It’s rare to go a full day without reading a headline in your email inbox or on a news site highlighting the rapid demise of the retail industry. Many brands that have become household names are undergoing massive business restructuring or shuttering their doors altogether. Shopping malls that once served as go-to destinations for many communities are experiencing increasing vacancies. The perception largely driven by the media is that brick and mortar retail is a sinking ship, but what is the reality? Deloitte set out on a nearly year-long study to better understand the state of retail as it stands today and the driving forces behind recent changes. And what did they find? The silver lining. Despite the onslaught of negative press, retail is still growing and in many places, thriving. Backed by a stable and growing economy, consumer confidence is at an all time high. Experts predict that in the next five years, online sales will grow 11.7 percent annually, and in store sales by 1.7 percent.1 That’s healthy growth across the board. Deloitte found that a big contributor to the success of brick and mortar stores actually comes down to income. Today, shoppers in lower income brackets prefer to to buy in physical stores. As the wealth gap continues to widen, more and more Americans are losing their discretionary incomes and landing in this low earning bracket. The purchases they make will likely be in person, so brick and mortar stores stand to benefit the most from this change in the distribution of wealth. With this in mind, here are a few marketing priorities to consider: 1. Fine tune your customer acquisition strategy Yes, you know a lot about your customers, but are you investing into the right channels that will lead them (and other audiences who look like them) to make a purchase? As mentioned previously, even details like household income (HHI) play a significant role in the way people shop. Consumers with a low HHI may compare prices online before ultimately going into a nearby store to make a purchase. Your marketing dollars should be aligned with these behaviors. For many brands, it may be time to reevaluate how consumers search, and ultimately buy. Find an agency that can help you understand the unique features of your most profitable audiences, and then identify the right mix of channels to activate them. Small optimizations on the front-end can have a big impact on long-term growth. 2. Make it easy for consumers to compare prices and find inventory at nearby stores Eighty-one percent of consumers do online research before making a purchase.2 Whether shoppers are becoming more cost conscious or simply cost aware, the fact is they are more informed than ever before. Retailers should leverage local ads to motivate store visits. Solutions like Google’s Local Inventory Ads and Brand Showcase Ads allow shoppers to quickly locate information on the products they’re looking for as well as their availability in nearby stores. Google also has a feature that allows advertisers to adjust bids for individuals with a certain income range (from the top 10% to the lower 50%), who live within a certain geography. If you’re a multichannel retailer who sells discounted items, you may want to increase bids for searches that originate in an area in the lower 50% household income level. To measure the impact these ads are having on driving purchases in stores, check out Google’s Store Visits tool. Store Visits uses anonymous, aggregated data to measure the number of people who click or view ads and later visit a store. 3. Build superior storefront shopping experiences The digital and physical shopping experience shouldn’t be planned in silos, rather they should be developed as a consistent end-to-end experience. Forty-two percent of in-store shoppers search for more information while in a physical store3 and savvy retailers like Sephora are combining digital elements into their physical stores to make it easy for shoppers to explore, find and purchase the products that are right for them. Discount retailers like Marshalls are making the physical shopping experience more social by encouraging store visitors to share their unique finds with their social networks using the hashtag #marshallssurprise. 4. Leverage partnerships to grow awareness and sales Brands and retailers often market to the same consumers, so by working together, their power is magnified. With ecommerce set to experience double-digit growth over the next five years, digital co-op investments are a great way for brands to increase their exposure online and drive sales across channels. The right agency can help you identify, manage, and measure the outcomes of these opportunities. While the Retail industry is alive and well, we are seeing a massive shift in the way multichannel retailers operate to meet the changing needs of their consumers. And let’s not count out pure-play e-tailers. Amazon is working hard to turn low income shoppers into loyal customers. Individuals who receive government assistance can qualify for a reduced $5.99 a month Prime membership, and EBT cards can now be used to pay for qualifying groceries. We expect that as brands compete more on price and free shipping becomes more universal, consumers from all income brackets will begin to make more purchases online. As Socrates once said, “the secret of change is to focus all of your energy, not on fighting the old, but on building the new.” Here’s to building the new. You can access a copy of the Deloitte study, The Great Retail Bifurcation, here. 1 IBIS World 2 GE Capital 3 Google, Ipsos
Intel is planning to invest over $100 million in the retail industry over the next five years and at the heart of that is the Intel Responsive Retail Platform (RRP), an IoT solution that will take retail to the next era of highly efficient and personalized shopping. Through RFID, video, radio and other sensors, it will enable easy, holistic integration, help to deliver a 360-degree viewpoint of retail from the store floor through the supply chain, and deliver real-time, actionable insights. The haves (data) and the have not.
Despite efforts to turn their businesses around, J.Crew, Gap and Abercrombie & Fitch have yet to dig out of quarter after quarter of negative sales slumps because too many factors — declining mall foot traffic, the threat of Amazon, lengthy supply chains and price-conscious shoppers — have converged, rendering the situation untenable. And time is running out. A lack of compelling brand identity
Paid-search ad conversions grew 45% year-over-year from Thanksgiving through Christmas day or 37% from Thanksgiving through Cyber Monday, according to data released Tuesday. Overall, marketers ran 58% more product ads such as PLAs, this holiday season, compared with 2015. Smartphone PLA orders were up 117% YoY. Text ad orders rose 31% YoY and smartphone text ad orders were up 96% YoY, according to AdLucent data. Search's growing share of total revenue
Ikea is frequently cited as a master of branding, marketing and advertising, and it has a portfolio of campaigns and creative to justify the compliment. The latest: the company's Retail Therapy website, which is part of its Where Life Happens campaign. The website takes a clever SEO-focused approach to promoting some of Ikea's wares. Slightly gimmicky, slightly cute.
Starbucks is placing tech at the center of its ambitious growth plans as the coffee giant looks to open almost 50% more locations by 2021. At an investor meeting yesterday, the company’s senior figures revealed plans to open around 12,000 new stores by 2021, bringing its total to roughly 37,000. The growth will be driven by enticing more customers with new products, store formats and technology, including offering members of its rewards program the ability to speak or message their orders into their mobile phones. Starbucks, caffeinated.
Snapchat might be a hard nut to crack for many brand marketers because of its lack of metrics. But Birchbox knows how to turn its Snapchat followers into buying consumers through a simple trick: Vanity URLs. Over the Black Friday and Cyber Monday weekend, Birchbox created a simple URL — birch.ly/Steals — exclusively for Snapchat to showcase its special holiday deals like Kiehl’s skincare set. The company saw more traffic to its site from this hack than organic Facebook posts. Short, simple, snap.
In the weeks leading up to and including the Black Friday shopping weekend, retailers across the board went deeper with discounts than last year, a strategy expected to intensify as the season continues. And this year, the season may also feel a little longer: There are four Saturdays this month before Christmas, giving marketers another opportunity for sales. Santa Claus is coming to town.
Amazon announced today through a video posted online that it’s testing a grocery store in hometown Seattle that has no checkout process, much less checkout lines. The store, dubbed Amazon Go, requires customers to launch a QR-code based app, which they scan upon walking into the site. The retailer’s “Just Walk Out” technology detects when products are removed from or returned to shelves, keeps track of them in a virtual cart, and totals the cost when customers depart the store. Grab and go.
Black Friday had barely just begun, but already mobile traffic and sales were breaking records compared with years prior, according to third-party reports and those from major retailers. In addition to yesterday’s Thanksgiving sales report of a record $771 million in revenue from mobile devices, top retailers, including Amazon, Walmart and Target, have also released numbers pointing to mobile’s sizable impact on their online sales. Mo money, mo mobile.