The second in a special series of podcasts reflecting consumer insights from Bigeye’s national study, Retail Disrupted, looks at the role that smart speakers and displays play in consumers’ shopping behaviors. We also learn which consumers are most likely to use augmented reality apps to support their purchasing decisions. Discussing the findings are antitrust expert Tim Hwang, retail futurist Doug Stephens, and Justin Hadaegh from the mobile shopper survey platform, MFour.

Episode Transcript

Adrian Tennant: ​​Welcome to the second in a special series of podcasts, accompanying Bigeye’s national study, Retail Disrupted: What Shoppers Want From Brands Today. Coming up:

Doug Stephens: Amazon knows full well how we behave online, but if Amazon can open a department store it gives them an opportunity to create yet another data point to begin to connect consumer behavior between the online world and the physical world.

Tim Hwang: Amazon we can talk about. This new generation of companies raise these very fascinating questions about what is the consumer harm? And can you actually show that there’s a monopolistic cost on the consumer?

Justin Hadaegh: Not only do we have visibility into psychographic and demographic information if they use the PetSmart app or the Petco app on their phone for delivery or pick up, we know that they’re pet owners we can target off of those people directly, as well as brick and mortar behavior.

Adrian Tennant: You’re listening to a special episode of IN CLEAR FOCUS, fresh perspectives on the business of advertising produced weekly by Bigeye. Hello. I’m your host, Adrian Tennant, VP of insights at Bigeye. A full-service, audience-focused creative agency. We’re based in Orlando, Florida, serving clients across the United States and beyond. Thank you for joining us. In August of this year, Bigeye conducted a national survey of over 1,500 shoppers aged 18 to 55, that reveals how shoppers’ behaviors have changed during the pandemic and what they want and expect from brands today. In today’s podcast, we’re going to explore some of the data points relating to consumers’ use of personal and in-store technology, and their implications for retail and direct-to-consumer marketers. Amazon.com, with its vast selection and drive to deliver convenience and low prices, became the nation’s default retailer and an essential service for many consumers at the height of the coronavirus crisis. Amazon announced record sales during the second quarter of 2020. The e-commerce giant’s ecosystem today includes an advertising business, exclusive collaborations and partnerships with celebrities to create original products, plus physical stores to sell them, including Whole Foods, Amazon Books, and Amazon 4-Star, as well as a subscription-based music service, original TV series and movies, logistics and cloud services. According to an April estimate from Consumer Intelligence Research Partners, Amazon has 105 million members in its Prime loyalty program. That’s 82 percent of all us households. Amazon’s Echo range of smart voice-enabled devices both support and promote synergies within the ecosystem. Based on the results from Bigeye’s study, approaching two-thirds of consumers aged 18 to 55 own at least one smart speaker or smart display, 64 percent. Smart speakers and displays are most popular with Gen Z, those born between 1996 and 2012, among whom 79 percent report owning at least one. Among Gen Y, those millennials born between 1980 and 1995, ownership is at 68 percent, while just over one-half of Gen X, those born between 1965 and 1979, report owning a smart device, 51 percent. Among those who own smart devices, Amazon is the leading brand with 56 percent of the market. Google and Apple both trail behind at 29 percent and 21 percent respectively. And at 67 percent, respondents identifying as male are six points more likely than females to own a smart speaker or display. Respondents identifying as Hispanic, Latino, or Latinx, or of Spanish origin are 19 percentage points more likely to own an Apple product at 29 percent than non-Hispanics, and 15 points more likely to own a Facebook Portal at 24 percent. In addition to being the generation most likely to own smart speakers and displays, approaching one-half of Gen Z owners have two or three such devices, while almost one-fifth own four to five devices, compared to 12 percent of Gen Y and 11 percent of Gen X. Those with annual household incomes of under $50,000 are most likely to have one device, 44 percent, or two to three devices, 43 percent. In contrast, almost one-quarter of those with annual household incomes of $150,000 have four or five devices, and 12 percent of this group own six or more. The most popular location for people to play smart speakers and displays are in a living room, 53 percent, followed by a bedroom, 46 percent, and one-third report having a device in their kitchen. Gen Z is the most likely to place a smart device in a bedroom, an office or study, or in a bathroom. Gen Y is the most likely to place a smart device in a dining room. And Gen X is the most likely to place their smart devices in a living room, kitchen, rec room, or den. Hispanic owners of smart devices are twice as likely to have a device in their dining room – 29 percent – compared with 14 percent of non-Hispanic owners. Three-quarters of all respondents who own smart speakers and displays use them for shopping. The most popular users are to find information about products, 28 percent, get shipping and delivery notifications, 27 percent, and to check the status of an existing order, 26 percent. Gen Z respondents are slightly more likely than others to use that device to manage a personal shopping list or wishlist, 24 percent, while Gen Y are slightly more likely to manage a family or household shopping list, 26 percent. Gen X are significantly more likely to use their devices to find information about products, 34 percent, get shipping and delivery notifications, 32 percent, and to check the status of an existing order. Thirty percent of respondents identifying as Hispanic are eight percentage points more likely than non-Hispanics to place and confirm orders with their devices, and six points more likely to copy the details of a previous order.

