Retail Commerce Continues to Move to the Online Channel in the US

ecommerce, retail spending, dailydealmedia.comOnline retail spending touched $43.2 billion according to comScore’s U.S. retail e-commerce sales estimates for the second quarter.

This performance represents a growth of 15% over the last year. The company says e-commerce as a category remains strong, even though the second quarter performance couldn’t sustain the high growth rate as witnessed in the previous quarter.

Online retail spending was reported to be $44.3 billion in the first quarter. The second quarter performance is welcome news. When the first quarter estimates were out, comScore had mentioned that the industry the performance was marked by year-over-year growth rates in the high teens. And such growth hadn’t been registered since 2007.

At the same time, the company said owing to factors such as economic uncertainty and high unemployment rate, it would rather opt for a cautious route for its projections for the remainder of the year.

According to comScore, the main online product categories included Digital Content & Subscriptions, Consumer Electronics, Flowers, Greetings & Gifts, Computer Hardware and Apparel & Accessories.

Each of these product categories rose by at least 16% compared to the previous year. In the first quarter, each of the top categories grew by 17% over the previous year. As indicated earlier this year, e-commerce has already reached critical mass in several product categories.

The economic recovery hasn’t picked as desired. But commerce continues to move to the online channel, and savvy retailers need to identify ways to be part of this growth.

Source: http://www.dailydealmedia.com/78retail-commerce-continues-to-move-to-the-online-channel-in-the-us/ By 

Taming the Data Deluge

Marketers and consumers struggle with the volume of data the world now generates. David Benady asks how the two sides can jointly control the tide, including the advent of brand ‘data stores’.

Data is inundating the economy, overwhelming consumers and businesses with swathes of information that they struggle to comprehend. The overload is set to spiral as social media, mobile and geo-location technologies spew forth yet more reams of data.

With billions of web searches made every month, more than 20,000 new books published weekly and more texts sent daily than there are people on Earth, data is increasing exponentially. The number of exabytes (EB – equal to 1bn GB) of information created in 2011 hit 1750, double the 2009 figure, according to IDC estimates. There is twice as much data as storage capacity.

This torrent of data makes it hard for marketers to ensure their brand messages are heard above the noise. Consumers have become reluctant to open the floodgates to receiving more irrelevant information, and some are wary of providing personal details.

Research company TNS has analysed the way in which consumers ‘eat’ at this table of information and created five consumer segments based on their readiness to absorb data. It calls the data deluge ‘information obesity’, and looks at the way people create their own ‘eating plans’.

You are what you ‘eat’
‘Fast foodies’, it says, consume the easiest, lightest data they can find. ‘Supplementers’ devour as much information as they can. ‘Carnivores’ consume only meaty chunks – whole books and in-depth research. ‘Fussy eaters’ are loath to consume information from any source, while ‘balanced dieters’ never consume too much information; what they do take comes from a variety of sources.

TNS marketing sciences director Russell Bradshaw says these ‘eating plans’ are a good way for marketers to target resistant consumers. ‘By understanding the predominant “eating plans” that exist among their brand franchises, brand managers and chief marketing officers have a tool for maximising the reach, resonance and values of their campaigns,’ he says.

TNS analysis suggests that ‘carnivores’ are more likely to shop at Marks & Spencer, while ‘fussy eaters’ tend to stock up at Asda. This gives M&S leeway to bolster its communications, giving customers big, meaty chunks of information they can savour slowly. Asda, meanwhile, would do well to deliver information in bursts and offer online nuggets such as tweets to appeal to voucher-hungry customers.

Marketers acknowledge that segmenting consumers by their propensity to consume information can be useful, but many see it as an add-on to the already tough task of identifying relevant audiences.

David Torres, global manager of chemicals technology at Shell Research, says that Shell intends to embed the TNS eating plans into its work, adding that brands need to search the data they have for clear and relevant insights.

Meanwhile, Stephanie Maurel, head of retention at Sport England, says the ‘eating plans’ could be useful if blended with other tools. ‘The TNS data obesity segmentation makes a lot of sense and rings true anecdotally. It is a great idea to segment by the information consumers are prepared to receive, although perhaps this is an extra step to be added to current tools,’ she adds.

