WHATCONSUMERSWANTINTHEPHYSICALANDVIRTUALSTOREWHATCONSUMERSWANTINTHEPHYSICALANDVIRTUALSTORECREATINGTHEIDEALSHOPPINGEXPERIENCECREATINGTHEIDEALSHOPPINGEXPERIENCEINDIANAUNIVERSITYAnIndianaUniversity-KPMGStudyTableofContents1Preface2Introduction4DeliveringtheBasics8OptimizingtheExperience:ProductCategories12OptimizingtheExperience:ConsumerSegments16TechnologyTraps19HearingtheVoiceoftheCustomer23RealizingthePotentialofTechnology24StudyMethodology/ParticipantDemographicsSPREFACEINDIANAUNIVERSITY—KPMGSTUDY11uccessfulretailersknowthatthecustomeristheultimatejudgeofthequalityofashoppingexperience.Everyday,shoppersdecidewhichmerchantisdoingthebestjobservingtheirneeds.Consumersenjoymorechoicethaneverbeforeinstores,brands,andchannelsandhaveaccesstoanever-increasingamountofinformationuponwhichtobasetheirbuyingdecisions.Capturingthepur-chasingpowerofthesesophisticatedconsumersisadifÞcultandconstantchallengeforretailers.TheIndianaUniversityCenterforEducationandResearchinRetailing(IUCenter)andKPMGsRetailIndustrypracticesharethebeliefthatsuccessfulretailersinthefuturewillbethosethatarefocusedontheircustomersandareabletodeliverthebestshoppingexperienceinbothtraditionalandnonstoreenvironments.Thevalueproposi-tioniscomplexencompassingprice,quality,information,selection,convenience,service,andentertainmentandprovidingtherightbalanceisnotaneasytask.Technologycanbeaveryusefultoolinhelpingtocreatetherightvalueproposition,butunderstandinghowconsumersreacttotechnology,andwhentechnologyshouldbeusedintheshoppingprocess,iscriticaltosuccess.TheIUCenterandKPMGarepleasedtopresentCreatingtheIdealShoppingExperience,aresearchstudythatmeasuresconsumersacceptanceoftechnologyand,moreimportantly,offersinsightsonhowconsumerswanttoshop.TheIUCenterisdedicatedtoeducatingfutureretailleadersandexecutingleading-edgeresearchforthebeneÞtoftheretailindustry.KPMG,akeypartneroftheIUCenter,deliversunderstandablebusinessadvicethroughawiderangeofassurance,tax,andconsultingservices.WewouldliketoacknowledgeIUsProfessorRaymondBurkeastheprimaryresearcherinthisprojectandtothankhimforhisresearchcontributions,includingthedesignandanalysisofthestudy.WehopeyouÞndthisstudyinterestingandthought-provoking.Ultimately,wehopeyoureabletousetheÞndingstohelpyoucreatetheidealshoppingexperience,sothatyoucancapturetheloyaltyandbuyingpowerofyourcustomersbothtodayandinthefuture.TheresaWilliamsDirector,CenterforEducationandResearchinRetailingIndianaUniversityKelleySchoolofBusinessMarkJ.LarsonNationalPartnerinChargeRetailIndustryPracticeKPMGDuringthepastyear,anumberofhigh-ßyingonlineshoppingcompanieshithardtimes.Some,likeToysmart.comandLiving.com,havegonebankrupt.Others,likePeapodandCD-NOW,ranoutofcapitalandwereacquired.EvenAmazon.com,thepremieronlineshoppingcom-pany,hasstumbledinrecentmonthswithsalesofbooksandmusicdown4percentovertheÞrsttwoquarters.Theseeventsbringtomindearlierfailuresofonlineshoppinginitiatives,includinginteractivetelevisioninthe1990sandvideotexinthe1980s.CompaniesalsohavestruggledtoÞndthebestapplicationsoftechnologyinconventionalretailstores.WhileUPCscanningandautomatedtellermachines(ATMs)achievedwidespreadacceptance,othertechnologieshavenotmetretailersexpectations.Interactivekiosks,forexample,haveßuctuatedinpopularityovertheyears,gettingaboosteverytimeanewtechnologyisincorporated(suchasvideodiskplayers,touchscreens,barcodereaders,andWebaccess).Buttherearedisappointments,suchasKmartsSolutionsTMin-storekiosk,ErnstHomeCentersspecialorderkiosk,andtheMicroMallcatalogshoppingkiosk.In1993,TedTurnersCheckoutChannel,anetworkofÞve-inchcolormonitorspositionedbythecheckoutcountersin840grocerystores,wasdiscontinued.Thatsameyear,VideOcartwentbankruptafterinstallingLCDscreensandcomputersonthehandlebarsofshoppingcartsin220stores.Beforeretailersinvestmoretimeandmoneyindeveloping,deploying,andpromotingretailtechnologies,thesequestionsshouldbeasked:◗Whatroledoconsumerswanttechnologytoplayintheshoppingprocess?◗Arepeopleoverwhelmedbythetechnicalinnovationsandwantsimplerratherthanmoresophisticatedshoppingexperiences?◗Havecompaniesalreadytappedoutthemostpromisingapplicationsoftechnology?Fromthecustomersperspective,therearecostsaswellasbeneÞtsassociatedwithnewtechnologies.Theyoftenareconfusing,taketimetolearn,arepronetofailure,andcanraisethepricesofgoodsandservices.Fromtheretail-ersperspective,technologyisexpensivetoadoptandmaintainandcanbecomeobsoletequickly.Clearly,itisnec-essarytounderstandwhichtechnologiesandapplicationscreatevalueforspeciÞcconsumersegmentsandproductcategoriesinordertooptimizetheshoppingexperience.Toaddresstheseissues,theIndianaUniversityCenterforEducationandResearchinRetailingandKPMGconduct-edanationalsurveyofconsumersperceptionsofthedesiredroleoftechnologyintheshoppingexperience.Thegoalsoftheresearchwereto:◗Determinewhatwouldbetheidealshoppingexperiencefromthecustomersperspective.◗Identifyhowmediaworktogethertomoveconsumersthroughthepurchaseprocess.◗Helpretailersoptimizetheonlineandin-storeshoppingexperiencebyidentifyingthemostimportantfeaturesofth