Consumers spent $861 billion online with US merchants in 2020. That’s a year-over-year increase of 44 percent, the highest annual e-commerce growth in at least two decades. Amazon benefited from the switch from in-store to online buying during the pandemic. In our study, compared to before COVID-19, nearly one-half of all respondents say that today, they’re doing more of their shopping on Amazon, 47 percent. Most likely to have increased their use of Amazon for shopping are Gen X at 49 percent and Gen Y at 48 percent. Respondents identifying as female or as nonbinary are more likely than males to report doing so. And Amazon just keeps on growing. Shortly before we started collecting data for Bigeye’s study, the Wall Street Journal published a story about Amazon’s plans to introduce brick and mortar department stores. I asked retail futurist Doug Stephens, the CEO of Retail Prophet, for his response to the rumors.

Doug Stephens: Amazon knows full well how we behave online, but it gives them an opportunity to create yet another data point in the marketplace to begin to connect consumer behavior between the online world and the physical world. And then there’s the more sinister side. As we know, from past announcements, it gives Amazon the ability to absolutely tank the market caps of companies like Kohls who could potentially even become acquisition targets. We know that anytime Amazon merely clears its throat and sort of fixes its gaze on a category, they have a tendency to really rock the market caps of incumbents in those categories. We’ve seen them do it in the pharmacy sector. We’ve seen them do it across various categories. So that could be potentially the play here as well. But I think the big message to the marketplace, Adrian, and my opinion is that this is a warning shot across the bow of all physical retailers. And most specifically I’m thinking of categories that have sort of dodged the bullet up until now, categories like home improvement. If Amazon can open a quote-unquote department store and sell in the physical world, well, that brings them one step closer to selling lumber and concrete and building supplies and maybe doing a much better job of it than the incumbents in that category. So I think everyone has to take this very seriously. And above all, Amazon has the luxury to spend a tremendous amount of money doing this and sticking with it and experimenting. So, it could have many, many strategic dimensions, but something that everyone in the retail industry should be taking note of, for sure.

Adrian Tennant: Amazon now captures two of every 5 dollars spent on e-commerce in the US, which has placed it in the Federal Trade Commission’s crosshairs. Several high profile stories have been published, including one from Reuters News Agency about the use of its merchant data to create Amazon-branded products and manipulating search engine results to favor Amazon’s own products. Concerns have also been raised about the company’s employees’ safety and working conditions at the growing number of Amazon fulfillment warehouses, including a lack of access to bathrooms. In this context, we wanted to know to what extent consumers believe that Amazon’s dominance in retail is a good or a bad thing for American shoppers. Thirty-one percent of all respondents say they fully support Amazon and have no misgivings about its dominance. Gen Y respondents are five percent more likely than Gen Z to do so. Thirty percent of respondents say they mostly support Amazon, but have some misgivings. Respondents identifying as Hispanic are four points more likely than non-Hispanics to select this response. Thirteen percent say they’re less likely to support Amazon now than in the past, but don’t think it warrants government intervention, while just 11 percent say they think Amazon’s dominance is a problem that needs to be addressed by the Federal Trade Commission. Tim Hwang is a writer and research fellow at The Center for Security and Emerging Technology. Tim joined me earlier this year on IN CLEAR FOCUS to discuss antitrust claims in relation to Amazon and other big tech companies being considered by the chair of the Federal Trade Commission, Lina Khan.

