Tag Archives: RETAIL

2012 : Retailers all about Customer Interaction

In an effort to build customer engagement, capture wallet share and accelerate sales growth, retailers in 2012 will focus on a number of customer-centric functions, including IT and ecommerce investments, enhancing customer service initiatives and, building on their mobile platforms. Those findings are from a new report from the National Retail Federation (NRF) Foundation by KPMG.

Retail Horizons: Benchmarks for 2011, Forecasts for 2012,” surveyed 247 retail executives from various sectors, outlines retailers’ top strategic initiatives for 2012 including merchandising, ecommerce, store and field operations, supply chain and human capital, among others.

“Retailers are poised to enter 2012 with a renewed focus on building up and building out many of their most important operations, hoping to establish a new sense of brand loyalty with all of their customers,” said NRF President and CEO Matthew Shay. “Though customers are always a company’s top priority, customer satisfaction will get a huge facelift this year. From increasing their brand visibility through cross-channel initiatives to providing unique, personalized shopping experiences through every channel, retailers have indicated 2012 is all about the customer.”

According to the survey, nearly 67% of companies rank customer satisfaction as the top strategic initiative for 2012 and, similarly, 82% say customer service strategies will be their top priority in the coming year, up from 75% last year.

For the first time in the survey’s ten-year history, retailers’ websites or online channels eclipsed physical stores as the top channel for marketers (81% for brick-and-mortar vs. 86% online). As such, retail executives say they will invest in programs that directly resonate with today’s shopper. According to the survey, 85 will emphasize  increasing online sales, up from 83% in 2011, and 38% will have a greater focus on increasing mCommerce sales over the next year, up from 29% in 2011. Additionally, more than half (53%) of those surveyed say they will specifically focus on web personalization engines in the coming months, which includes such enhancements as location-based services and tracking methods unique to shopping habits.
To better serve mobile-savvy shoppers in their stores, retailers also stated enhancing handheld technologies, such as mobile point-of-sale, will be a core focus over the next 18 months. While 17% already use mobile POS technologies in their store, an additional 33% indicate they plan further POS investments during that timeframe.

“Compared to the past few years, retailers have turned their attention to growth acceleration, with an emphasis on improved customer engagement strategies and tactics,” said Mark Larson, KPMG’s global head of retail. “Harnessing the vast amounts of customer data they have at their disposal to create unique consumer interactions will be critical, especially as digital sales grow. Clearly the retailers who master the one-to-one customer approach, and who also leverage the full potential of e-and-mobile commerce platforms, will be in a much stronger position to gain wallet share.”

Aiming to grow that customer interaction, 45% of companies are actively developing widgets, gadgets or advanced links that can be incorporated with their social media pages, and another 41% are planning to develop these items over the next 18 months.

Other KPMG/NRF survey findings:
• Thirty-three% reported increases of greater than 5% in same store sales in 2011, up from 21% in 2010. Additionally, 63% reported gross margins greater than 40% in 2011, up from 40% in 2010
• After years of practicing cost containment, this year more than half (52%) of respondents plan to increase their IT budgets
• Nine in 10 (91%) respondents said they will focus on leadership assessment, development and succession, up from 83% in 2011. Additionally, 52% will increase associate training, up from 39% last year
• As the number of multichannel shoppers continues to grow, so will retailers’ focus on price optimization – more than one-third (35%) of respondents will focus on solidifying their price optimization technologies over the next 18 months
• Nearly six in 10 (59%) say new customer acquisition is their top strategic priority for 2012, up from 55% in 2011

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Consumers spend on Valentine’s Day

Recession? What recession? To all appearances, consumers are going to take at least one day off from dealing with the sluggish economy and invest in making their loved ones feel loved. That’s what the National Retail Federation says, based on research provided by BigInsight. According to NRF, Valentine’s Day 2012 figures to be a record breaker.

According to NRF’s 2012 Valentine’s Day Consumer Intentions and Actions survey, conducted by BIGinsight, the total spend on the holiday is expected to come home at $17.6B.

One a person-by-person basis, celebrants are expecting to invest an average of $126.03, up from $116.21 a year ago and amounting to an increase of 8.5%. NRF says this is the highest total its ever recorded in ten years of conducting the survey.

NRF President and CEO Matthew Shay observed, “As one of the biggest gift-giving holidays of the year, it’s encouraging that consumers are still exhibiting the desire to spend on discretionary gift items, a strong indication our economy continues to move in the right direction. Anticipating high foot traffic in the coming weeks, retailers have replenished their inventories and will entice eager shoppers with great deals on everything from special menu items at restaurants to clothing to flowers and, of course, chocolates.”

