September 2015
RETAIL ROUNDUP Consumers spend billions each year at retail, and retailers are the biggest digital ad spenders of any industry in an effort to attract them, especially to digital and mobile channels. eMarketer has curated this Roundup of key articles, insights and forecasts to help retailers understand what shoppers are up to, how their competitors are trying to attract them and what’s coming next in the world of tech-enabled retail.
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RETAIL ROUNDUP Overview eMarketer is forecasting 3.3% growth in US retail sales this year, with the total expected to reach $4.785 trillion. Growth will continue above 3% for the next few years, with sales hitting $5.480 by 2019, the end of our forecast period. Direct ecommerce sales still make up a fairly small share of that amount: $340.61 billion this year, and a projected $534.95 billion in 2019. More than nine in 10 internet users in the US will search and browse items online this year, eMarketer estimates, and among that group, 83.8% will make at least one digital retail purchase during the calendar year. Mcommerce sales will be an even smaller slice of the pie. This year, US consumers will spend $74.93 billion on purchases made via mobile phones, tablets and other internet-connected mobile devices, amounting to 22.0% of retail ecommerce sales and a tiny 1.6% of total retail sales. In efforts to attract those shoppers, retailers will be the biggest spenders of any industry on digital ads. This year, US retail industry ad spending will be up 16.8% to $12.80 billion, a figure that will nearly double by 2019.
US Retail Ecommerce Forecast Model, 2013-2019 2013
2014
2015
2016
2017
2018
2019
US population ages 14+ (millions)
259.0
261.9
264.5
267.0
269.6
272.1
274.6
Internet users ages 14+ (millions)
215.1
221.2
227.3
232.5
237.0
240.2
242.4
% of US population ages 14+
83.1%
84.5%
85.9%
87.1%
87.9%
88.3%
88.3%
Digital shoppers 191.1 ages 14+ (millions)
198.2
205.0
211.1
217.1
221.7
224.0
% of internet 88.8% users ages 14+
89.6%
90.2%
90.8%
91.6%
92.3%
92.4%
Internet users
Digital shoppers
Digital buyers Digital buyers ages 14+ (millions)
157.1
164.6
171.8
179.0
185.8
191.2
195.1
% of digital shoppers ages 14+
82.2%
83.0%
83.8%
84.8%
85.6%
86.2%
87.1%
% of internet 73.0% users ages 14+
74.4%
75.6%
77.0%
78.4%
79.6%
80.5%
Retail $260.67 $298.26 $340.61 $384.89 $431.84 $481.94 $534.95 ecommerce sales* (billions)
Note: *includes products or services ordered using the internet, regardless of the method of payment or fulfillment; excludes travel and event tickets Source: eMarketer, June 2015; confirmed and republished, Aug 2015 190675
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US Retail Industry Digital Ad Spending, 2014-2019 billions, % of total digital ad spending and % change $20.52 $18.50 $16.52 $14.71 $12.80 $10.96 22.1%
22.0%
21.9%
14.4%
16.8%
14.9%
2014
2015
2016
21.9%
21.9%
21.9%
12.3%
11.9%
11.0%
2017
2018
2019
Retail industry digital ad spending % of total digital ad spending % change Note: CAGR (2014-2019)=13.4%; includes advertising that appears on desktop and laptop computers as well as mobile phones, tablets and other internet-connected devices, and includes all the various formats of advertising on those platforms Source: eMarketer, Sep 2015 195270
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Copyright ©2015 eMarketer, Inc. All rights reserved. 2
Where Do Digital Buyers Start Their Online Shopping Journey? Marketplaces the most popular source when starting journey Based on research from PYMNTS.com and Amazon Payments, most digital shoppers seem to know where they want to shop right from the beginning of their online shopping journey. Asked in July 2015 where they began their online shopping journey, nearly two-thirds of digital buyers in the US said they started with marketplaces like eBay, Amazon or Etsy, where they could search through a wide variety of goods from various sellers. Nearly half reported that they sometimes began their journey right at their favorite etailer’s site. There’s still room for retailers to grab new customers via search, of course—two in five respondents started at least sometimes by searching for the product they knew they wanted to buy. Social was a less popular starting point among digital buyers.