Maurel’s role at Sport England is to use data to help various sports’ governing bodies to increase participation and attendance, a challenge for smaller sports, such as hockey. One solution is to take data from grassroots sources, such as social media, and integrate it with i n fo r m at i o n from elite sports events.

While small sports may be unsophisticated when it comes to data collection, Maurel says some governing bodies are using real-time data to build their popularity.

British Cycling, for example, gets feedback from locally organised Sky Ride mass-cycling events and feeds it through to its board meetings. This, in turn, helps it shape the way in which Sky Rides are organised.

For many brands, the UK’s data-chain is dominated by retailers. They control the all-important information about sales, which they then sell back to brandowners. Nonetheless, retailers, too, are suffering from information overload, according to Chris Osborne, retail principal at software supplier SAP. A recent survey by SAP found that more than half of retailers believe they have more information than they can handle. ‘Structured’ data – such as till receipts showing items purchased, times of day, quantities and prices – has been around for decades. Osborne advocates combining this information with ‘unstructured’ data – such as the random chat of social media – as the next great challenge for brands and retailers.

The prize will be to build a total view of each customer’s likes, behaviour and loyalty, and target offers accordingly. A crucial step is ensuring both types of data are gathered and acted upon in real-time.

Osborne believes the development that will enable this is ‘in-memory’ data analytics, where the data is stored in the computer’s memory for quick retrieval, rather than on a conventional database where it is stored on a hard disk, making it harder to access and wasting capacity.

He envisages a two-track economy where success will depend on efficient use of data. ‘The retailers that win out will be the ones that are very careful about how they use data and don’t swamp consumers with irrelevant offers,’ adds Osborne. ‘Retailers that create competitive advantage are (also) careful about how often they communicate with consumers.’

Useful data vs ‘noise’
Given the retailers’ iron grip on data, some brands have turned to comparison website Mysupermarket.co.uk to gain access to information about their own performance through mini-shops on the site. Reckitt Benckiser, Kellogg, Danone and Nivea are among those to have created such stores.

James Foord, vice-president of business development at Mysupermarket.co.uk, says brands are only just beginning to grasp the distinction between ‘data noise’ and what is useful. The site allows brand-owners to create a direct relationship with consumers and thus control their data. Brands can analyse the battle between their products and stores’ own-label versions, for example – data retailers rarely release. ‘This is the tip of the iceberg of what is possible. Brand stores will open up a whole new level of insight that has real value,’ adds Foord.

The battle for data control is about more than simply capturing as much information as possible and keying it into a database. Finding ‘smart’ data can save time and money in research and bring significant benefits for brands. The challenge is to find the pieces of information that help a brand locate its best customers and give insights into their motivation for buying a product.

Mike Dodds, chief executive of integrated agency Proximity, recalls a cat-food brand’s CRM programme in which customers were questioned about their behaviour. The question that delivered the best data was: ‘Do you celebrate your cat’s birthday?’ The responses helped the brand discover the most involved and valuable customers.

A potential barrier to the development of data-driven marketing will be consumers’ attitudes to privacy and control of their personal details. The online giants, such as Google, Facebook and Twitter, have built their businesses on getting users to give up their data in return for ‘free’ services. If the public refuse to play, this could put a spoke in the wheel of the data economy.

Chris Combemale, executive director at the Direct Marketing Association, says brands have to be upfront about privacy and make their policies simple and readable: ‘If you can’t put the policy on one page and make it clear, you have an issue.’ He also warns brands to avoid being ‘creepy’ online – by serving ads based on details consumers thought were private – which, he argues, can make digital marketing appear intrusive.

Modern marketing is essentially a battle for data. However, consumers themselves have the ultimate weapon: to switch off and stop sharing their information.

Technology was supposed to make life easier, but, in reality, it has made the world far more complex. The task of creating marketing campaigns that get heard above the din will only get harder still in a society deluged with data.

Marketing © Brand Republic

Shops lose 88% of customers due to poor service

Despite an overwhelming preference for in-store shopping, consumers are being turned off to high street retail by low customer service levels, new research released today reveals.

In a survey conducted by customer intelligence company Market Force, electrical retailers had the lowest customer service satisfaction score of any service industry with just 2.24 per cent of shoppers left happy.