The chief beneficiary of the spending will be those filling the role of spouse or significant other – they will be on the receiving end of an average $74.12 outlay, up from $68.98 in 2011.

Children, parents and other family members are next on the shopping list, for an average benefit of $25.25. Friends and pets are also on the shopping list, for $6.92 and $4.52 respectively.

BigInsight date found that this is one holiday where men do most of the spending – when it comes to clothing, jewelry and cards, they are expected to invest $168.74 on average, almost double the $85.76 their significant others of the female persuasion are expected to spend.

There has been an increase in the number of people planning to buy jewelry, which is rising from 17.3% to 18.9%; and gift cards are in the plans of 13.3% compared to 12.6% in 2011.

Big categories on the day remain candy, in the plans for 50.5%; flowers, mentioned by 36.0%; and an evening out, cited by 35.6%.

Jewels can look for a total payday of $4.1B; restaurateurs are expected to rake in $3.5B; florists are looking at a haul of $1.8B; candymakers can expect about $1.5B and the total spend on gift cards is expected to hit $1.1B.

“Celebrated by children who give Valentines to their teachers and classmates, family members who make sure to send greeting cards across the miles and couples who wish to show their appreciation for each other, Valentine’s Day means more than what’s simply on the surface,” said Pam Goodfellow, Consumer Insights Director at BIGinsight. “This year we could very well see some consumers searching high and low and stopping at nothing to make sure their loved ones receive the perfect gift.”

Describing the breakdown of shopping venues, NRF/BigInsight said, “Though discount stores are expected to see the most traffic (37.0%), one-third of shoppers (33.6%) will head to department stores, up from 30.5 percent last year. Online retailers will also see a nice boost from the business of love – nearly one out of five (19.3%) will shop online for gifts this Valentine’s Day, up from 18.1 percent last year. Others will shop at specialty stores (20.2%), floral shop (17.8%), jewelry stores (10.6%) and specialty clothing stores (6.6%).”


Retailers Ramp Up Mobile Sites and Apps

With the holiday shopping season rapidly approaching, more consumers than ever are expected to turn to their phones to research and make purchases this year. At least half of mobile consumers view their device as a holiday shopping resource for product information, coupons and sale information, according to a recent Mojiva survey.

Retailers, likewise, are ramping up mobile operations to capitalize on the growing appetite for m-commerce. A new report indicates that 37% of retailers now have mobile sites — up from 12% last year and 4% in 2009.

More stores are also embracing mobile apps. One in four (26%)  retailers have at least one mobile app, up from 7% in 2010. Nearly a quarter (23%) have an iPhone app, and 10% an Android app. Few are creating apps for other smartphone operating systems such as Windows Phone 7, WebOs and BlackBerry.

A smaller group of retailers (18%) have both a mobile site and an app, and 26% have a mobile site optimized for each of the most popular smartphone platforms. The results are based on an annual audit analyzing Internet Retailer’s Top 500 companies on their rate of mobile adoption.

The top 10 when it comes to m-commerce: Amazon, Armani Exchange, Barnes & Noble, Buy.com, Cabela’s, Gilt Groupe, The Home Depot, Newegg, Walgreens, and Wal-Mart. The ranking is based on various factors including having a mobile site, rendering a home page correctly, offering a checkout/booking capability, and having an app.

Not only have they implemented mobile-optimized sites to support a wide range of devices, but they have taken initiatives a step further with exceptional transactional functionality and well-designed apps that meet customer needs.

The study pointed out that mobile adoption, and specific mobile tactics, can vary widely by industry. The health and beauty, food and drug, and mass merchant categories, for instance, skewed much higher than flowers, gifts, hardware and home improvement in launching iPhone apps — 66% compared to 36%.

Only 20% of companies in the music/books/video vertical have mobile-optimized sites compared to nearly 70% in the office supplies category and more than half among apparel sellers. Less than half of retailers are putting up mobile sites to date — probably because they don’t see a big upside yet to building out a mobile presence.

Forrester study in June estimated that retailers in 2011 can expect just 2% of their online Web sales to be conducted via mobile. While m-commerce will grow 40% each year for the next five years, it will still only reach 7% of sales by 2016.

Getting Digital Marketing Right:Q&A with Google’s Industry Director for Retail Todd Pollak

17 September, 2011

Q&A with Google’s Industry Director for Retail Todd Pollak: Getting Digital Marketing Right

What are a few of the top trends you’re seeing in digital retail this year?
In no particular order…mobile, social, deals and convenience. The cost of walking out of a store is cheaper than it has ever been. For the first time in history, consumers have the ability to save the absolute amount of time and money at zero incremental cost regardless of whether they’re standing in a store with their coveted merchandise in hand. When you have two-parent working families with kids who have more activities, an economy generating flat income growth relative to inflation and rising commodity prices, the pressure to adapt and find efficiencies to maximize your lifestyle accelerates.