Sources Where US Digital Buyers Begin Their Online Shopping Journey, July 2015 % of respondents Marketplaces
64%
Favorite merchants
48%
Search Social media
40% 29%
Note: for products they plan to purchase via desktop/laptop Source: PYMNTS.com and Amazon Payments, "Innovation and the Digital Shopper," Aug 5, 2015 194962
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Data from MarketLive shows search—specifically, organic search—is the largest single driver of traffic to US retail ecommerce sites. In Q2 2015, 40.0% of tablet traffic, 38.5% of desktop and laptop traffic, and 33.3% of smartphone traffic went to retail sites from organic search. Paid search accounted for another 12.6% of traffic overall.
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Retailers Account for One-Quarter of Programmatic Spend Digital display ad spending skews heavily programmatic US retailers spend more on digital advertising than any other industry, and they also lead all verticals in programmatic spending. eMarketer estimates that nearly 25% of programmatic digital display ad dollars will be spent by the retail industry this year. Digital display ad spending by US retailers was also more programmatic-heavy than in any other industry. Retailers are spending 70.0% of digital display budgets on programmatic buys this year. Overall, the industry will spend $3.71 billion on programmatic digital display ads in 2015. Retailers are using programmatic to boost brand awareness as well as for a host of other goals, according to research. Industry subsegments are adopting programmatic display at different rates. Online retailers that need to make up shipping costs and those that trade in commodity products that compete with Amazon could spend as high as 100% programmatically. Luxury, on the other extreme, could be as low as 20% since this sector likes maintaining control of ad placements and has the margins to play around with pure branding. Brand safety is brought up repeatedly as a concern among retailers. The importance of ads not running against unflattering content is a general issue, but particularly for more image-conscious categories like luxury retail.
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US Digital Display Ad Spending, by Industry and Transaction Method, 2015 billions and % of total industry ad spending *
ic
c y - ati ry tr st on m us d u N d d n n am am nd n l f i spe gr gr f i spe o o o o ta % ad Pr pr % ad To at
m
Retail
$3.71
70.0%
$1.59
30.0%
$5.29
CPG & consumer products
$2.10
63.0%
$1.23
37.0%
$3.33
Automotive
$1.57
50.0%
$1.57
50.0%
$3.14
Telecom
$1.58
52.0%
$1.46
48.0%
$3.05
Financial services
$1.66
55.0%
$1.36
45.0%
$3.02
Computing $1.04 products & consumer electronics
52.0%
$0.96
48.0%
$2.00
Entertainment
$0.78
41.0%
$1.13
59.0%
$1.91
Media
$0.62
38.0%
$1.01
62.0%
$1.63
Travel
$1.09
68.0%
$0.51
32.0%
$1.60
Healthcare & pharma
$0.19
25.0%
$0.57
75.0%
$0.75
Other
$0.54
40.8%
$0.79
59.2%
$1.34
Total
$14.88
55.0%
$12.17
45.0%
$27.05
Note: numbers may not add up to total due to rounding; includes advertising that appears on desktop/laptop computers as well as mobile phones and tablets; includes banners, rich media, sponsorship, video and other; *digital display ads transacted via an API, including everything from publisher-erected APIs to more standardized RTB technology Source: eMarketer, May 2015 188679
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Omnichannel Remains Omnipresent for Department Stores Department stores leverage brick-and-mortar locations to create omnichannel experience Hurt by the gradual decline of the iconic US shopping mall format they long anchored and retail generalists in an era when specialty stores and personalization are on the rise, department stores are having to adjust their business strategies for the digital age. Ecommerce sales are still less than 15% of revenues for most players in the sector, but many that have taken steps toward digital-physical integration are starting to see their work pay off, according to a new eMarketer report, “Department Stores and Digital Commerce: Trends and Benchmarks.” The persistent industry buzzword “omnichannel” has taken many forms across sectors, and department stores have been at the forefront of attempting to use traditional spaces as a value add rather than a detriment when competing against online pure plays. “Amazon.com is thought to be the retail killer in ways from a price comparison standpoint and a research comparison standpoint,” said Danielle Bailey, principal at L2 Think Tank. “However, where department stores have an advantage is using and leveraging their physical locations as touchpoints to consumers.” Seemingly small changes can have big impact. In a Q4 2014 earnings call, Nordstrom co-president Erik Nordstrom mentioned that allowing in-store returns of merchandise purchased digitally—a sensible move for a retailer known for customer service—was a strategy starting to show results. “Well over 60% of our Nordstrom.com returns end up at our full-line stores, and well over 70% HauteLook and Nordstrom Rack returns end up at our Rack stores,” he said. Those in-store returns equaled increased foot traffic— for Nordstrom Rack, that amounted to an additional 1 million retail visits in 2014, Nordstrom said. Foot traffic is important because of potential impulse purchases, according to Marshal Cohen, chief industry analyst at The NPD Group. “The retailers need you in the store, particularly the department stores. Forty-seven percent of consumers buy on impulse in the store. Online, they only buy 25% on impulse. So, where would I rather have you if I’m a store owner?”
