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Retail Spring Update
May 2011
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Today’s presenters
• Damian Roskill, Managing Director, Marketing at Compete
• Jason Caine, Director, Retail practice at Compete
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Webinar logistics
• Today’s webinar will be recorded. You will be emailed a link.
• Please enter your questions in the Questions box. We will answer as many as possible at the end.
• If you have technical difficulties, try loggingback in or use a different browser
• The Twitter hashtag for today’s webinar is #competeretail
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• Founded in 2000, joined WPP/Kantar in 2008
• Passionate about understanding consumers to inspire great marketing
• Largest integrated online consumer behavior and survey panel in industry.
• Expertise in the automotive, consumer goods, financial services, media, mobile, online, retail, telecom and travel markets.
• Strategic partnerships within the WPP and Kantar family of companies that enable marketing optimization and more holistic view of consumers.
Compete connects the dots from online insights to marketing ROIAbout Compete
• Advertising and promotion effectiveness
• Shopper quality and brand consideration
• Website effectiveness
• Segmentation and targeting
• Search marketing performance
• Customer satisfaction and loyalty
• Competitive tracking and benchmarking
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What is the Compete Retail Update?
Quarterly update to provide an update on key industry trends
Review performance of new and emerging retail trends using Compete Online Shopper Intelligence survey
Follow 2-3 standard metrics to monitor industry health using Compete behavioral data
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Today’s agenda
We will highlight some of the key trends in Retail using Compete’s panel of 2M consumers and our Online Shopper Intelligence quarterly survey.
Ship to Store
Online Sales Tax Impact
Facebook Effect on Retail
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Retailers have made some decisions that could signal next evolution in online retail business model.
LL Bean announces free shipping on all orders…is this the beginning of the end of shipping charges?
Walmart begins home-delivery pilot in San Jose market…will home grocery delivery finally go mainstream?
Best Buy is latest retailer to announce plans to reduce its store square footage…could a day come when a retailer moves its business entirely online?
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The Numbers
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Retail segments that offer essential household items and “one-stop” shopping experienced the largest traffic increases.
Total Online Visits – by Retailer Segment(in millions)
1,482,896,900
149,070,753
327,336,088
141,090,660
409,052,556
22,363,090
122,398,050
522,846,439
133,893,766
1,618,231,352
182,714,110
346,432,517
158,115,608
420,983,196
23,371,848112,463,201
510,007,817
117,854,384
Largest YOY growth Largest YOY Declines
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Office supply and department store retailers both experienced healthy YOY gains in conversion rates.
Online Conversion Rates – by Retailer Segment
Health & Beauty
Pets
Home Improvement
Electronics
Sporting Goods
Apparel
Mass Merchants
Department Stores
Office Supplies
7.3%
4.8%
1.0%
1.4%
3.7%
5.0%
3.7%
3.0%
5.6%
5.3%
3.8%
0.7%
1.4%
3.8%
5.0%
3.7%
3.2%
6.1%
Largest YOY Growth
Largest YOY Declines
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Consumer intent to purchase online appears strong during the next 6 months.
What categories do you intend to buy online in next 6 months? (n = 3269)
Garden supplies
Groceries
Kitchenware & household appliances
Baby, children & toys
Health & beauty products
Apparel
Books
10.0%
12.2%
13.0%
13.6%
16.3%
21.4%
23.4%
29.5%
30.8%
35.6%
46.8%
52.6%
53.0%
Source: Compete Online Shopper Intelligence – Q1 2011 Survey
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Looking ahead
• Traffic healthy across majority of online retail segments during the winter
• Trends indicate home improvement retailers primed for success during their peak spring and summer seasons
• Increased focus on monitoring and stealing market share from competitors
• Traditional mass-merchants need to identify ways to differentiate themselves from Amazon’s growing online reach
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Ship to Store
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One of the ways traditional retailers are trying to differentiate themselves is by offering to ship to store.
1 Consumer places order on Retailer site
2 Retailer delivers order or pulls from shelf
3 Consumer picks up order at store
What is Ship to Store?
Select Retailers That Offer
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Ship to store has become an increasingly popular shipping option for shoppers in the last year.
% of visits that ship-to-store is selected during checkout
12%16%
44%
30%
24%
45%
Q1 2010 Q1 2011
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Consumers choose ship to store because it is cheaper than paying shipping costs.
Source: Compete Online Shopper Intelligence – Q1 2011 Survey
Why do you choose the ‘in store pick up’ or ‘ship to store’ option? (n=1611)
Cheap
er th
an p
ayin
g sh
ippi
ng co
sts
Wan
ted
the
prod
uct im
med
iate
ly
Plann
ing
to vi
sit th
e sto
re a
nyway
Only w
ay to
ord
er p
rodu
ct
Had b
ad o
nlin
e sh
ippi
ng e
xper
ienc
eOth
er
70.4%
31.1% 29.0%
18.1%
3.8% 1.2%
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The main reason consumers do not select ship to store is due to the inconvenience of picking up the order.
