Despite a shorter shopping season and consumers still concerned about the economy, U.S. holiday sales for 2013 ultimately came in at $601.8 billion, representing 3.8 percent year-over-year growth and in line with NRF’s holiday forecast. Online holiday sales totaled $95.7 billion, a 9.3 percent growth over 2012. Now is the time to find actionable insights in these results.

Multichannel-Retailers-fulfillment-investment-focus_shoporgeholiday2014

Download the eHoliday 2013 Post-Holiday Retailer & Consumer Study.

The latest Shop.org eHoliday post-holiday retailer and consumer survey, conducted by research partner Prosper Insights & Analytics, offers a fascinating glimpse into how the season unfolded for retailers, what mattered to consumers, and how, where and when holiday shoppers spent. In particular, retailers had numerous thoughts on what they’ll invest in this year and the one thing they plan to do differently for Holiday 2014. Advice they offered includes:

Mobile execution must be flawless – and is a top priority this year. “Mobile/tablet is very different but clearly where growth is headed,” one retailer said while another cited “significant shift in device usage” regarding mobile’s impact on this past holiday season. Little surprise that mobile was among the most frequently mentioned areas where retailers plan to invest in this year, along with better site experience and apps.

Shipping and fulfillment will evolve further – and need more planning. Forrester’s Sucharita Mulpuru expects “last mile” strategies to be a key focus this year for retailers. The late-season shipping delays seen in the U.S. highlighted that fulfillment is just as important to the customer as the front-end shopping experience. Fulfillment capacity, additional shipping options to extend the holiday season and improved logistics for drop shipments from vendors are areas retailers said they will target for investing this year. Multichannel retailers also are exploring how they can leverage stores to hedge against over-reliance on any one shipping method, including ship-from-store (42 percent) and ship-to-store (27 percent), among other areas.

Marketing and promotions strategies require proactive analysis and management. With consumers still focused on stretching holiday budgets amid continued economic uncertainty (and demanding “discounts, discounts, discounts,” according to one survey participant), retailers understand that a successful holiday season includes proactively managing marketing and promotion programs. During Holiday 2013, vehicles such as affiliate marketing, paid search and emails to boost conversion worked hard for retailers. Looking ahead, retailers say they will do a number of things differently in this area. Plans include beginning promotions earlier in the fourth quarter, changing promotional strategy or simplifying the promotional message for the holiday period.

Assortment and planning are fundamental and cannot be short-changed. Assortment ranks high among factors that are most important to consumers in choosing to do business with a retailer. On a scale of one to five, with five being “very important,” consumers rated broad product selection at 4.2, availability of brand-name products at 3.9 and unique products that can’t be found elsewhere at 3.7. Plans for 2014 include better inventory management, better evaluation of merchandising mix prior to the holidays, better inventory planning for promotions and more detailed forecasting and planning.

See more of what we learned in the full consumer and retailer post-holiday survey results, now available for Shop.org members to download.

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AN14_80x80-2With average web growth of 29 percent, 2013 was a great year for e-commerce, and “2014 promises to be even better,” according to Forrester Research analyst Sucharita Mulpuru.

Forrester's Sucharita Mulpuru

Forrester Research’s Sucharita Mulpuru talks same-day shipping, mobile and dynamic pricing

Mulpuru previewed findings from Forrester’s upcoming “State of Retailing Online 2014: Key Metrics and Initiatives” study during her “First Look: 2014 Outlook for Digital Retail” presentation at Retail’s BIG Show, pointing to the web’s increasing influence on total retail sales this year and beyond. Mulpuru said we’ll reach close to $300 billion in online direct sales in 2014, but that “the really interesting number” is the additional $1.4 trillion of retail sales that will be influenced by the web in some way this year. Following an uneven holiday season and amid as-yet tenuous consumer confidence, that’s welcome news for retailers.