Tim Hwang: What’s really interesting is that the long-standing trend in American antitrust law over the last few decades is to really think about antitrust as it pertains to monopolies that influence price among consumers. So the notion is okay, well, if you’re a monopolist, you control the whole market. Then one of the things that we don’t like is that you use your market power to impose a cost on people. People have to spend more than they would otherwise spend had it been a more competitive market, right? And that’s actually where traditionally the case for antitrust has come from. Now this new generation of companies raise these very fascinating questions about okay. What is the consumer harm? And can you actually show that there’s a monopoly here that is imposing a monopolistic cost on the consumer, right? And this has been the crux of the battle. Can you show that the company that you’re trying to bring antitrust claims against really controls the market and engages in anti-competitive conduct in the way that you claim? It is actually really interesting how it’s evolving in DC right now, because needless to say we don’t live in a particularly bipartisan time, probably understatement of the century. But it is interesting to me that whether you are a hardcore progressive or a diehard Trumpist it actually has turned out that both sides agree that something needs to be done about big tech. and so I do think that the next two or three years really are the Superbowl, if you will, of tech policy, that if something big is going to happen, it’s going to happen in the next few years when there’s policy concern about these companies and what they’ve become. Now there’s actually an interesting question about Lina Khan and her view around some of these things and Amazon actually filed a petition trying to get Lina Khan disqualified from participation in antitrust prosecutions, arguing that basically she’s pre-judged the situation given her previous publications. And so I think the fight is really becoming a knife fight, and I think it actually is getting quite dirty in some ways, but I do believe that the tech companies are on defense now. And I think really now the question is, can we really articulate what we think is the right way forwards?

Adrian Tennant: Let’s take a short break. We’ll be right back after these messages.

Marissa Martin: I’m Marissa Martin on Bigeye’s operations team. Every week, Bigeye’s podcast IN CLEAR FOCUS explores how consumer behaviors are evolving as a result of COVID-19. From the influence of Generation Z, with its interest in social and environmental issues – to the fast-growing Hispanic market and the opportunity it presents  – Bigeye interprets signals from primary and secondary research, identifying the trends driving consumer spending today – and those that will have the greatest impact tomorrow. If you’d like to put Bigeye’s research-backed, data-driven insights to work for your brand, please contact us. Email info@bigeyeagency.com. Bigeye. Reaching the Right People, in the Right Place, at the Right Time.

Adrian Tennant: Today’s shoppers are more informed, connected, and demanding than ever before. To examine how the rise of e-commerce during the pandemic has disrupted the retail industry, Bigeye recently conducted a national study with over 1,500 consumers. Our exclusive report, Retail Disrupted: What Shoppers Want From Brands Today, reveals that while people enjoy the convenience of online ordering and home delivery, many still prefer to shop in physical stores. But their expectations of merchandise selections, in-store technology, and customer service are all heightened. To understand consumers’ new shopping behaviors, and mindsets – and what they mean for retailers, direct-to-consumer marketers, and traditional brands – download the full, complimentary report available now at Bigeye.agency/retail. Retail Disrupted: What Shoppers Want From Brands Today.

Adrian Tennant: Welcome back. You’re listening to Retail Disrupted: What Shoppers Want From Brands Today. According to the Pew Research Center, 85 percent of Americans now own a smartphone. Over the past couple of years, we’ve seen retailers offering apps that take advantage of phones’ improved technical capabilities. Augmented reality, or AR, integrates digital information with the physical environment: live, and in real-time. During COVID-19, AR apps were especially appealing since they allowed consumers to try on clothing or makeup to see how they looked without having to go to a physical store. Similarly, furniture and homeware companies, including IKEA and Wayfair, offer apps that enable consumers to see how items of furniture will look in their own homes, thoughtfully providing options to superimpose the dimensions of their products. Etsy recently debuted an augmented reality experience that let shoppers tour a digital home decorated with curated items from its marketplace. The Artsy app enables buyers to visualize works of art, accurately sized on the walls of their own homes or offices. And AI apps can also be used to preview the results of various aesthetic interventions, such as dental treatments or cosmetic surgeries. Progressive advances in phone technology and making new types of shopping experiences possible. Shoppers can aim their phone cameras at an item they spot in real life or in an online catalog, then try that item on virtually. AR superimposes images of clothing or products over the live camera data and users can further personalize their avatar by selecting body types, colors, and styles. Warby Parker’s try on app for glasses and sunglasses was among the first to go mainstream, but other brands offering AR apps, including H&M, Nike, and Forever 21. Apple’s latest flagship iPhones have LIDAR technology, which allows the phone to scan the environment and create more faithful, responsive, augmented reality experiences for users. But how open are consumers to using these kinds of shopping technologies and how many shoppers are using them already? Well, our data shows that almost one-quarter of Gen Z shoppers have already used smartphone apps to try on clothes, glasses, or sunglasses, to see how they look. Among Gen Y, more than one fifth have. Gen X are the least likely to have done so at 15 percent. When it comes to homewares, 22 percent of Gen Z shoppers have used apps to see how furniture looks in their home compared to 19 percent of Gen Y and 14 percent of Gen X. I asked Doug Stephens if traditional retail stores should be introducing more augmented reality or virtual reality technologies to bridge the gap between physical and digital retailing – that some have dubbed “phygital”.

