Post on 20-Aug-2020
Providing in-depth insight, data, and analysis of everything digital. BI Intelligence
THE FUTURE OF RETAIL 2016
EVEN THOUGH E-COMMERCE MAY NOT SEEM LIKE MUCH COMPARED TO IN-STORE RETAIL...
Source: US Census Bureau
Overall US Retail Sales
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016
Bill
ions
E-Commerce In-Store
NEARLY ALL GROWTH NOW COMES FROM ONLINE SALES
Source: US Census Bureau
2%
16%
Total retail E-Commerce
US Retail Average Growth Rate During 1H 2016
AND WHILE PURCHASES MADE ON DESKTOP REMAIN STRONG AND STEADY…
Source: comScore
US E-Commerce Sales On Desktop
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Bill
ions
…IT’S MOBILE COMMERCE THAT’S TAKING OFF
Source: comScore
US E-Commerce Sales On Mobile
$0 $2 $4 $6 $8
$10 $12 $14 $16 $18
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Bill
ions
SO WHAT’S DRIVING THIS GROWTH?
Source: Rawpixel, Shutterstock
CONSUMERS ARE GOING DIGITAL — THE NUMBER OF ONLINE SHOPPERS HAS GROWN NEARLY 20 MILLION SINCE 2015
Source: comScore
Number Of US Online Shoppers In millions
208
224
Q1 2015 Q1 2016
AND THEY’RE SPENDING MORE — THE AMOUNT OF MONEY SPENT ONLINE GREW BY $7 BILLION
Source: comScore
Online Spending By US Consumers In billions
$61
$68
Q1 2015 Q1 2016
CONSUMERS ARE ALSO SHOPPING ONLINE MORE OFTEN — THE NUMBER OF ONLINE TRANSACTIONS HAS INCREASED BY 115 MILLION
SINCE 2015
Source: comScore
US Online Transactions In millions
780
895
Q1 2015 Q1 2016
MEDIA, SPORTING & HOBBY GOODS ARE LEADING THE WAY IN THE SHIFT TO DIGITAL
Source: US Census Bureau, BI Intelligence estimates
Digital’s Share Of US Retail Sales
0%
20%
40%
60%
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Clothing & accessories
Health & personal care
Electronics, appliances, computers
Food & beverage
Furniture & home furnishings
Media, sporting & hobby goods
OVER HALF OF THESE SALES WILL OCCUR ONLINE IN 2016
Source: US Census Bureau, BI Intelligence estimates
US Sales Of Media, Sporting & Hobby Goods
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90
$100
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Bill
ions
In-Store
Digital
THAT MEANS RETAILERS NEED TO GO ALL IN ON DIGITAL
Source: Random Retail, Flickr
THE STAKES ARE HIGH: THE SPORTS AUTHORITY COULDN’T KEEP UP AND FILED FOR BANKRUPTCY IN APRIL
Source: Mike Mozart, Flickr
ELECTRONICS HAS REMAINED STEADY
Source: US Census Bureau, BI Intelligence estimates
Digital’s Share Of US Retail Sales
0%
10%
20%
30%
40%
50%
60%
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Clothing & accessories
Health & personal care
Electronics, appliances, computers
Food & beverage
Furniture & home furnishings
Media, sporting & hobby goods
NEARLY ONE IN FOUR ELECTRONICS PURCHASES HAVE BEEN MADE ONLINE EACH YEAR SINCE 2014
Source: US Census Bureau, BI Intelligence estimates
US Sales Of Electronics & Appliances
$0
$20
$40
$60
$80
$100
$120
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Bill
ions
In-Store
Digital
BEST BUY HAS BEEN CAPITALIZING ON THIS…
Source: Company filings
Best Buy E-Commerce Sales In millions
$639 $581 $601
$1,720
$673 $676 $709
$1,950
$832 $835
$0
$500
$1,000
$1,500
$2,000
$2,500
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
…BUT AMAZON IS CHALLENGING BEST BUY’S DOMINANCE
Source: Deutsche Bank, Twice
0%
5%
10%
15%
20%
25%
30%
2010 2011 2012 2013 2014 2015
Best Buy Amazon Apple
US Consumer Electronics Market Share, By Retailer
DESPITE LOGISTICAL BARRIERS, CONSUMERS ARE ALSO INTERESTED IN BUYING FURNITURE ONLINE
Source: US Census Bureau, BI Intelligence estimates
Digital’s Share Of US Retail Sales
0%
10%
20%
30%
40%
50%
60%
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Clothing & accessories
Health & personal care
