Beyond smartphone shopping the rise of smart assistantsAn Ericsson Consumer & IndustryLab Insight Report May 2018ericsson/ consumerlabMethodologyThis report presents insights based on an online survey carried out in January 2018, of 5,048 (500 per city) advanced internet users in Johannesburg, London, Mexico City, Moscow, New York, San Francisco, São Paulo, Shanghai, Sydney and Tokyo.Respondents were aged 15 to 69 and fit the profile of urban early adopters. They represent 50 million of the 180 million living in these cities, which is not only a small slice of the consumers in those places, but also makes up a fraction of shoppers globally. However, we believe the way respondents employ digital technology in their shopping activity puts them at the cutting edge of the paradigmatic changes we now see sweeping retail around the world. More specifically, of the sample studied, 43 percent are online smartphone shoppers, meaning that they shop using their smartphones directly at least weekly. A further 45 percent of the sample use digital voice assistants on a weekly basis, with as many as 35 percent using augmented reality (AR) or virtual reality (VR) at least once a week.About Consumer & IndustryLab Ericsson Consumer & IndustryLab delivers world-class research, strategic design concepts and insights for innovation and sustainable business development. We explore the future of consumers, industries and a sustainable society in regards to connectivity by using scientific methods to provide unique insights on markets, industries and consumer trends. Our knowledge is gained in global consumer and industry research programs, including collaborations with renowned industry organizations and world-leading universities. Our research programs cover interviews with over 100,000 individuals each year, in more than 40 countries statistically representing the views of 1.1 billion people.03 Key findings 04 Smartphone shoppers change the face of purchases 05 The chooser, not the choice06 Top jobs for digital assistants 07 Stores transform or disappear08 Bargain prices go offline09 Materialism at a crossroads10 Peak smartphone shopping11 Who are the assistants working for?Contents2 Ericsson | Beyond smartphone shopping the rise of smart assistantsSmartphone shopping will continue to peak on a global scale over the next few years, as the store moves into every users hand. However, we are already seeing the next wave of disruption coming the rise of AI-based assisted shoppingo waves of disruptive change in shopping behaviorsWhen Chinese retailer Alibabas Singles Day on November 11, 2017 reported USD 25 billion record sales of which an astounding 90 percent of transactions were mobile1 it was clear that direct smartphone shopping had officially reached the mainstream.This new wave of mobile shopping is not only sweeping China. When the smartphone offers consumers all of the worlds shopping literally at their fingertips, the explosion of choice itself drives a new wave of change beyond the smartphone. Getting help to choose from digital shopping assistants is an emerging need among consumers. This report shows that assistant shopping needs cover both routine household purchases and more aspirational personal shopping.We see smartphone users relying increasingly on the digital assistants in their phones for aspirational shopping support, while simultaneously driving interest in smart speakers that handle automation of routine household purchases.Given that shopping through digital voice assistants is expected to top USD 40 billion by 2022,2selecting your type of assistant might soon be more important than making the actual purchasing choice.Key insights 1. Direct smartphone shopping peaking Already, 43 percent are smartphone shoppers and make purchases directly using their phone every week Sixty-seven percent of them also regularly pay with their phone in stores2. Digital shopping assistants the next shopping disruptor Selecting the chooser for home and personal shopping is more important than making choices Forty-seven percent of smartphone shoppers would like a service that automatically restocks everyday items Sixty-three percent of them think most people will have a personal shopping advisor in 3 years3. Top jobs for digital assistants Sixty-three percent of smartphone shoppers want help with price comparisons a likely role for a home restocking assistant And 48 percent want help making shopping decisions easy a likely role for a personal shopping advisor 4. Stores transform or disappear Sixty-nine percent of AR and VR users think the technology will give smartphones all the benefits of stores in just three years time5. Bargain prices go offline Thirty-six percent of smartphone shoppers already believe they should pay lower prices in stores than online if they take the trouble to go there6. Materialism at a crossroads Only 15 percent prefer