Doug Stephens: I think it depends. And this is often the question, so, I mean, you know, should stores be using virtual reality? Should they be using blockchain? Should they be experimenting with crypto? I mean, all of these questions around technology are good ones. But it ultimately comes down to being a brand decision, I think. So the question is not “which technology should we, or shouldn’t we use?” The question is, ” do we fully understand and have we completely mapped our entire consumer journey across all interactions, across all phases of that relationship with the consumer? Have we completely mapped that out in a meticulous way?” And if we have, that’s good news, because then you’re able to stand back as a brand and look at that consumer journey. And you’re able to identify these sort of choke points in that journey. You know, where clearly there’s a moment that the consumer could use help in obtaining information, of understanding the choices that they have, in trying something on perhaps. And that’s the point at which we can say, “okay, we’ve identified the consumer’s problem on that journey,” or “we’ve identified a place of friction. What is the best solution for alleviating that friction?” And it may not be one answer. It may not simply be, “Oh, well, we need to put augmented reality into the equation here.” It may be that there are several different choices that we present the consumer with. The most important thing – and frankly, 10 years from now, it may not be augmented reality, it may be something else. But the important thing is the mapping of the journey, is understanding every single moment and micro moment in that journey. And then, and only then, making cogent decisions about the technologies we can use to make that journey more pleasant and memorable.

Adrian Tennant: In Bigeye’s study, shoppers identifying as Hispanic, Latino, or Latinx or of Spanish origin are more likely than others to have already used a smartphone app to augment their shopping experience. Close to one quarter have already used an app to see what teeth whitening or alignment would look like compared with 10 percent of non-Hispanics, and one fifth have used an app to take a test drive in a vehicle compared with just 9 percent of non-Hispanics. Yes, automobile manufacturers are also getting into AR and virtual reality. In the US, it’s been estimated that car buyers typically spend 15 hours in the buying process, and 70 percent still don’t know which car they want until they visit dealerships and sit in different makes and models. With AI and virtual reality applications, consumers can take virtual test drives through different terrains and test conditions, giving them a feel of how the car will perform in real life. Brian Cooley is editor at large for CNET’s Road Show. Here’s an excerpt from a story Brian reported in June about how AR is bringing the car showroom to consumers and why he believes it could offer a better car buying experience.

Brian Cooley: You want to go see the car? You want to sit in it. And of course you want to take a test drive. However, we’ve had a big shift toward online purchasing of vehicles. And I think it’s now time to virtualize the showroom the same way! Flat pictures, rotating images and web videos. They’re good, but they’re flat. AR can bring the car to you where you are, let you put any paint job on it. Put on different options, change those wheels. See what it looks like in your driveway. That’s something unique that I think maps beautifully to the increased appetite for buying cars, largely online.

Adrian Tennant: I mentioned Apple’s iPhone support for LIDAR earlier. Brian highlights innovations from Google.

Brian Cooley: Notice if you’re on an Android device these days, and you search for a particular model of car, one of several hundred will show up in 3D. That’s essentially an AR activation that allows you to see the car in an AR presentation. And that’s powered by Google out of their own database. Several manufacturers have got this going as well. Jaguar was one of the first to let you do that. They all realize that the car needs to sit where you want to see it. Not someplace you have to go to get to it.