Electronics, appliances, computers
Food & beverage
Furniture & home furnishings
Media, sporting & hobby goods
ONLINE FURNITURE SALES ARE RAPIDLY APPROACHING A QUARTER OF THE TOTAL MARKET
Source: US Census Bureau, BI Intelligence estimates
US Sales Of Furniture
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Bill
ions
In-Store
Digital
WAYFAIR LAUNCHED AN AR APP CALLED WAYFAIRVIEW THAT LETS SHOPPERS SEE HOW FURNITURE WOULD LOOK IN THEIR HOME
Source: Scott Lewis, Flickr
MOVES LIKE THIS MAY HELP WAYFAIR KEEP UP ITS RAPID GROWTH —SALES HAVE MORE THAN DOUBLED IN TWO YEARS
Source: Company filings
Wayfair E-Commerce Retail Revenue Growth
Millions
$286 $347 $369
$440
$545
$686 $712 $756
$0
$100
$200
$300
$400
$500
$600
$700
$800
Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
ALTHOUGH APPAREL AND ACCESSORIES ARE SLOWER IN THE SHIFT TO DIGITAL…
Source: US Census Bureau, BI Intelligence estimates
Digital’s Share Of US Retail Sales
0%
10%
20%
30%
40%
50%
60%
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Clothing & accessories
Health & personal care
Electronics, appliances, computers
Food & beverage
Furniture & home furnishings
Media, sporting & hobby goods
ONE QUARTER OF PURCHASES OCCUR ONLINE
Source: US Census Bureau, BI Intelligence estimates
US Sales Of Apparel
$0
$50
$100
$150
$200
$250
$300
$350
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Bill
ions
In-Store
Digital
ACCOUNTING FOR NEARLY $80 BILLION IN ONLINE SALES
Source: US Census Bureau, BI Intelligence estimates
US E-Commerce Sales, By Category
Billions
$0
$20
$40
$60
$80
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Clothing & accessories
Media, sporting & hobby goods
Furniture & home furnishings
Electronics, appliances, computers
Health & personal care
Food & beverage
E-COMMERCE WILL ACCOUNT FOR 8% OF ALL HEALTH AND PERSONAL CARE ITEMS SOLD THIS YEAR
Source: US Census Bureau, BI Intelligence estimates
US Sales Of Health & Personal Care Products
$0
$50
$100
$150
$200
$250
$300
$350
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Bill
ions
In-Store
Digital
AND SUBSCRIPTION SERVICES ARE CAPITALIZING ON CONSUMERS’ NEED TO STOCK UP ON THESE PRODUCTS
Source: Sean Locke Photography, Shutterstock
BUYING THESE FREQUENTLY PURCHASED ITEMS ONLINE ELIMINATES IN-STORE FRUSTRATIONS
Source: Gemenacom, Shutterstock
IN JULY 2016, SUBSCRIPTION-BASED COMPANY DOLLAR SHAVE CLUB WAS ACQUIRED BY UNILEVER FOR $1 BILLION
Source: Dollar Shave Club
AMAZON IS THE MOST POPULAR E-COMMERCE DESTINATION FOR EVERYDAY GOODS LIKE HEALTH AND BEAUTY PRODUCTS
Source: comScore
Monthly US Visitors To Online CPG Shopping Destinations In thousands, 2015
175,094
81,919
50,843
7,844
3,377
2,982
910
Amazon
Walmart
Target
Kroger
Safeway
SuperValu
Albertsons
AND HIGH-END CONSUMERS ARE FLOCKING TO THE E-COMMERCE GIANT IN GREATER NUMBERS
Source: Shullman Research Center
Affluent US Consumer Behavior On Amazon 2015
67%
58%
71%
70%
66%
73%
62%
72%
83%
Have bought from Amazon in the past 12 months
Buy from Amazon once a month or more often
Think Amazon is better than other stores
Affluent consumers (HHI $75,000+) Upper affluent consumers (HHI $250,000+)
Top 1% consumers (HHI $500,000+)
AMAZON’S RECCURRING ORDER CAPABILITIES ARE POPULAR
Amazon Subscribe & Save Growth As Part Of Total CPG E-Commerce Year-Over-Year Sales Growth 2015
Source: 1010data
20%
22%
YoY growth
AND AMAZON’S 2015 LAUNCH OF THE DASH BUTTON MADE REORDERING HOUSEHOLD GOODS AS EASY AS… PUSHING A BUTTON
Source: Amazon
BUT GROCERIES ARE THE BIGGEST OPPORTUNITY IN E-COMMERCE
Source: US Census Bureau, BI Intelligence estimates
Digital’s Share Of US Retail Sales
0%
20%
40%
60%
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Clothing & accessories
Health & personal care