Shops lose 88% of customers due to poor service

Clothing retailers scored only 2.69 per cent, supermarkets polled 6.10 per cent, local convenience stores received 6.48 per cent backing from consumers, while department stores got the highest score of any retail business type with 9.72 per cent left satisfied.

Of those surveyed 41 per cent said that their biggest frustration with store staff is a lack of interest in their needs and wants, and despite more than three quarter of people preferring bricks and mortar shopping to online as a many as 88 per cent will leave a shop if service is poor.

Tim Ogle, CEO at Market Force Europe, commented: “Good customer service doesn’t have to be expensive. Small, inexpensive changes can have an oversize impact on whether someone buys in your shop and how much they spend.

“For example, our research shows eight out of ten shoppers want to be taken to a product when asking about its location. It’s these little gems of insight that turn a question into a sale.”

Retailers are increasingly realising that in order to make their bricks and mortar offer as compelling as their online platforms they have to improve the experience of visiting their stores.

This morning the UK’s largest retailer Tesco announced a huge recruitment drive, which in part is in reaction to a perceived drop in the supermarket chain’s service levels in recent years.

Several simple service techniques could be employed by businesses to boost trading it seems, with Market Force also finding that 59 per cent of shoppers like products to be recommended to them by staff members.

Although shoppers like to have a personal service, they also seem open to new technologies which cut out staff interaction, with 63 per cent saying they like to use self-service machine and 49 per cent in favour of contactless payments.

In a warning to retailers keen to make more transactions automated however, the research shows that 37 per cent of consumers feel they should pay less when using self-service checkouts.

Compared to other industries retail appears to be struggling to please its consumers at present, with banks (10.8 per cent), restaurants/pubs (28.3 per cent), and hotels (31.5 per cent) all scoring higher customer satisfaction levels in the Market Force survey.

Ogle added: “These findings should be a wakeup call to retailers looking for cost effective ways to grow their business.”

Retailers see smaller outlets as the next big thing.

Bigger is not always better. Just ask the biggest retailers in the country — and their customers.

Neng Yang, left, purchases a new phone at the Best Buy Mobile mini-store at Independence, Mo., with her brothers Cheng Yang and John Yang, right.

 Neng Yang, left, purchases a new phone at the Best Buy Mobile mini-store at Independence, Mo., with her brothers Cheng Yang and John Yang, right.
KANSAS CITY, Mo. — To Neng Yang, the Best Buy store in Independence, Mo., is just too overwhelming — so much so that she only shops there once a year, at the holidays.

So when she needed a new cellphone, she bypassed the 55,000-square-foot store with its many departments — appliances, big-screen TVs, computers, cameras, car audio, video and music. Instead, she stopped across the street at the Best Buy Mobile store.

The slimmed-down 850-square-foot sister store concentrates only on mobile devices.

“I ask about a thousand questions, and this is more personalized, more one-on-one attention,” said Yang of Blue Springs, Mo.

Yang bought a white Droid Razr, and her brother John Yang picked up a black one.

Bigger is not always better. Just ask the biggest retailers in the country — and their customers.

The recession and the growth of online shopping have conspired to cut chains down to size. One strategy they’ve employed has been to close underperforming stores. But Best Buy and an increasing number of companies are trying another strategy too — going smaller.

Among the retailers testing smaller concepts are Blockbuster, Ann Taylor, Gap, Kohl’s, Lowe’s and Sports Authority. RadioShack even is trying a “store-within-a-store” format in several OfficeMax stores in California.

Lower square footage makes for lower construction and remodeling costs, and that also tends to make them easier to finance. The smaller locations have less overhead costs and can be manned by fewer employees.

The small size also gives the chains more flexibility in locations, allowing them to squeeze into heavily developed urban centers, and compact spaces in airports, college campuses and strip centers. If the location isn’t successful, the chains can close the sites with less financial fallout.

“For a decade it was ‘build it and they will come,’ ” said Candace Corlett, president of WSL Strategic Retail in New York.

“It’s definitely a correction for retailers as well as restaurants, a direct result of consumers not having as much to spend on the extras. The strategy has to be to reduce your costs to offset less traffic. Usually that means less rent, shrinking retail and restaurants,” Corlett said.