Source: Compete Online Shopper Intelligence – Q1 2011 Survey
Why don’t you choose the ‘in store pick up’ or ‘ship to store’ option? (n=1357)
55.0%
27.8% 25.0%
4.6%14.8%
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Looking ahead
• Ship to store growth likely as more retailers decrease store footprint and shift inventory online
• Will be counteracted by online retailers who offer free shipping and eliminate inconvenience of visiting store
• “Buy online, pick up in store” marketing likely to become more focused on instant pickup of in-store products
• What about applying this concept to grocery? - Consumer orders non-perishables online- Comes to store to pick out their own produce /
meats (categories they are more protective of)
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Facebook’s Effect on Retail
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The profile of retailer and brand Facebook pages continues to rise.
Source: Compete Online Shopper Intelligence – Q1 2011 Survey
Super Bowl Ads
Facebook Marketing Campaigns
• Many household brands called out Facebook pages in Super Bowl ads
• Target ran a campaign to give away $1M during February 2011
• Facebooks fans voted on charity to donate money to
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Interest in retailer Facebook pages is still fairly low despite all of the buzz surrounding Facebook as a marketing tool.
Facebook Fan Page UVs – February 2011
76K
78K
86K
223K
952K
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About 26% of people visit an official retail or consumer product Facebook page at least once a month.
How often do you visit official Facebook pages of retail and/or consumer product companies? (n = 3269)
Source: Compete Online Shopper Intelligence – Q1 2011 Survey
Daily 6.6%
Weekly 11.0%
Monthly 8.9%
Less than once month 23.1%
Never 27.8%
Not member of Facebook
22.4%
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Consumers are treating retailer Facebook pages like an online circular.
Why do you visit a retailer Facebook page? (n = 1627)
Source: Compete Online Shopper Intelligence – Q1 2011 Survey
Connect with other people who like the retailer
Let others know why I like a specific retailer
Appears in my news feed b/c a friend "likes" it
Learn more about a specific retailer
Keep up to date on sales and promotions
13.6%
13.7%
26.4%
29.0%
56.2%
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Consumers still do not consider Facebook retailer pages as being very influential to making a purchasing decision.
Source: Compete Online Shopper Intelligence – Q1 2011 Survey
Influence Extremely influential
How influential have Facebook pages been on your decision to purchase those products or from those retailers? (n = 1627)
22.5% 21.7%
32.9%
16.7%
6.2%
Not at all influential
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Looking ahead
• Facebook pages are a great low-cost marketing tool
• Main purpose will likely be to:1. Deliver information where consumers are
spending time2. Develop deeper relationships with consumers
• Marketing campaigns drive short-term awareness, but long term ROI is unclear
• Look for more of an emphasis on integrating commerce on Facebook pages
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Online Sales Tax
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Online retailers are required to collect sales tax in any state they have a “physical presence.”
• Texas: Amazon has threatened to close an Irving, TX, distribution center if the state passes legislation that defines such structures as having a physical presence.
• Illinois: Amazon’s Illinois affiliates were terminated when the state passed legislation requiring sales tax be collected because the affiliates constituted “physical presence” by Amazon in the state.
Recent debate over “physical presence”
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51.1%
13.3% 10.0% 10.8% 10.6%4.2%
About 1 in 2 consumers are likely to shift online spending if an online sales tax is enacted.
Source: Compete Online Shopper Intelligence – Q1 2011 Survey
How would paying sales tax on your purchases from online-only retailers impact your online shopping habits? (n=1357)
48.9% would change online spending habits
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Product categories that you can ‘touch and feel’ would most likely be negatively impacted by an online sales tax.
Source: Compete Online Shopper Intelligence – Q1 2011 Survey
Categories that consumers would decrease online spending (n=1357)
Shoes
Books (excludes e-books)
Movies, music & video games
Apparel
Electronics
38.0%
42.3%
44.3%
47.1%
48.8%
Sporting goods
Groceries
Garden supplies
Household essentials
Baby, children, toys
19.2%
19.5%
19.8%
20.6%
21.5%
Most likely to decrease online spend Least likely to decrease spend
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A potential online sales tax would cause consumers to be more price sensitive and maybe spend more offline.
Source: Compete Online Shopper Intelligence – Q1 2011 Survey
Reasons spending would shift from online-only to offline retailers (n=1092)
More price senstive if sales tax is collected
46.7%
Prefer to have in-store re-turn option
44.6%
Prefer in-store pickup op-tion
27.8%
Other2.4%
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What could be next?
• Impact will depend on how many states elect to follow Illinois and Texas
• 100% free shipping will likely be a defense that online retailers will need to consider if legislation expands
• Opportunity for traditional big-box mass merchants like Target and Walmart to make a value/price play
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Questions?
Damian RoskillManaging Director, [email protected]
Jason CaineDirector, [email protected]