Retail Roundup
US Department Store Retail Sales, 2004-2014 billions and % of total retail sales* $87.27 $87.46
$82.66
$79.02 $72.80 $64.36 $65.57 $66.35 $63.41
$61.39 $61.02
3.8% 3.6% 3.2% 3.0% 2.7% 2.5% 2.5% 2.4% 2.2% 2.0% 2.0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Department store retail sales
% of total retail sales*
Note: excludes discount department stores; *excludes auto dealers, gas stations and restaurants Source: US Department of Commerce, "Monthly Retail Trade Report"; eMarketer calculations, March 27, 2015 188231
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L2’s Bailey attributed some of Nordstrom’s success to early investment in digital, but also said the retailer has been able to blend online and offline by adding Guideshops for once online-only menswear retailer Bonobos and more recently in-store studios featuring products from online-only custom footwear company Shoes of Prey. “What [Nordstrom has] done really well is seeing what’s worked online or seeing digital brands that they want to bring in-house,” she said. Using digital innovations to enhance the in-store shopping experience is an extension of the omnichannel approach. Right now, this encompasses everything from clienteling apps sales associates can use to put together outfits for high-spending customers, to beacons sending realtime offers to smartphones, to interactive dressing room mirrors, to visual search. Despite retailers wanting to be at the forefront of instore technology, it is often fulfilling more basic needs that most improves the in-store shopping experience. Much larger percentages of US internet users surveyed by PricewaterhouseCoopers in 2014 said checking online inventory (40%) and self-service checkout (36%) would improve in-store shopping than would digital mirrors (4%) or video walls displaying products (7%). Copyright ©2015 eMarketer, Inc. All rights reserved. 5
Why Mobile Shopping Remains an Upper-Funnel Affair Security is biggest barrier to mobile purchases What’s stopping people from buying on mobile devices? They spend plenty of time shopping that way, but the purchase dollars just aren’t flowing. By and large, mobile is still for the top of the purchase funnel. According to comScore research from February 2015, the problem isn’t just with smartphones—tablets scored lower against all the problem metrics measured, but not by much. The biggest issue on either device was security. But other problems were not far behind in hindering smartphone users from making purchases on their devices. Respondents complained screens were too small to see the products, that navigating was too slow and that comparison shopping was difficult. Inputting information was tough—especially on smartphones—and wireless speeds were often not what users wished for when completing a transaction. Overall, problems spanned a variety of areas largely inherent to mobile: small screen size, limited ability to input or interact with information, and less-than-perfect data connections.