Just as retailers are increasing productivity through adoption of technology like CRM, connected stores, recommendation engines, free shipping, site-to-store, etc., the vast majority of consumers are also using technology to steepen their value and efficiency curve and improve their lifestyles. Deals, recommendations, inventory availability and price comparison have become so accessible to Main Street that the traditional ways consumers look to save money more clearly than ever express their true costs of use.

Are digital technologies reinventing the relationship between consumers and advertisers? What does this mean for retailers?
Shopping tools that are always available, predicated on simplicity and elegant design combined with real mobile processing power have fundamentally changed retailing forever.

There are 330 million search results for “my 2-year-old can use an iPhone.” In short, technology is more accessible than it has ever been at a time when inventory, pricing, reviews and recommendations information have reached near 100% transparency for non-perishable goods. Today, we have easy-to-use tools that personalize, organize and filter information like Groupon, Facebook, Twitter, Amazon, and Google.

Consumers’ understanding of these tools is peaking and usage has become more sophisticated overtime.
Retailers should be focused not just on where consumers spend their time researching and buying, but on how best to tailor their tactics based on the transitions people make by device and by location. From desktop at work, to tablets after work on the couch, to mobile in the aisles, focus on transitions in mindset and context. Size of screen and location impact the kinds of information people seek.

I’d be remiss if I didn’t ask about one of the biggest social media announcements of the year – the launch of Google+. Will you share three tips for retailers looking to leverage the platform?
Social seems to have its most significant impact at the front – through awareness – and backend – through conversion – of the buying cycle. What deals are available? What brands or products do people who are like me buy and when it comes down to the final choice, which brand do people like me buy? It’s still very early days and retailers are investing in the promise of tomorrow.

Today, social signals are relatively one dimensional in that they express interest, but not necessarily intent. In the future, companies that make sense of these connections and influences by understanding their relationships will revolutionize the way retailers merchandise and personalize their stores for each customer.

At Google, our goal is to use social signals to improve consumer experiences across Google properties and partners. In the near term, we’ll enhance the relevance of intent-based queries which are already delivering the most qualified customers on the web to retailers. If someone is looking for barefoot running shoes and their friend endorses a specific result for barefoot running shoes, we believes this will improve engagement for brands, improve the relevance of generic queries and deliver higher conversion rates for our partners.

According to this year’s State of Retailing Online report, search is still the number one marketing acquisition tool for online retailers. I know you can’t tell us what’s in the Google secret search optimization sauce, but what common mistakes do you see among retail clients when it comes to optimizing their site for search?
For multichannel retailers, too many still optimize for an online conversion and view all other paid search visits to the website as waste. Many focus their investments on 2% of their traffic as though the only people who come to a website are online buyers. This happens because the organization views the website as one store, although a very profitable one, and not the gateway to the brand. The stores benefit far more from the website than the online division, they just don’t fully measure online to store activity. The first stop for any consumer – regardless of where they intend to buy – is a website. As long as online divisions are hyper-focused on converting every visit, the consumer experience, which is tied to the whole brand, will be sub-optimal. To create an optimal customer experience, online divisions need to focus less on converting every visitor online and more about the overall customer intention and experience.

The other piece of advice I’d give is to think differently about website visitation by category. People don’t buy sheets the same way they buy blenders so if you’re using the same layouts, information, attribution window for transaction across all your categories…there’s an opportunity to increase topline revenue by optimizing for each category.

As online and offline continue to blur, retailers are hoping to increase customer insight and build relationships between online and the physical world. What tips do you have for retailers looking to leverage this customer data?

The consumer has changed and as a result, retailers must structure themselves for the 21st century.

First, align your organization to optimize for delighting the consumer regardless of the channel. From the CEO down, the whole organization must commit to the idea of a single profit center where everyone is fairly compensated and media is optimized for any conversion regardless of channel. In short, start by eliminating internal friction. This is a must do, because consumers don’t see any difference between your stores and your website. Creating separate PnLs that compete for resources, media dollars, etc. creates confusion for the consumer and damages a brand. Most of our testing demonstrates that the stores benefit far more from a visit to the website than the .com.

Second, invest in continuous testing. I’m always surprised when retailers expect a single test with a positive or negative outcome to change a media mix that’s been built over 10 years. Make a long-term commitment to solving this because you have to believe that eventually 20%+ of commerce in the U.S. will happen online.

