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Below are some 2009 digital retail ideas for consideration.
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Continue investing, albeit conservatively, in digital retail. Online is not immune from the problems of the economy, but with nearly two-thirds of retailers experiencing YOY online holiday sales growth including 40% experiencing growth of 10% or higher, it is still the bright spot for retail and can provide a comparatively strong ROI. Retailers that abandon their Internet investments (and some will) will do so for other reasons than an inherent lack of value in their online retail presence.
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Focus on optimization (and it’s no coincidence that this is the theme for Shop.org’s events in 2009) and customer retention. Innovation (which isn’t always about new site features or social media) will drive smarter, more efficient, and more effective processes and tactics. Because we’ve been seeing the growth of new shoppers slowing down for the last few years, this would make sense even if we weren’t in a recession.
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I feel like I’ve been saying this for the last 5+ years, but I really mean it this time – retail CMOs should give the Internet a big ole bear hug. Given the efficiency of online advertising and the need to save money, 2009 should be the year when retail marketing truly embraces online. According to the Shop.org/Shopzilla eHoliday study, newspapers were the most popular place (48%) for shoppers to research merchants and special offers in stores on Black Friday, which isn’t surprising. However, look at the next three most popular sources: merchant web sites (24%), emails from merchants (21%) and comparison shopping engines (12%). Television (6%) and radio (2%) were ranked 8th and 12th respectively.
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Financially strong brick-and-mortar retailers should consider acquiring strategically aligned pure-plays that struggled through the holiday season (online sales from larger store-based retailers generally saw higher YOY sales increases than smaller pure-plays). For the right price you can expand your customer list and acquire great e-commerce talent for which demand is high and supply is low.
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Pay attention to Washington DC. There will be a great debate about online privacy in Congress in early 2009, which is likely to lead to the proposal of new laws with unintended consequences for legitimate marketers. Become an industry activist and have your voice heard.
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With limited growth opportunity due to consumers feeling the pinch of the economy, market share gains will replace profitability as the most important success measurement. Those that gain market share will emerge stronger and more profitable when the economy recovers. Retailers will need to pursue new strategies to achieve this goal. Customer satisfaction will reign supreme.
This last point is the perfect segue for a shameless plug of Shop.org’s 2009 Strategy and Innovation Forum, February 2-4 in Orlando. The theme of the event is “Opportunity from Adversity.” And, by opportunity, we mean market share. Those attending this event will have the opportunity to explore strategies, innovations, best practices and ideas to ensure that they are on the positive side of market share shifts. I hope to see you there.
What do you think? What else should retailers be thinking about in 2009?
I agree with your overall assement that the web channel should be Embraced more, however, in my view this will never replace physical shops as people want to see and hold what they are purchasing.
Colin Shaw
2 comments. First, love the point on optimization — it could be the silver lining for retailers and their customers in 2009. Economic adversity slowing down the constant launch of new features will hopefully force online teams to go back through their sites and focus on cleaning them up and streamlining the path to purchase for their customers. This was exactly what Eddie Bauer did a few year’s back when their parent was ailing so they had to make due with less. I remember Sally MacKenzie outlining how they were able to improve conversion rates by optimizing rather than working on launching more bells and whistles.
Second, the “newspapers were the most popular place (48%) for shoppers to research merchants and special offers in stores on Black Friday” is an interesting stat. Mainly because it seems counter to ever newspaper stat I’ve seen that shows declining readership since the 60′s or earlier! Don’t see how the two can jibe.
brick-and-mortar shopping will be with consumers for the long term. It’s really a question of how the two assets (in-store and online) will work together to return value to the business. Clearly e-retailers have improved the capability of consumers to gain a better feel for products with 3D imagery, video and other rich internet applications. I see retailers looking for means to broaden their appeal to consumers; in this day and age it requires retailers to craft a multi-channel approach. We will see 100 year old businesses go away/change and new ones emerge overnight ie Kmart, Mervyns zappos.com, newegg.com.
In summary things are changing fast…
The focus on optimization is definitely timely. Now is a good time to look for traffic that is under-performing, such as visitors who are just looking or not completing the buying process. Optimizing the site experience for these visitors can yield significant gains in conversion and revenue, without incurring any added costs for customer acquisition.
I agree with Troy. It’s important that retailers develop effective multi-channel marketing strategies. As the web matures there will need to be more technologies that create a symbiotic relationship between online and brick and mortar. I venture to say more useful social commerce applications will find there rightful place in the ecommerce world as a result of the shifting retail landscape.
Excellent points and I happen to agree with all of them however as is always the case, there is never any mention of international expansion, why is this? With all the tools available that now allow domestic US based retailers/etailers to begin selling to the rest of the world from their existing US based brick and mortar locations, why are so few exploring this option? Why do so few offer the same product to the 300+million people who live in the UK and Europe that live here? These are the same people who think nothing of buying a roundtrip air ticket for $600.00 to shop in Manhattan! lets hope they never figure out that there are no bargins in Manhattan or we are all sunk…the bargins are on-line as is all the information to make an educated purchase. Couple this with the fully cost landed engines that are available and domesitc etailers could double their target audience overnight….think about it….
I think that lean retailers will outperform others, in this context anything that can be digitally sold should, movies, music – UnBox, CinemaNow, iTunes etc. This saves a lot of WC and carrying costs per store and moves WC into perhaps providing a richer mix or better promotions. Perhaps a downloading kiosk or a virtual download kiosk or the ability to watch online ala UnBox or Netflix.