First Look: !What to Expect in Retail in 2014

Notes, Observations, and Key Trends from NRF 2014

2013 was a great year for eCommerce •  Average YOY growth = 29% •  Trending upward: 2014 eCommerce

expected to reach $300b •  Online-influenced sales grew significantly – Web-research driven / pre-shopping behavior

that leads shoppers to the physical store – 2013 estimated at $1 trillion; 2014 expected

to increase

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2013 Holiday Recap •  November was extremely strong •  50% of holiday shopping is actually for SELF

(not others!) •  Growth in early December softened •  Huge spike in last minute shopping

–  Dec. 22-23 were strongest days –  Largely due to extended / “guaranteed”

shipping promises made by retailers –  Aggressive shipping plans promised by

retailers were overconfident: many retailers had to refund purchases they couldn’t deliver on time

•  Cyber Shoppers deliberately avoid stores during the holidays –  Consumers spend greater portion of wallet

share online in Q4 –  Email is still highly effective in communicating

promotions / deals for consumers – driving a lot of traffic to purchase in Q4

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So What Happens Next… •  “Delivery Wars” are just

beginning –  Couriers –  Drones (4-5 years…) –  Same day delivery –  Shipping rates will drive

competition in Retail •  Consumers EXPECT low

shipping costs or won’t make a purchase unless retailer is offering free/discounted shipping…

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Shipping as the “Achilles Heel” of Retail •  USPS is in dire straights

–  Major carriers still rely on USPS •  USPS delivered 30% of FedEx shipments in 2013 holiday season

•  USPS must change / adapt: –  Declining volume and rising expectations from consumers for faster / more affordable options are driving these changes –  Cost Reductions:

•  Retail shared deliveries with neighboring stores •  Clustered delivery boxes •  Fewer delivery days in the week

–  Cost Increases: •  First Class •  Parcels – very profitable for USPS – and relatively inelastic for retailers since they MUST get

packages to consumers •  Business Delivery (catalogs, magazines, direct mailers…expect these cost contracts to rise)

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Shipping’s Savior: the Physical Store In-Store Pick-up + Ship-to-Store options

–  Reduces cost pressure –  Reduces time pressure –  Brings consumers back

to the physical store

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eCommerce will drive traffic to Stores •  Given the shipping challenges

retailers face, 2014 will present opportunities for the retailer to reconnect with consumers via in-store pick-up programs

•  How will retailers capitalize on these visits? –  Must blend the online and physical

store –  Create a seamless experience that

connects eCommerce with pick-up and store visits

–  Omni-channel investments will insulate retailers from becoming casualties of the “Shipping Wars”

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inTouch™ Retail Table w/32” Ultra HD 4K touchscreen

inTouch™ 80” Interactive Wall

What about mobile? •  9% of all 2013 sales were made via

mobile phone (excluding tablets) –  Mobile experience is overwhelmingly

disappointing –  Strong numbers suggest consumers

are willing to suffer through poor mobile experience to make purchases from their phones

•  Retailers are slated to invest in mobile in 2014 – need to reduce friction between mobile / eCommerce / in-Store experiences

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Frictionless Experiences •  Mobile = 1st Screen; Reality = 2nd Screen – Mobile is the most important screen, but it’s

not the only one… •  Experiences on mobile / in-store must

complement one another •  Omni-channel = looking at this system as

one whole; connecting the dots between mobile / eCommerce / in-Store

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Contextually Aware Marketing •  51% of consumers want mobile

apps that recognize their location within a store and send relevant discounts and promotions

•  80% want mobile apps that will be useful to them when they want to make a choice between products

•  Mobile experience should tie-in to physical experience: create links to blend these two and better the overarching brand experience

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Customize messaging, product recommendations, and promotions via mobile.

Dynamic Digital Signage •  Digital Signage is an opportunity

to tailor messaging to specific customer

•  Mobile phones and Loyalty cards as identifiers –  QR / NFC / BLE tie-ins

•  Recognition Tools –  Gender / Emotion / Age

recognition can work twofold: •  Dynamic content creates

personalized experience for customer

•  Provides demographic data on customers entering store / what content they are identifying with

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Experiences > Sales •  In-Store Interactive Solutions

–  Physical Tables, Walls, Signage that customers can directly interact with

–  Empowers retail associates with the tools they need to deliver better experiences to the customer

–  PSFK’s Future of Retail Report •  Technology Tables increase sales

10% per location •  Associates knowledgeable about

inventory in-store AND online via in-store technology tables

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Data, Data, Data •  If it’s not measured,

it’s meaningless… –  Identify key metrics

before implementation

–  Identify solutions that can measure activity and in-store shopping behaviors and patterns for ongoing analysis

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Conclusions for 2014 Retail 1.  Shipping = opportunity to bring shoppers back to the store via in-

Store Pick-Up Program •  Retailers must capitalize on this by blending online environment with

in-store environment for a cohesive brand experience 2.  Mobile = opportunity to augment in-store experiences with

contextually-aware messaging and promotions for shoppers 3.  Digital Signage = opportunity to present dynamic content by

automating demographic recognition or allowing for shoppers to opt-in via mobile or loyalty card

4.  In-Store Interactive Solutions = opportunity to increase interactions AND provide tool to store associate to improve the customer’s experience by blending online/mobile/in-store channels in one central place

5.  Metrics = Everything. The more data, the more you can customize the end experience.

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Learn more about our retail experiences:

t1visions.com/markets/retail

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