Jeff Green, president of Jeff Green Partners, Phoenix-based real-estate consultants, has long criticized the “bigger is better” movement.

“They think the bigger they are the more exciting they are and that’s not necessarily the case, as Apple has proven,” Green said.

“Consumers like the smaller stores, like to be part of a ‘happening,’ and smaller stores have that feel.”

When retailers like Ann Taylor, Chico’s and the Gap opened larger stores, they didn’t necessarily see an equivalent rise in sales, if any rise at all, that would justify the added expense, Green said.

“Any retailer that is opening larger and larger stores, I question their long-term viability,” Green said. “Costco and Sam’s Club defy that theory. That’s because consumers really perceive them as great values and value trumps the inconvenience of size.”

One of the latest retailers to embrace small stores is Cabela’s. On Feb. 16, the outdoor-equipment and sporting-goods retailer said it would open its first Cabela’s Outpost Store this fall in Union Gap, just south of Yakima; up to three more are planned for next year.

The Outpost stores will be significantly smaller than traditional Cabela’s: about 40,000 square feet compared with, say, the 185,000-square-foot Cabela’s in Lacey, Thurston County.

Cabela’s also has plans to open an 110,000-square-foot store this year at Quil Ceda Village on the Tulalip Tribes Indian reservation. And it will target smaller markets — 250,000 people or less with a high concentration of them already Cabela’s customers.

Best Buy introduced its mobile locations in 2007 and there are about 260 nationwide, including the Independence Best Buy Mobile store, which opened in August. Best Buy has about 1,100 full-size stores.

“The customer wants a different shopping experience. We don’t work on commission, and we carry everybody,” said Kyle Cochran, manager of the Independence store, which is tucked between two specialty stores on the lower level of the Independence Center mall.

Still, consumers who have come to know a brand as a “category killer” might be confused by the new concept.

The Wal-Mart Neighborhood Stores are designed to provide shoppers with a quick, convenient stop for fresh produce, dairy items, and pharmacy products at low prices. The grocery stores are about 29,000 square feet compared with a 142,000-square-foot supercenter.

But some grocery store shoppers still expect to see the large selections of products Wal-Mart is known for.

Carolyn Shaw of Shawnee, Kan., was disappointed in the holiday selection at a Wal-Mart Neighborhood store earlier this month during a morning stop in a snowstorm.

“They didn’t have many Valentine’s items,” Shaw said. “Now I’ll have to go back out this afternoon to a bigger Wal-Mart.”

Big bazaars score over kiranas

EARLYthis year, when escalating prices were crunching household budgets, modern retailers were more responsive in cutting or holding prices of day-to-day products than traditional retailers, thanks to their ability to check operational costs bargain hard with suppliers and launch private labels.

According to a study by The Nielsen Company, modern retail dropped prices by more, or increased them by less, for more product categories than traditional retailers, or kiranas, between the last quarter of 2009 (Oct-Dec) and the first quarter of 2010 (Jan-Mar).

“The power of modern retail lies in the scale and efficiencies which we have built over the years,” says Kishore Biyani, CEO of Future Group that operates retail formats such as Food Bazaar, Big Bazaar, Pantaloon and KB’s Fairprice stores.

The Nielsen Shop Census study compared prices of 47 commonly used items including toothpastes, washing powder and confectionery. Modern retail dropped prices by more, or increased them by less, than traditional retailers for 29 product categories while traditional retailers did better in 18 categories.

It collected data from 16,000 stores (11,000 urban and 5,000 rural, in both modern and traditional retail) in 462 towns and 1,427 villages.

During this period, the rate of inflation, as measured by the Wholesale Price index, was hovering around 10% and food inflation was more than 12%.
In the past two years, modern retail has been able to significantly cut operational costs related to real estate rentals, energy costs and increase persquare-feet productivity of employees leading to savings in people costs.
They also launched private labels to get a better grip on selling prices and profit margins, and some savings were passed onto customers.

Higher collaboration with small and medium suppliers as well as distributors of large FMCG companies helped them cut costs in transportation and logistics.