Reasons that US Mobile Device Owners Do Not Purchase Products via Smartphone/Tablet, Feb 2015 aggregate score* Do not feel secure providing payment information over mobile devices 20.2 17.1 Cannot see the product detail 19.6 15.0 Navigating between screens is too difficult/slow 19.3 16.1 Cannot browse between multiple screens easily to comparison shop 19.2 16.0 Too difficult to input my name, address, and payment information 18.6 15.0 Cannot navigate to coupons/discounts easily 18.4 15.9 Connection speeds/spotty service slows down the browsing process 18.4 15.9 Smartphone
Tablet
Note: n=2,417 ages 18+; *of responses on 7-point scale where respondents rate how big of an issue each reason is for them and how frequently each reason is a factor inhibiting mcommerce conversion; these ratings were then multiplied to produce an aggregate score Source: comScore Inc., "The M-Commerce Gap: Why Dollars Continue to Lag Shopping Behavior on Mobile," June 11, 2015 191749
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Does Programmatic Work for Branding? More than six in 10 UK and US marketers use programmatic branding campaigns eMarketer estimates that US programmatic digital display ad spending will leap 48.9% this year to hit $14.88 billion, or 55.0% of total digital display ad spend. While the majority of those dollars will likely focus on direct-response efforts, April 2015 research by Econsultancy in association with Quantcast finds that programmatic branding adoption is relatively high, and spending will rise in the coming years. Among UK and US senior marketers polled, 62% said their companies ran programmatic advertising campaigns for branding objectives. What was holding back nearly four in 10 non-users from buying in, or existing users from investing further? Data privacy concerns and difficulty proving return on investment were the two most common issues, each cited by 23% of respondents. Lack of quality data (18%), a complex marketplace (17%) and lack of transparency (16%) rounded out the top five. When asked about the benefits of using programmatic for branding, respondents were most likely to cite increased efficiency, reduced overall advertising costs and the ability to optimize and target the right audience in real time as “major” benefits. Among all benefits included, at least 45% of respondents rated them highly beneficial. In terms of budget, marketers were most likely to allot between 31% and 40% of programmatic spend to brandfocused campaigns. However, Econsultancy expected this to shift in the coming years, with marketers intending to increase their investment in programmatic branding campaigns by 37% on average by 2017.
Benefits of Running Programmatic Brand Advertising Campaigns According to UK and US Senior Marketers, April 2015 % of respondents Increased efficiency 64%
33%
Reduced overall advertising costs 58%
3%
36% 6%
Ability to optimize and target the right audience in real time 56% 36%
8%
Higher ROI 52% Opportunity to leverage first-party data 52%
44% 5% 32%
Ability to build effective cross-device campaigns 49%
15% 45% 6%
Greater data and insights to understand my customers 49% 42%
9%
Ability to achieve scale 48%
45%
Reduced time to launch campaigns 45% Opportunity to leverage third-party data 45% Major benefit
Minor benefit
8%
51% 5% 40%
15%
No benefit
Note: n=66; numbers may not add up to 100% due to rounding Source: Econsultancy, "Programmatic Branding: Driving upper-funnel consumer engagement" in association with Quantcast, May 26, 2015 190416
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Does Programmatic Work for Branding? Research by Chango conducted in September 2014 found that while retargeting and acquisition was the No. 1 goal that marketers in North America and the UK were trying to achieve via programmatic advertising, branding ranked a close second, at 75% vs. 72%. And programmatic branding may be even more important for the retail industry specifically. When March 2015 polling by WBR Digital asked US retail industry marketers about the goals they were trying to achieve via programmatic advertising, improving brand awareness was the No. 1 response, cited by 92%. However, this fell when it came to business goals that had actually been achieved by programmatic campaigns. Here, improving brand awareness ranked second to last, cited by a still-impressive 75%.
Percent of Programmatic Ad Spending Focused on Branding Campaigns* Among UK and US Senior Marketers, April 2015 % of respondents 1%-10%
9%
11%-20%
14%
21%-30%
15%
31%-40%
19%
41%-50%
15%
51%-60%
6%
61%-70%
6%
71%-80% 81%-90%
12% 3%
Note: n=65; numbers may not add up to 100% due to rounding; *rather than direct response Source: Econsultancy, "Programmatic Branding: Driving upper-funnel consumer engagement" in association with Quantcast, May 26, 2015 190418
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Apparel Retailers and Ecommerce: Direct Marketers Dominate Retailers with strong direct-sales history lead for ecommerce eMarketer forecasts US retail ecommerce sales of apparel and accessories will reach $60.0 billion in 2015, a 17.2% share of total US retail ecommerce. Consumers have a wide range of retail choices when shopping for apparel: discount stores, department stores and specialty stores of all sorts, from fast fashion to luxury. As a general rule, apparel-specific retailers tend to have a higher percentage of revenues coming from ecommerce than do discounters or department stores, according to a new eMarketer report, “Apparel Retailers and Digital Commerce: Trends and Benchmarks.” When examining the role ecommerce plays in apparel and accessories retail sales, one factor is clear: a correlation between catalogs and sales. According to eMarketer data, nearly all of the leading ecommerce retailers (as measured by ecommerce as a percentage of revenues) in this product segment are known for having translated mailorder businesses to the internet. (It is important to note, too, that Lands’ End, J.Crew, Free People, Anthropologie, Urban Outfitters and Victoria’s Secret include catalog sales in the ecommerce figure.) A background in catalog retailing doesn’t guarantee success, but multichannel retailers with strong direct-mail roots, such as a J.Crew or an Urban Outfitters brand, can command as much as 30% of sales digitally. For midtier retailers like Ann Taylor Loft, New York & Company and Gap, 10% to 15% is more common. Shoes, accessories and teen-focused retailers generally win smaller proportions of sales via ecommerce. For example, none of the shoe retailers tracked by eMarketer had ecommerce penetration higher than 14.1% for the January 2014 to January 2015 period.
