access to products Return items to store Advice on products Good return policy Free returns Q. What makes existing customers spend even more at their favourite retailers (multi channel)? Sample : Online shoppers who provided favorite multichannel retailers (8 619) Estimation model: multinomial logistic regression. Significant coefficients are indicated via or Slide 29 April 2014 Demystifying the online shopper

30. PwCSlide 30 April 2014 Demystifying the online shopper

31. PwC Eight key customer expectations emerged from the survey 2014 April 2014 Demystifying the online shopper Slide 31 A compelling brand story that promises a distinctive experience Customized offerings based on my totally protected personal preferences and information An enhanced and consistent experience across all devices 1 2 3 #1 reason people shop at their favorite retailers: I trust the brand #2 reason (81%) for customers to select a retailer is the store, location and staff Engage in consistent conversations with customers Instill the brand message to employees through hiring and training Customers want personalized offerings and to interact with retailers 24/7 67% used a coupon received via smartphone Enable personalized offerings, payments and loyalty programs in all channels Protect against potential cyber-attacks by increasing defenses on customer databases Customers are multi-device users PC is still the preferred method of online purchasing, but not by much Customer information must travel with each device and still be secure Experience across devices does not need to be identical Survey saysImplications

32. PwC Eight key customer expectations emerged from the survey 2014 (continued) April 2014 Demystifying the online shopper Slide 32 Transparency, real time, into a retailers inventory Favorite retailers are everywhere To maximize the value of mobile shopping, apps must improve 4 5 6 46% of respondents want the ability to check other store or online stock quickly. Inventory tracking tool can fulfill this customer desire and also enable faster decision- making across the supply chain Customers want an always-on experience Customer loyalty is at risk when a familiar channel closes Customer loyalty is subject to change when encountering subpar experience in any sales channel Growing enthusiasm for mobile shopping Many retailers have not invested heavily into apps Mobile apps is an attractive investment, as it is a tool to improve customer experience Survey saysImplications

33. PwC Eight key customer expectations emerged from the survey 2014 (continued) April 2014 Demystifying the online shopper Slide 33 Two-way social media engagement Brands act like retailers, and we'll treat them that way 7 8 Retailers should be active online, ready to interact at any hour 59% follow favorite brands or retailers via social media Investing in social media is a journey toward increasing internal capability and true consumer engagement Few distinctions between manufacturers and retailers when purchasing 70% of U.S. participants made purchases directly from manufacturing brands Increase partnership between retailers and manufacturers, such as private label Survey saysImplications

34. PwC Total Retail: Building the next retail business model April 2014 Demystifying the online shopper Slide 34

35. PwCSlide 35 April 2014 Demystifying the online shopper Mag. Andreas Plamberger Senior Manager Technology Consulting Erdbergstrasse 200 1030 Wien M:+43 (0) 676 83377 2837 andreas.plamberger@at.pwc.com http://www.pwc.com/r&c ® 2014 durch PwC. PwC Österreich unterstützt Unternehmen als auch Organisationen dabei, Wert zu schaffen. Das tun wir an acht Standorten in ganz Österreich und als Mitglied im weltweiten Netzwerk von PwC. Wo immer Sie auf uns treffen, rund 180.000 Mitarbeiterinnen und Mitarbeiter haben ein gemeinsames Ziel vor Augen: Mit unseren Dienstleistungen Wirtschaftsprüfung, Steuerberatung und Unternehmensberatung wollen wir Ihnen Mehrwert bieten. Sagen Sie uns, was für Sie von Wert ist. Und erfahren Sie mehr auf www.pwc.at.