renting cars to owning them but 70 percent think mostly everyone will rent cars in 3 years1bloomberg/news/articles/2017-11-12/alibaba-singles-day-goes-global-with-record-25-billion-in-sales2techcrunch/2018/03/02/voice-shopping-estimated-to-hit-40-billion-across-u-s-and-u-k-by-2022/Key findings3Ericsson | Beyond smartphone shopping the rise of smart assistantsHave you bought anything today? Unless it was a cup of coffee on your way to work or last-minute dinner ingredients on your way back home, chances are that you didnt visit a shop.If you made an online purchase, you probably did it directly in an app on your smartphone instead of using a computer. And lets think about the cup of coffee you picked up this morning most likely, you didnt pay for it with cash, even though it was only a small purchase. Maybe you even paid for it with your smartphone.This is the way our smartphones are changing the way we shop and in fact, smartphones have even changed the way consumers think about shopping.Given that the smartphone shoppers in our study have become used to paying via their phones, they also expect to use smartphones for purchases when visiting stores; and 67 percent of them already pay with their phone in stores on a weekly basis.Still, the smartphone is not seen as the ultimate shopping experience. Even though smartphone screens have been growing over recent years, the main gripe remains the size limitations of the screen. This is probably the reason why the most active smartphone shoppers are also the most interested in using AR and VR to bypass the screens limitations.Again, China is leading the way here. Fifty-nine percent of those surveyed in Shanghai prefer buying things with their smartphone, compared to only 12 percent in Tokyo. More than half in Shanghai also think AR and VR will be used for clothes shopping, compared to only one-fifth of respondents in Tokyo and San Francisco. The second highest concern among smartphone shoppers is losing connection in the middle of making a purchase. As we move towards the implementation of 5G networks across our cities, being able to place trust in a fail-safe network connection will remain a top requirement.In our survey, we found that 43 percent were already smartphone shoppers in the sense that they make purchases directly using their phone every week.Figure 1: How smartphone shoppers use their phonesUses smartphone to make in-store price comparisons at least weeklyPays store purchases with smartphone at least weekly0% 20% 40% 60% 80%Smartphone shoppersSource: Ericsson Consumer & IndustryLab, Beyond Smartphone Shopping, 2018 Base: 5,048 advanced internet users aged 1569 in Johannesburg, London, Mexico City, Moscow, New York, San Francisco, São Paulo, Shanghai, Sydney and TokyoOthersSmartphone shoppers change the face of purchases 4 Ericsson | Beyond smartphone shopping the rise of smart assistantsChoice is at the very heart of our economy, as variety and competition drive companies to create value differentiation in their offerings.In brick-and-mortar stores, choice is all about moving the hand of the consumer between differently branded products. However, we now live in a world where supply increasingly outstrips demand,3to the extent that this is causing a retail crisis in its own right.Although consumers have a world of choice at their fingertips, they seem to spend more time choosing the product than actually using it.Who can feel anything but fatigue when standing in front of a rack with more than 100 types of toothpaste? Or when scrolling through endless versions of the same product? For reasons like these, 48 percent of smartphone shoppers want to only see relevant items when making choices. Almost as many think that trusted brands should help them with making purchasing choices. This rejection of choice and demand for the opposite the reduction of choice is a major shift that will fundamentally change shopping behaviors.With 43 percent of smartphone shoppers wanting a shopping assistant that helps them narrow down purchasing choices, we are moving towards an era where the most important thing is the chooser we select, rather than making decisions ourselves. Having a personal shopping assistant will empower smartphone shoppers further, as they increasingly use Artificial Intelligence (AI) to develop their individual tastes while engaging in shopping experiences that are most suited to them.Shopping or purchasing it is all about why we buyOf course, technology may be used in different ways, and to support different buying processes. Emerging technology has the potential to fully automate everyday buying decisions, freeing up consumers time to do other, more exciting things. This shift seems to be driven by smartphone shoppers 47 percent of them say they would like a service that automatically restocks everyday items, compared to only 27 percent of those who are not