US Apparel and Accessories Retail Ecommerce Sales, 2013-2018 billions, % change and % of total retail ecommerce sales $86.4 $77.0 $68.2 $60.0 $52.2 $44.9
17.2%
17.1%
17.2%
17.3%
17.4%
17.5%
17.0%
16.4%
14.9%
13.7%
12.9%
12.2%
2013
2014
2015
2016
2017
2018
Apparel and accessories retail ecommerce sales % change % of total retail ecommerce sales Note: includes products or services ordered using the internet, regardless of the method of payment or fulfillment Source: eMarketer, Sep 2014 178676
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The apparel retailer with the highest ecommerce rate for the 12-month period ending January 31, 2015, was Lands’ End. With just 256 US stores, 236 of them shops inside Sears department stores, direct sales (via digital and catalog) are where Lands’ End draws a vast majority of its revenues (84.9%). During the 12-month period, the retailer’s ecommerce sales grew 1.3% to $1.32 billion, while retail store sales shrunk 9.4%. [Note: Lands’ End was spun off from Sears in April 2014.]
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Apparel Retailers and Ecommerce: Direct Marketers Dominate Other strong performers included Urban Outfitters’ brands. All three of its brands (Urban Outfitters, Anthropologie and Free People) saw ecommerce make up around 29% of total revenues in the January-to-January period. Though ecommerce growth is happening faster for some retailers than others, digital progression is taking hold across the sector. Data from The NPD Group tracking US apparel industry dollars for the 12 months ending February 2015 shows that industry sales grew 2% overall, while in-store sales shrank 2%. Ecommerce sales, which NPD pegs at 17% of apparel sector revenues, grew 19% during the period.
In-Store and Ecommerce Revenues for Select US Apparel Retailers, Jan 2015 In-store Ecommerce Total Ecommerce sales sales revenues % of total (millions) (millions) (millions) revenues
Lands' End J.Crew
(2)
$234.6
$1.320.6 (1)
$1,555.4
84.9%
$1,714.2
$826.2 (3)
$2,579.7
32.0%
Free People (Urban Outfitters)
$147.2
$157.8 (3)(4)
$530.8
29.7%
Anthropologie (Urban Outfitters)
$980.8
$403.4 (3)(4)
$1,384.3
29.1%
Urban Outfitters
$989.9
$395.2 (3)(4)
Lilly Pulitzer (Oxford Industries) Abercrombie Kids (Abercrombie & Fitch) Abercrombie & Fitch Ann Taylor (ANN INC.) Victoria's Secret (L Brands) (5)
$1,385.1
28.5%
$46.5
$167.7
27.7%
$238.0
$83.4 (4)
$321.4
25.9%
$1,082.7
$367.2 (4)
$1,449.9
25.3%
$750.9
$201.9 (4)
$952.8
21.2%
$5,700.0
$1,507.0 (3)
$7,207.0
20.9%
$57.2
Note: figures depict annual results over a full year ending 1/31/2015; numbers may not add up to total due to other revenue streams not shown (e.g., wholesale); (1) includes catalog, digital and in-store kiosk sales; (2) other revenues consist primarily of shipping & handling fees and revenues from third-party sellers; (3) includes digital and catalog sales; (4) eMarketer estimates; (5) includes only US and Canada operations Source: company reports; eMarketer calculations, May 22, 2015 190786
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In-Store Personalized Digital Display Pushes Purchases Digital personalization could help brick-and-mortar retailers turn browsers into buyers Shoppers may still prefer the store for most purchases, but digital plays a big role before they decide what shops to enter. In April 2015 research by Google and TNS, 55% of US internet users said they became aware of products on the internet via websites and apps, vs. 38% who cited the store. When May 2015 polling by Adroit Digital asked internet users in North America about how frequently they researched digitally before making a purchase in-store, nearly four in 10 millennials said they did so always or often, and an additional 28% at least sometimes. Results were similar among respondents 35 and older, with 39% researching online often or always before buying at a brickand-mortar, and 27% doing so at least sometimes. Still, when it came time to choose the primary location/ channel where they browsed for retail purchases, around six in 10 Adroit respondents from both the 18-to-34 and 35-and-older groups cited the store. In comparison, just over one-quarter from each group primarily