In her remarks and an on-stage Q&A with Jason Goldberg of Razorfish, Mulpuru noted three key factors retailers “need to be keenly aware of” that will shape 2014 as they navigate choppy waters that lie ahead:

  • “The last-mile wars are just beginning.”  With all the talk in 2013 about shipping options from same-day delivery to the Amazon delivery drone, Mulpuru said shipping “is the Achilles heel of online shopping.”  Around pre-Thanksgiving, Thanksgiving weekend and Cyber Monday timeframes this past holiday season, Forrester found consumer use of free shipping offers was up – sometimes significantly – over 2012 and 2011. “Consumers expect to have free shipping and expect retailers to subsidize free shipping,” Mulpuru said. Shipping logistics are key to e-commerce but face deep difficulties. Not only did holiday volumes prove too much for firms such as United Parcel Service over the 2013 holiday season, the U.S. Postal Service – a key national shipper with unmatched reach particularly for the last mile – is restructuring everything from staffing to retail locations to reduce burgeoning costs and stem losses.  The cost savior for multichannel retailers: shipping to their stores since shipping to a commercial location is cheaper than a residential address. While shipping expenses are unlikely to decrease omnichannel investments such as ship-to-store, click-and-collect and other delivery mechanisms that leverage the retailer’s network of stores “can insulate retailers from unwelcome surprises,” she said.
  • “Mobile madness maddens.”  Retailers surveyed for the “State of Retailing 2014” study ranked mobile as their top priority, spanning projects from responsive design to mobile site optimization and tablet redesign.  “The irony is that the majority of retailers are investing less than $1 million in their mobile initiatives,” Mulpuru said, leading to a classic case of “first mover dilemma” where companies hit a home run by being first as long as the technology isn’t changing – not the case for mobile technology at this stage.  Therefore, the lower investment is actually rational given the uncertain payoff. Nonetheless, companies that have been bold in the mobile arena are gaining traction – think Uber, Domino’s pizza delivery tracker, and Walgreens prescription-refill-by-scan. The lesson: by creating “mobile unique” experiences that meet real customer needs, retailers will enhance their chances of their mobile success and create distinct competitive advantage.
  • Everyday low prices dies “because the web always has a lower price.”  A third of consumers Forrester surveyed early last year said they use their smartphones to research and compare prices in-store, and many expect to use their phone for price research even more in the future. Additionally, half of consumers would be willing to pay a premium of 1 percent to 5 percent in order to get the product on the spot in the store versus having to wait for an online order.  The pricing research firm 360pi analyzed a basket of goods priced on Amazon versus a variety of other retailers, revealing an average of 15 percent variance in price (for some it was over 30 percent). “Branded manufacturers with strong brands will strike out on their own (with independent stores) and will be able to maintain prices across channels, but this is limited to the top brands in any sub-category,” she said.  For other companies, trade funds will be key. “Dynamic pricing is here to stay,” Mulpuru said, with some of the biggest impact in areas such as merchandising strategies.

Watch for the full “State of Retailing Online 2014: Key Metrics and Initiatives” report, due out later this month.

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AN14_80x80-2There’s plenty of talk about big data, but while “big data” might be a buzzword, what it comes down to for most retailers is how to create personalized experiences for consumers. How can you harness the information and technology to create an experience that delights your customer?

Retail’s BIG Show tackled this hot topic with the help of four professionals who work with consumer data in different ways: Bryon Colby, senior vice president, digital commerce, Cornerstone Brands; Nicolas Franchet, head of retail and e-Commerce, Facebook; Zach Davis, co-founder and chief marketing officer, Stylitics; and John Mulliken, co-founder, Joss and Main, senior vice president strategic initiatives, Wayfair.

Personalization

Nicolas Franchet, Facebook (left); Bryon Colby, Cornerstone Brands; Zach Davis, Stylitics and John Mulliken, Joss and Main, Wayfair speak at Retail’s BIG Show 2014.