Third, invest in a single view of the customer. That means breaking down the data silos between stores, website analytics and online transactions. This will enable top line revenue growth for your company by truly understanding the lifetime value of your customers.

How are you seeing locality play out in the current customer shopping experience? 
Location is still one of the most important factors for a traditional retail business. Today’s consumer wants instant gratification as a result of technology. Price transparency and inventory availability make local shopping more important than ever before. Your customers expect that they only have to drive to your store if you have what they need, when they need it.

I don’t think that retailing has changed all that much. The foundational things still apply, but technology that can identify a customer’s current location presents all kinds of interesting opportunities to encourage a visit that never existed before.

Mobile is accelerating the importance of a local strategy. There are over 100 million Google mobile maps users in the U.S. Some of our best performing ad units on a mobile device are brand searches and click-to-call. Consumers use their phones as shopping tools to save time looking for your store locations and calling for information. In fact, we have data that shows that mobile queries peak at the same time that offline sales peak. Those consumers who are a bit further ahead of the curve know they can find inventory availability and pricing information by store location on the web as well.

The easier the tools are to use, the smarter we become about who the shopper is and what she likes, the more opportunity there will be for advertisers to design an exceptional and personalized shopping experience for their customers.

What do you think the 2011 holiday season holds for retail? 
Long lines and aggressive shoppers have been hyped by the media for the past three years. True or not, this stuff sticks with people. As a result, a greater share of transactions will shift to the web again in 2011. Shoppers will buy earlier and deal sites will see gains as consumers hunt for values. Increased use of technology in the aisles as a shopping assistant, as well as mobile and tablet usage will see exponential growth.

What is the number one recommendation you’d make for retail companies as they begin their holiday planning?
Don’t build another microsite. Increase your presence in social communities where consumers already spend time. You’ll activate a lot more users and benefit from network effects.

Furniture industry to expect faster growth in 2012, 2013

In an updated forecast, industry analyst Jerry Epperson is now calling for a 2.9% increase in U.S. consumer spending on furniture and bedding this year – much of it due to price increases rather than real growth.

 Jerry Epperson, Furniture, Economy

But he’s looking for gains of 4% next year and 5.7% in 2013, which he expects will be “the best year for furniture and mattresses in recent history…. Without the distraction of the presidential election and with stronger existing home sales (above 5 million units), we expect the closest to ‘normal’ activity the home furnishings industry has seen in almost six years.”

He expects consumer spending, the broadest measure of industry retail activity, to continue growing at 4.1% in 2014 and 5% in 2015. The spending figure is projected at $83.3 billion this year and is forecast to top $100 billion in 2015.

Late last year, Epperson, of Mann, Armistead & Epperson in Richmond, had expected better news in 2011 based on economic indicators and projections at the time. But GDP growth was slower than expected, unemployment stayed high as too few jobs were created, and the modest recovery in housing starts has mainly been in multi-family, with single-family starts still declining a bit.

He said he still expects economic growth to pick up in the second half of this year – aided by a drop in gas prices – but not as much as was expected earlier in the year.

“We do not expect a double-dip recession, but agree with many that it has a 25% to 30% chance of occurring, most likely in early 2012 – if at all,” he wrote in the new forecast.

Epperson, who bases his economic assumptions on the University of Michigan projections for 2011 and 2012 and uses a blend of five other long-term forecasts for 2013-2015, said he expects U.S. economic growth will reach or exceed 3% next year. That will finally “give the economy a perceivable level of growth,” he said.

He projects GDP growth of a more consistent 3.3% to 3.5% in 2013 as home resales and housing starts pick up. More gradual improvement is expected in 2014 and 2015 as unemployment finally declines to 8% or lower, according to the forecast.

High Gas prices likely dampened May retail sales

U.S. retailers are expected to show a small increase in May sales, as high gas prices softened spending and  consumer demand for summer clothing and other discretionary items.

Analysts on average are expecting a 5.3 percent increase in May sales at stores open at least a year, according to Reuters. That compares with gains of 8.9 percent in April, when sales were fueled by a late Easter holiday, and 2.6 percent in May 2010, when many experts feared a double-dip recession.

Experts debate to what extent will the jump in fuel prices continue to take the edge off of growth, but as we move into several months of high fuel prices, we’re starting to see some effects in May.

Although U.S. gasoline prices fell to an average of $3.90 per gallon in the latest Lundberg Survey, Gas hit $4 per gallon earlier in May and has been above $3 per gallon for most of the year. High fuel prices affect shopping behavior. The longer those fuel prices persist, it’s more likely to affect the average household budget.