used PCs, while mobile sites and apps didn’t even break double digits. To turn in-store browsers into buyers, brick-and-mortar retailers must provide a stellar experience; boosting engagement based on customer data and creating tailored experiences can help. Adroit found that satisfying today’s digital consumers’ desire for personalization when they’re in-store could boost brick-and-mortar sales. Fully 85% of respondents ages 18 to 34 and 35 and older said they would be more likely to make a purchase if they saw something personalized to their interests on an in-store beacon or digital display. In both age groups, males were more interested in this technology than females. However, other research suggests retailers should tread lightly when implementing in-store personalization if they want to avoid being seen as creepy. In April 2015 polling by RichRelevance, just 25.8% of US internet users thought that digital screens displaying prices that were tailored to them were cool, vs. 41.8% who said this was creepy. And when asked about having digital screens in each dressing room
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Primary Location/Channel Where Internet Users in North America Browse for Retail Purchases, by Age, May 2015 % of respondents in each group In-store 57% 61% PC 28% 26% Mobile site 8% 6% Mobile app 7% 6% 18-34
35+
Note: numbers may not add up to 100% due to rounding Source: Adroit Digital, "Marketing to Millennials: Do They Really Shop Differently Online than Gen X and Boomers?" Aug 11, 2015 194985
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Internet Users in North America Who Would Be More Likely to Make a Purchase if They Saw Something Personalized on an In-Store Beacon/Digital Display, by Demographic, May 2015 % of respondents in each group Male 18-34
91%
35+
93%
Female 18-34 35+
76% 72%
Note: personalized to their interests Source: Adroit Digital, "Marketing to Millennials: Do They Really Shop Differently Online than Gen X and Boomers?" Aug 11, 2015 195034
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that provided personalized product recommendations based on current items and past purchases, 54.8% viewed this as creepy, compared with 25.1% who thought it was cool.
Copyright ©2015 eMarketer, Inc. All rights reserved. 11
Buy Online, Pick Up In-Store Model Financially Beneficial for Retailers
Chitra Balasubramanian Head of Business Analytics RetailNext
With ecommerce having outpaced brick-andmortar sales during the 2014 holiday season, retailers are increasingly merging digital and physical shopping experiences. Chitra Balasubramanian, head of business analytics for RetailNext, a provider of in-store analytics, spoke with eMarketer’s Lisa Barron about omnichannel retail. eMarketer: How strong was foot traffic this past holiday season? Chitra Balasubramanian: In the brick-and-mortar environment, foot traffic was down compared to last year. During the combined November and December period, traffic declined about 8.3% vs. the prior year. Moreover, sales were down by about 8%. eMarketer: What about foot traffic in the period after Christmas?
Balasubramanian: Digital is starting to emerge as a force to be reckoned with in the retail industry, and we’ll start to see more of that coming into fruition in 2015. Retailers should be in a better position to deploy relevant technologies within the store. Many have taken on omnichannel strategies, which will likely pay big dividends this year. There is more of a focused attempt to converge the digital and physical space. eMarketer: Who is at the forefront of this? Balasubramanian: Victoria’s Secret has done a great job. We also see big-box retailers doing a lot with buying online and picking up in-store, as well as offering kiosks and other types of technology in-store to better educate consumers on products. eMarketer: Was the buy online and pick up in-store feature a big one in 2014? Balasubramanian: It’s a way to drive traffic from the online channel into the physical store. Shoppers who buy online and pick up in-store end up spending a lot more once they get to the store. From a financial perspective, it’s beneficial for retailers to have that type of option in place.