Facebook’s Franchet outlined three trends that are driving and accelerating retailers’ personalization efforts:

  1. Discovery. More retailers are focusing on these browse-able discovery experiences to present the right products to the right people at the right time.
  2. Seasonality. Retailers are slicing and dicing data in new ways to be relevant in the moment to consumers.
  3. Compression. Mobile is changing things. With limited room on a mobile screen, you have fewer chances to capture your consumer. The things you choose to show must be relevant.

He makes a good case, but the vastness of data can be very daunting. Just take online home décor and furniture retailer Joss and Main. The company features seven to 10 different curated “stories” a day, generates 21,000 different versions of daily emails and 30,000 million homepage variations. This kind of personalization isn’t something you just jump into, so how and where do you start?

The panel emphasized identifying your most important targets and starting there. One of the most revolutionary discoveries for Joss and Main, Mulliken said, was simply showcasing either neutral tones or bright colors based on a customer’s observed preferences.

The session wasn’t just about cold, hard data, though. While the panel insisted you must experiment, measure, learn and refine your programs, it became clear that the future of personalization is as much an art as a science.

Mulliken described personalization as “creating a moment of magic” for the consumer. Just as a gifted personal stylist might help someone in a store find complementary items perfectly suited to them, the challenge for retailers now is moving from offering shoppers the same items they’ve purchased before, to delighting them with new discoveries and offering help that improves their lives. The future of personalization isn’t to impress customers with science; it’s to delight them with magic.

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AN14_80x80-2In 2011 Daniella Yacobovsky and her business partner opened BaubleBar, an online retailer specializing in women’s jewelry and accessories, to fill a void in the women’s jewelry and accessories space. And like other young companies that start with social already built into their DNA, it’s already developed an enviable base of vocal and engaged fans throughout the social sphere.

Together with Resource’s Social Media Strategy Associate Director Amanda Williams, Yacobovsky shared some keys to her company’s social-savvy approach this morning at Retail’s BIG Show. Their presentation included some great ideas for retailers seeking to improve customer engagement, all centered around answering these three questions:

How do we build a community, engage customers and tell our story?

  • Be authentic.

BaubleBar’s most popular posts are inspirational quotes and behind the scenes content. Instead of posting straight product shots on Pinterest, they use a fun twist such as “who wore it better” posts featuring their staff.

  • Be personal.
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BaubleBar Co-Founder Daniella Yacobovsky

BaubleBar SWAT stylists (Service With Accessorizing Talent) are personal stylists who pair up with customers who need suggestions for or help with products on the site. These stylists have their own personality and Instagram pages that help customers get to know them. Not surprisingly, those that engage with SWAT stylists have bigger basket sizes.

  • Listen.

Social media is a gold mine for data on your customers. Thanks to BaubleBar’s model that can bring product to market in four to five weeks, the company uses social data to quickly inform its product design and merchandising.

How do you bridge the gap between social and digital platforms?

  • Leverage user-generated content.

Using a social widget on home and product pages, BaubleBar can add hundreds of user-generated photos to their site, and the tactic is extremely effective. A third of site visitors engage with it and the conversion rate for those who do is 2.5 times higher than those who don’t.

  • Include games.

BaubleBar’s “Buried Bauble” (a secret $10- to $20-dollar deal hidden on the site) is one of the brand’s most effective engagement tactics.  Shoppers who are in the know receive clues on how to find the deal via social media and emails.

How do you amplify the conversation?

  • Form partnerships with key personalities.

BaubleBar engages fashion bloggers and editors who love the product. These influential fans become “Guest Bartenders” that curate product lists and post pictures of themselves styling them. Their posts soon inspire similar posts from their followers.

  • Use social data to influence the web experience.

Pins posted by others drove 10 times more traffic than BaubleBar’s own Pinterest content, so to encourage shoppers to pin, they redesigned and emphasized the “Pin it” button on product pages.

According to Williams, user-generated social content will only continue to increase in 2014. Retailers who invite data sharing and use that data to deliver personalized and rewarding experiences will earn the trust and loyalty of their consumers.

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