U.S. consumers turned more pessimistic in May, according to an index of consumer sentiment, while home prices fell back below crisis-era lows in March, as the economy that continues to show signs of a struggle.

May is not  a big month for shopping, it falls after the Easter holiday and before the back-to-school season. Retailers have been struggling with a slow job recovery that has kept spending levels low, especially for lower-income households.

The weather across much of the country was cool and rainy; many retailers also blamed bad weather for lackluster sales in the first quarter.

The biggest May sales increase, 7.3 percent, is expected from discount stores that appeal to consumers on a budget, such as Costco and Target, according to Reuters.

Clothing companies such as Gap Inc , TJX Cos Inc  and Limited Brands Inc are expected to turn in the smallest gain, of 2.5 percent.

TJX, Chico’s FAS Inc  and Ann Taylor parent Ann Inc indicate that May was strong, while Pacific Sunwear of California Inc , Aeropostale Inc (ARO.N) and Urban Outfitters Inc  saw generally weak trends.

Though they have not commented on May trends, early data suggests Limited and Ross Stores Inc probably performed well, while Gap was likely soft.

Consumer strategists say retailers that cater to lower-income consumers are expected to struggle throughout the year, since their customers are more affected by unemployment and higher food and fuel prices than a recovering stock market.


Black Friday Weekend: Bigger Crowds, $45 Billion In Spending

Black Friday Weekend: Bigger Crowds, $45 Billion In Spending

View complete survey results
View corresponding survey on Cyber Monday expectations 

NRF: Black Friday Weekend Sees Bigger Crowds, $45 Billion in Spending
Thanksgiving Day, Early Bird Shoppers Up

Washington, November 28, 2010 – With one of the biggest shopping days of the year under their belts, retailers have reason to smile. According to a National Retail Federation survey conducted over the weekend by BIGresearch, more shoppers visited stores and websites over Black Friday weekend – and spent more – than a year ago.

According to the survey, 212 million shoppers visited stores and websites over Black Friday weekend*, up from 195 million last year. People also spent more, with the average shopper this weekend spending $365.34, up from last year’s $343.31. Total spending reached an estimated $45.0 billion.

“While Black Friday weekend is not always an indicator of holiday season performance, retailers should be encouraged that a focus on value and discretionary gifts has shoppers in the spirit to spend,” said Matthew Shay, NRF President and CEO. “As retailers look ahead to the first few weeks of December, it will be important for them to keep momentum going with savings and incentives that holiday shoppers simply can’t pass up.”

If it seems like Black Friday gets earlier every year, that’s because it is. Many retailers opened their doors earlier than ever, and eager shoppers followed suit. According to the survey, the number of people who began their Black Friday shopping at midnight tripled this year from 3.3 percent last year to 9.5 percent in 2010. In fact, by 4 a.m. nearly one-fourth (24.0%) of Black Friday shoppers were already at the stores. Thanksgiving Day openings have also been a boon to the industry, as the number of people who shop on Thanksgiving – both online and in stores – has doubled over the past five years, from 10.3 million in 2005 to 22.3 million in 2010.

After a holiday season of blue jeans and coffeemakers, shoppers demonstrated that they were in the mood to purchase more discretionary gifts this year. The number of people who purchased jewelry over the weekend rose substantially, from 11.7 percent last year to 14.3 percent this year. Additionally, more people purchased gift cards, toys and books and electronic entertainment than a year ago.

“It’s certainly encouraging to see an increase in traffic and sales from the four-day holiday weekend, however, consumers still have concerns about the economy, jobs, and paying down debt,” said Phil Rist, EVP, BIGresearch.  “It was the consumers’ search for deals and bargains that drove the weekend traffic rather than their confidence in the economy.”

While shoppers seemed focused on getting good deals, items of strong value seemed to win out over the absolute lowest prices. According to the survey, both department stores (52.0% this year vs. 49.4% last year) and clothing stores (24.4% vs. 22.9%) saw healthy increases in traffic, while the percentage of people who shopped at discounters declined 7.2 percent, from 43.2 percent last year to 40.3 percent this year. As retailers leverage their websites to offer Black Friday prices to shoppers who don’t want to fight crowds, the percentage of people who shopped online this weekend rose a healthy 15.2 percent, from 28.5 percent last year to 33.6 percent this year – a strong sign heading into Cyber Monday.

About the Survey

The survey, conducted Nov. 25-27, 2010 by BIGresearch for NRF, polled 4,306 consumers and has a margin of error of plus or minus 1.5%.