Adrian Tennant: You’ll find a link to the full video in the transcript for this episode. Let’s change focus from smartphone apps to in-store technology. A first of its kind media and merchandising platform called Cooler Screens adds a new twist to the in-store shopping experience. The company’s technology replaces regular glass cooler doors, the time you have to open to access refrigerated items, with new digital smart screens. The company claims to have built the world’s first and largest in-store digital merchandising and media platform for brick and mortar retail. Customers in a store equipped with cooler screens, see animated displays showing which products are in the cooler. These screens also support brand advertising, meaning that consumer packaged goods brands can engage directly with consumers in store. Retailers can now enter the digital media business, offering those CPG brands access to millions of consumers with contextually relevant messages and promotions at the point of purchase. Retailers already using cooler screens includes certain Walgreens locations, which is where I first encountered the technology in use. Cooler screens say they aim to engage three types of shopper. The first they describe as informed seekers, those familiar with the location and layout of the store, they’re quick to scan and then grab items, rarely deviating from their habitual routines. The second type are list driven gatherers. These consumers think through a list of items and are more open to considering items that are missing from their list. The third type are casual browsers. They do not know the location, are passively scanning items in store, and are the most receptive to novel items. Based on retail partners, pilot store sales, data, unit sales and stores equipped with cooler screens grow their sales by 50 to 100 percent more than comparable areas stores. In addition, products advertised on Cooler Screens see sales two to 10 times higher compared to non advertised products. Coolest Screens boasts that brands that advertise on the platform can measure the performance and consumer response to their media buys in real time. With instantaneous feedback, brands can rapidly test and refine their offerings. In my local Walgreens, where a bank of eight or so Cooler Screens are located, a QR code is displayed, which customers can snap on their phones to complete a short survey. So the company is also monitoring consumers’ reactions to the platform. By digitizing their in-store operations retailers, gain insight from real time, consumer analytics and efficiencies through automated merchandising, inventory tracking and pricing. By digitizing their in-store operations, retailers gain insight from real-time consumer analytics and efficiencies through automated merchandising, inventory tracking, and pricing. With digitized planograms, merchandising can also be improved as products are never hidden, disorganized, or unknowingly out of stock. The Cooler Screens technology certainly looks like it has the ability to enhance the brick and mortar shopping experience. Another way the brands can understand the consumers in-store shopping experiences is by working with research providers that collect in the moment, behavioral data. This is typically done via smartphone apps with opted-in shoppers. One company that offers this kind of shopper data is MFour. I recently spoke with MFour sales representative, Justin Hadaegh.

Justin Hadaegh: The way that we obtain our consumer data is through our first party app. It’s called Surveys on the Go. you can download Surveys on the Go and the iOS store or the Google Play store for Android and our consumers take surveys with us for a cash incentive. We have about 2.5 million across the US, almost three that have the app downloaded, but we like to base our feasibility on active panelists and that’s about 300,000 daily taking surveys with us for a cash incentive. Since we are all mobile, we have visibility into a lot of different behaviors that other data companies don’t have access to. We operate in the space between behaviors and opinions, a large majority of our panel opts-in to have their location tracked, so we have the ability to target off of brick and mortar visitation. So if someone visits a Target, we can ping them a survey as they enter, as they exit, or if they’ve been there in the last 30, 60, 90 days. Knowing that it’s validated behavior and we could ask them questions around their shopping experience.

Adrian Tennant: So that’s how MFour can target particular store buyers. I asked Justin how MFour targets specific category buyers.

Justin Hadaegh: Not only do we have visibility into psychographic and demographic information of our panelists, because when they download their app, they fill out a demographic survey, so we can target off of ethnicity, income, age, et cetera. If they use the PetSmart app or the Petco app on their phonefor delivery or pick up, or we know that they’re pet owners, we can target off of those people directly, as well as brick and mortar behavior. So if you’d like to survey people in-store of certain locations and ask them about what products they’re looking to buy – are they interested in buying another product than they currently do? You know, or can you take photos of the shelf, and see how product placement looks? We will then screen for have you purchased this product? Do you typically purchase this product? Are you interested in purchasing something else? We would screen for more of the granular components of what you’re looking for.

Adrian Tennant: You’ve been listening to the second episode of Retail Disrupted: What Shoppers Want From Brands Today. My thanks to all the contributors to this podcast: Doug Stephens, Tim Hwang, and Justin Hadaegh. To download the full report on which this podcast is based, go to bigeye.agency/retail, where you can also watch the on-demand webinar highlighting results from our national study. I’ve been your host, Adrian Tennant, VP of Insights at Bigeye. Thank you for listening. Until next time, goodbye.