Electronics, appliances, computers
Food & beverage
Furniture & home furnishings
Media, sporting & hobby goods
EVEN THOUGH ONLY 2% OF ALL GROCERY SALES WILL TAKE PLACE ONLINE…
Source: US Census Bureau, BI Intelligence estimates
US Grocery E-Commerce Sales
$0 $50
$100 $150 $200 $250 $300 $350 $400 $450 $500
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Bill
ions
AMERICANS WILL SPEND OVER $700 BILLION TOTAL ON GROCERIES IN 2016
Source: US Census Bureau, BI Intelligence estimates
Total US Sales Of Grocery
$0
$100
$200
$300
$400
$500
$600
$700
$800
2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016
Bill
ions
DESPITE CONSUMER CONCERNS OVER BUYING PERISHABLES ONLINE…
Source: Brick Meets Click
SURVEY: Why Don’t You Shop Online For Groceries? US, 2015
59% 49%
39% 33%
29% 19%
17% 14% 13% 12%
10% 9%
7% 6% 6%
I like to select my own fruits & vegetables I like to touch, smell, and see what I'm buying
I want to take advantage of special in-‐store deals I have the Hme to go grocery shopping
I shop with a parHal list and by browsing the I use a lot of coupons
I can find the products I want in-‐store I use grocery shopping to get out of the house
Ordering groceries online is more effort than it's I enjoy talking with people in the store
I prefer to buy groceries at certain stores It's too expensive
I haven't received any special offers I'm not very tech savvy
Buying anything online scares me
CONSUMERS OF ALL AGES HAVE SHOWN INTEREST
Source: AT Kearney
US Shoppers That Have Bought Groceries Online
7% 11%
5% 7% 6% 7%
25%
37% 34%
28% 32%
25%
18-24 25-34 35-44 45-54 55-64 65 and older
2014 2015
INSTACART WILL PROCESS $600 MILLION IN ONLINE ORDERS IN 2016
Source: BI Intelligence estimates
Instacart Annual Sales Handled
$0
$100
$200
$300
$400
$500
$600
$700
2012 2013 2014 P2015 E2016
Mill
ions
NOW LET’S SEE HOW E-COMMERCE MASS MERCHANTS ARE PERFORMING — THE RETAILERS THAT SELL ALL OF THESE PRODUCTS
Source: Tookapic; Pexels
AMAZON HAS BEEN THE BIGGEST BENEFICIARY OF E-COMMERCE'S GROWTH
Source: Company filings
Amazon Global Retail Revenue In billions ($)
$7 $8 $8
$13
$10 $10 $11
$17 $13 $13 $13
$20
$15 $16 $17
$25
$20 $21
0%
20%
40%
60%
80%
100%
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016
YoY Growth
AND DESPITE A SLOWDOWN IN GROWTH, EBAY’S GROSS MERCHANDISE VOLUME HAS REMAINED FAIRLY STEADY
Source: Company filings
eBay Global Gross Merchandise Volume In billions ($); Ex-auto
$16 $16 $16 $19 $18 $18 $18
$21 $20 $20 $20 $21
$20 $20 $19 $21
$20 $20
-5%
0%
5%
10%
15%
20%
$0
$5,000
$10,000
$15,000
$20,000
$25,000
Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016
YoY Growth
BUT LEGACY BIG-BOX RETAILERS ARE STILL STRUGGLING TO SUCCESSFULLY SHIFT TO DIGITAL
Source: SFIO CRACHO, Shutterstock
WALMART’S E-COMMERCE SALES HAVE BEEN SUFFERING
Source: Company filings
Walmart Global E-Commerce Sales Year-Over-Year Growth
0%
5%
10%
15%
20%
25%
30%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
AND LESS THAN 5% OF TARGET’S TOTAL SALES COME FROM E-COMMERCE
Source: Company filings
Target E-Commerce Sales
$479 $471 $463
$1,081
$567 $534
3% 3% 3%
5% 4% 3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
$0
$200
$400
$600
$800
$1,000
$1,200
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Mill
ions
E-commerce as % of total sales
RETAILERS NEED TO EMBRACE MULTIPLE CHANNELS TO REACH CONSUMERS
Source: Tanay Mondal, Flickr
SHOPPERS THAT ENGAGE WITH RETAILERS ON MULTIPLE CHANNELS MAKE PURCHASES MORE OFTEN
Source: Fluent
21% 28%
52%
25% 32%
43% 49%
36%
14%
Once a week or more At least once a month, less than once a week
Less than once a month
1-4 5-9 10+ Number of channels engaged
SURVEY: How often do you make purchases from your favorite retailer’s website?