Efficiencies of scale helps one source the goods closer to the manufacturer says Mr Biyani. In 2009, Big Bazaar sourced 26,000 tonnes of rice, 4 crore pieces of clothing, 20 lakh suitcases, 36 lakh mixer-grinders, 45,000 manufactured beds, 20 lakh bedsheets and 19,000 LCD TVs. Each of these figures will be higher by a minimum of 30% for the year 2010, he says. “Such large sourcing allows us to get better prices directly from manufacturers and producers.”

Big Bazaar is the largest player in the segment contributing over 33% of modern retail sales. Other top retail formats competing with traditional kirana for essential purchases include Reliance Retail, Aditya Birla Retail’s More and Spencer’s Retail.

Kumar Rajagopalan, CEO, Retail Association of India, says strong sourcing power helps modern formats offer better prices. “They have done away with the extra level of intermediaries,” he says.

Meanwhile, grocers too are working on protecting their turf by leveraging on their strengths such as customer relationships, home delivery, credit facilities and expanding their product portfolio.

Top FMCG companies such as Hindustan Unilever, Procter & Gamble Marico and Godrej have begun adopting kiranas, teaching them category management and effective merchandising to counter big retailers and their private labels.

Bharatiya Udyog Vyapar Mandal (BUVM), the biggest national-level association of mom-and-pop stores, has formed city-centric associations that negotiate directly with manufacturers such as Unilever and P&G and do away with any middlemen.

This helped kiranas offer 5-20% discounts on MRP of branded products like detergents, shampoos soaps, oil and atta.

“When prices rose due to inflation some kirana stores offered customers the option of paying in instalments apart from extending them credit for a month,” says Vijay Prakash Jain, secretary general of BUVM that comprises 17,000 state and district-level associations across 27 states.

Interestingly, kiranas managed the prices of items such as detergent bars toilet soaps, shampoo, packaged tea and iodised salt better than modern retail, according to the Nielsen study.

Currently, traditional retail, both grocers & chemists, constitute over 95% of total sales in the country.

Modern trade at just 3-5% of the total national industry sales, had grown aggressively at over 35-40% contributing to over 15-25% sales for most consumer goods companies last year.

Build Your own Facebook Store

Shopping search engine Sortprice.com expanded its merchant store application on the Facebook Platform to help retailers expand their e-commerce capabilities that can be used by the social network’s audience.

The free application, available to any Sortprice.com enhanced merchant with an existing Facebook account, works hand-in-hand with their product listing on Sortprice itself and allows them to build a virtual store right on Facebook. Merchants can have their full inventory available to Facebook users for shoppers to peruse and compare prices on, complete with photos and direct links to their own Web sites, according to Sortprice.

The tools give retailers complete control over the ‘look and feel’ of their stores, with dozens of choices for color schemes, an option to upload category images, and the ability to add a slogan to their page as well. Sortprice also included an extensive FAQ section to guide merchants through the process of configuring their stores while offering tips for promoting the application to internal and external audiences.

On the user side, Sortprice’s unique Drag & Drop feature for the merchant pages is now compatible across all web browsers, facilitating each user’s visit. Shoppers can now quickly and easily compile a “wish list” of desired items from a particular merchant’s store. These lists are viewable to all users and are the foundation for a truly interactive shopping experience. Visitors can comment on other users’ wish lists, indicate particular items that they “like”, and even invite friends and family to check out wish lists or specific products.

To learn more about the Facebook store application, visit http://www.sortprice.com/facebook_store

Shoeboxx.co.uk creates a digital repository for receipts

Shoeboxx wants to get retailers and consumers onboard with its idea of creating a digital repository for receipts. The idea is that a customer carries a Shoeboxx card, which a retailer can swipe at its tills. The receipt is then sent electronically to the customer’s account online where they can store and view all their receipts in one place.

The company says that as well as being environmentally friendly, the system allows customers to keep track of their expenses and retailers have the option of placing additional advertising on the online receipts.

Shoeboxx says that it is in negotiations with several major retailers to set up pilot programmes of the service. The basic business model would involve it being free for both retailers and consumers to use; with the company behind the site making money by charging only for enhanced services, such as corporate customers who want to use it as an expenses tool.

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