yet smartphone shoppers. Automated buying could be thought of as routine purchasing rather than shopping, where consumers are mainly interested in a process that runs smoothly, and requires their attention as little as possible. But routine purchasing is far from the only way that consumers want to shop. Sixty percent of our smartphone shoppers agree that shopping makes them happy, and furthermore, 53 percent say they can spend hours online browsing for products if it is something that truly interests them. This means that for aspirational shopping, we need to think a little differently. When shopping for enjoyment, consumers could use a savvy personal advisor that puts the thrill and excitement to the fore. In fact, as many as 63 percent of smartphone shoppers believe everyone will have their own personal digital assistant to advise them on their own shopping needs within 3 years.For example, if you never went on that adventurous mountain climbing trip, your personal shopping advisor could be telling you that now is the moment for you to challenge your status quo and buy the flights, boots and kit.43% 43 percent of smartphone shoppers want a shopping assistant that helps them narrow down purchasing choices.3Dart, Michael and Lewis, Robin (2017), Retails Seismic Shift, St. Martins Press, New YorkThe chooser, not the choice 5Ericsson | Beyond smartphone shopping the rise of smart assistantsThere is strong interest in automated home purchasing that enables the restock of everyday household items, such as toothpaste, milk and pasta.4statista/statistics/792604/worldwide-smart-speaker-market-share/5ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/financialyearendingmarch2016#total-spending-remained-unchanged-when-compared-with-a-year-agoFigure 2: Tasks for a home shopping assistant0% 10% 20% 70%60%50%40%30%Although Amazons share of the global smart speaker market has dropped from over 93 percent in 2016 to around 52 percent at the end of 2017,4Alexa is still very much the market leader. But what is the consumer perspective on home purchase automation?Although the items may not cost much individually, they all add up. For example, in the UK, around 10 percent of total household income is spent on food and non-alcoholic beverages alone.5In this light, it is interesting to note that the digital assistant functionality thats most requested by smartphone shoppers is the ability to handle price comparisons, with as many as 63 percent reporting this as a likely role for a smart speaker in their home. Given that Amazon is also developing automated grocery stores, the low-involvement purchasing loop could potentially be closed without any human participation at all.What if the new brand of cereal that your home restocking assistant chose is not to the liking of your children? It will need to be returned. The second most wanted functionality for digital assistants is the handling of returns and refunds, which makes sense in an automated home restocking setup. Forty-four percent of smartphone shoppers also say they want a digital assistant that receives deliveries when they are not home, and a massive 68 percent think that this will be mainstream in only 3 years.Once household purchasing chores are handled with minimal human involvement, chances are that consumers will have more energy to spend on aspirational shopping. This would require a shopping advisor that knows all about their habits and personality more like the current smartphone assistants, and less similar to what a shared smart speaker does. Price will still be an important aspect in this context, and 53 percent of smartphone shoppers say they would like their personal assistant to negotiate prices with salespeople. However, when shopping for items that express them as an individual, making the right choices becomes much more important as many as 48 percent want the personal assistant to help make shopping decisions easy. Moreover, consumers do not express their personality just by shopping for themselves, which may be why equally as many also want their assistants advice on gifts for family and friends. It is easy to see how consumers could use a personal shopping advisor to gain new insights and experiences in high-involvement shopping situations. Although a quite different role, it is equally easy to understand the consumer benefits of a smart home restocking assistant that takes over almost completely in low-involvement purchasing of everyday household supplies. And the implications for the retail industry in both scenarios could be massive.Making price comparisonsHandling returns and refundsBuying and replenishing canned foods, toilet paper, soap etc. without your involvementManaging your household budgetSource: Ericsson Consumer & IndustryLab, Beyond Smartphone Shopping, 2018 Base: Smartphone shoppers, constituting 43% of 5,048 advanced internet users aged 1569 in J