AND SOCIAL MEDIA IS ONE OF THE MOST IMPORTANT CHANNELS
Source: Epsilon
US Shoppers That Tried A New Brand Or Product, By Digital Tool Influencer 2015
29% 28%
23% 22%
21% 18% 18%
17% 17%
15% 15%
14% 13%
11%
Retailer social Brand social
Daily deal sites Friend social
Product reviews Mobile payment
Brand texts Shopping apps
Brand emails Mobile coupons Brand websites Retailer emails
Search engines Retailer websites
BECAUSE DESPITE E-COMMERCE’S SMALL PORTION OF TOTAL RETAIL SALES…
Source: US Census Bureau
Overall US Retail Sales
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016
Bill
ions
E-Commerce In-Store
…IT IS CONTINUALLY DRIVING GROWTH IN THE TOTAL MARKET
Source: US Census Bureau
2%
16%
Total retail E-Commerce
US Retail Average Growth Rate During 1H 2016
MAKING IT IMPORTANT TO STRADDLE THE DIVIDE BETWEEN PHYSICAL AND DIGITAL RETAIL
Source: Andrey_Popov, Shutterstock
YOUNGER CONSUMERS HAVE A SUSTAINING INTEREST IN IN-STORE RETAIL
Source: Piper Jaffray
US Teens’ Time Spent In Shopping Channels
15% 18% 10% 13% 11% 13% 14% 14%
85% 82% 90% 87% 89% 87% 86% 86%
Fall 2012 Spring 2013 Fall 2013 Spring 2014 Fall 2014 Spring 2015 Fall 2015 Spring 2016
Online-only retailers Physical retailers with online stores
AND 65% OF MILLENNIALS USE THEIR SMARTPHONE WHILE SHOPPING IN-STORE
Source: Alliance Data
65%
53%
34%
14%
Use smartphones while waiting in line to make a purchase
Use a smartphone in store to search for a discount or coupon
Use a smartphone to look at product reviews while shopping in store
Use a smartphone to pay for an in-store purchase
US Millennial Smartphone Behaviors When Shopping 2016
BEACONS ARE ONE OF THE BEST WAYS TO LEVERAGE THIS IN-STORE BEHAVIOR
Source: Estimote
BEACONS COMMUNICATE WITH IN-STORE SHOPPERS’ SMARTPHONE APPS VIA BLUETOOTH
Source: Estimote
AND HAVE THE POTENTIAL TO DRIVE UP IN-STORE SALES
Source: BI Intelligence estimates
Percentage Of US CPG Sales* Influenced By Beacon-Triggered MessagesActual vs. addressable, 2016
2% 13%
98% 87%
*Total US CPG market = $407 billion **Based on the requirements to be beacon receptive
Addressable CPG sales**
$35 billion
Actual beaconized sales
$8 billion
TARGET’S CARTWHEEL MOBILE APP LEVERAGES BEACONS TO PUSHES PROMOTIONS TO SHOPPERS
Source: Mike Mozart, Flickr
TARGET SHOPPERS HAVE SAVED OVER $275 MILLION IN COUPONS AND DISCOUNTS THROUGH CARTWHEEL
Number Of Target Cartwheel Mobile App Downloads In millions
Source: Target
18
BEACONS HAVE BEEN ADOPTED BY A NUMBER OF TOP CPG RETAILERS
Source: Mike Mozart; Shaggy Paul, Flickr
CLICK AND COLLECT IS ANOTHER CROSS-CHANNEL STRATEGY THAT ALLOWS SHOPPERS TO PICK UP ONLINE ORDERS IN-STORE
Source: Nejron Photo, Shutterstock
ONLINE SHOPPERS ARE QUICKLY ADOPTING THIS METHOD, WHICH MADE UP ONE-THIRD OF SAM’S CLUB’S ONLINE SALES IN 2015
Source: Slice Intelligence
Percentage of Online Sales That Are Click and Collect, By Retailer 2015
30%
23%
15%
12%
9%
8%
7%
3%
Sam's Club
Kmart
Toys R Us
Best Buy
Home Depot
Walmart
Target
Bloomingdale's
IN ADDITION TO BEACONS, CVS HAS ROLLED OUT CLICK AND COLLECT
Source: Mike Kalasnik, Flickr
$33 $35 $35 $37 $36 $37 $39 $41 $43 $44
0%
10%
20%
30%
40%
50%
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
YoY growth
CVS Net Revenue In billions
EVEN E-COMMERCE GIANT AMAZON OPENED ITS FIRST-EVER BRICK-AND-MORTAR LOCATION AS IT GOES OMNICHANNEL
Source: Amazon
THE RISE OF ONLINE SHOPPING WILL INCREASINGLY BLUR THE LINES BETWEEN DIGITAL AND PHYSICAL RETAIL
MAKING OMNICHANNEL STRATEGIES NECESSARY FOR BOTH LEGACY RETAILERS AND NEW ENTRANTS
Source: gpointstudio, Pexels
Nancee HalpinResearch Analyst
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Evan BakkerSenior Research Analyst