Balasubramanian: It was strong this year. Compared to last year, we saw an 8% increase in sales on December 26 and December 27 vs. last year. Traffic was also up 3% vs. last year.
“Shoppers who buy online and pick up instore end up spending a lot more once they get to the store.” A lot of it comes down to the timing of the dates. December 26, 2014, fell on a Friday instead of a Thursday, and a lot of people had that day off. Therefore, there was more opportunity for consumers to go in-store. eMarketer: What major trends did you identify in the 2014 holiday season?
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Digital, Social Media to Play Big Role in Back-to-School Business
Thom Blischok Chief Retail Strategist and Senior Executive Advisor Strategy& (formerly Booz & Company)
As summer comes to a close, retailers are looking ahead to the back-to-school sales season. Thom Blischok, senior executive advisor at consulting firm Strategy& (formerly Booz & Company), spoke with eMarketer’s Lisa Barron about what marketers will be doing to reach their target consumers this year. eMarketer: In what ways will this back-to-school season change from last year? Thom Blischok: There will be more online [shopping] than last year. Online will continue to challenge most traditional events and holidays as shoppers recognize that they can get pretty much anything instantaneously. They can look at it online and get it delivered the next day. Social is also going to play a huge part in the back-toschool season this year. Social acceptance is going to have a much bigger role in things like back-to-school as kids share what they like and what they dislike. Also, we’re moving into a digital world. Traditional school supplies may begin to slow a bit as more homework and reports go online and are shared electronically. We are on the cusp of this transition from traditional school supplies to more electronic school supplies. eMarketer: To what extent should marketers think about kids as their audience and to what extent should they think about the parents as their audience? Blischok: The biggest audience that marketers should focus on are the pre-millennials. Pre-millennials are going to be the trendsetters for the next 10 years. Learning how to deal with pre-millennials is going to be pretty important in a way that’s respectful to the pre-millennial—a lot more
Retail Roundup
trendy information, as well as more products that fit into their changing lifestyle.
“We are on the cusp of this transition from traditional school supplies to more electronic school supplies.” They also have to be aware of millennials. Kids today influence purchases. Marketing to parents about things like safety, security, usefulness, longevity, quality and great value is important. Marketing to kids about acceptance in general, usability, whether something fits into their lifestyle or group of kids they’re around is also important. These are two different marketing messages that get developed in this process. eMarketer: How will successful retailers take advantage of the back-to-school season? Blischok: Some retailers are already starting to think about back-to-school displays. They’re not just thinking about papers and pencils, but the holistic back-toschool centering around electronics cases, electronics accessories and something as simple as TVs to support as monitors. The successful retailers will understand back-toschool, and they will create displays in their stores, which are primarily serving the needs and usage needs of the kids going back to school. There may be displays which show how you can take your computer and have it on two or three screens, or there may be displays where you’re having the latest printing capabilities. Smart retailers will do three things very well. First, they’ll understand with clarity what the requirements are for this season’s back-to-school shopper, both child and parent. Second, they will begin to develop assortment displays that really meet those needs. Finally, they will begin to tune their assortments to meet the needs and wants of the various communities, trying to personalize the stores more than they have in the past and create experiences, not just product displays. The overarching theme is that successful retailers will without question create experience displays for back-to-school vs. product displays for back-to-school.
Copyright ©2015 eMarketer, Inc. All rights reserved. 13
Digital, Social Media to Play Big Role in Back-to-School Business eMarketer: How important is back-to-campus as opposed to back-to-school? Are a lot of retailers differentiating? Blischok: Absolutely, yes. Some retailers are building campus stores, which is interesting. Some retailers have special evening events where they close the stores and open them up just for back-to-campus. There are special assortments being displayed for moving into your dorm, everything around containers, all that kind of stuff that you need. Back-to-school and back-to-campus are two very important themes that retailers both need to, and will, use this season to try to capture more of the back-to-school and back-to-campus dollars.
Retail Roundup
Copyright ©2015 eMarketer, Inc. All rights reserved. 14
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