Retail Industry Analysis 2013

retailindustry

propanestudio.comsan francisco

[email protected]

private & confidentialseptember 19th 2013

Monday, September 23, 13

mailto:[email protected]

mailto:[email protected]

agenda

• industry overview

• types of retailers

• channel expansion

• omni-channel trends

• strategic retail partners

• future of retail


statistics

retail industry

Online retail has a growth rate of 28%

YOY1

Online shoppers

projected to spend $1,738/

person by 20163

By 2016 online sales will make up half of total

retail sales2

Mobile purchases are at 5% of total online sales4

1-4. Weithas, Rick. Engaging Online Shoppers With Custom In-the-Moment Digital Experiences. Webtrends. N.p., n.d. Web.


department stores

retail industry

The sector has experienced decline over the past nine years. In 2008 there were 138 independent department stores, by 2009 only 57 remained.5 Out of the remaining department stores the major players include: Nordstrom, Macy’s, Saks Fifth Ave, Neiman Marcus and Marks & Spencer (UK). In order to remain profitable department stores need to extend the personalization and customer service they are known for across their digital channels.

5. Galloway, Scott. "L2 Digital IQ Index: Department Stores." L2 Think Tank. N.p., n.d. Web.


specialty retailers

retail industry

Specialty retailers are small stores that tend to specialize in a specific range of merchandise and related items. These retail stores are able to provide customer with a high level of service and expertise on the products they carry. Specialty retailers have been synonymous with digital often leveraging in store technology to better serve customers.6 There is an opportunity for these retailers to collect customer data and leverage it across all channels to further personalize the customer experience.

6. Galloway, Scott. "L2 Digital IQ Index: Specialty Retail." L2 Think Tank. N.p., n.d. Web.


big box retailers

retail industry

Big box retailers can be broken into two categories. The first is made up of supercenters and warehouse clubs that offer an extensive amount of merchandise across all categories. The second is category killers, or places like Best Buy, Home Depot and Bed Bath & Beyond who cater to all types of merchandise under one category. The era of big box dominance is coming to an end, in order to remain competitive big box retailers will need to leverage in store technology and shift towards smaller pop up stores in convenient locations.7

7. Dishman, Lydia. "Why Walmart Is Betting Big On Small Stores." Forbes. Forbes Magazine, 06 Mar. 2013. Web.


discount retailers

retail industry

Discount retailers sell designer and brand name merchandise at deeply discounted prices. The stores often get deliveries of new items every two weeks meaning there is always new merchandise for customers to discover. They carry items across all categories including apparel, footwear, accessories and items for the home. Discount retailers have experienced strong profits in recent years and are looking to expand by opening eCommerce sites to give customers online access to products that as of now are only available in stores.8

8. Dishman, Lydia. "Why Walmart Is Betting Big On Small Stores." Forbes. Forbes Magazine, 06 Mar. 2013. Web.


channel expansion

retail industry

Every retailer, whether traditional or online only is realizing the importance and value of being able to access customers and drive sales across every channel. Traditional brick & mortar retailers are expanding across digital channels. Many are redesigning their websites, creating custom apps and implementing in store technologies. Additionally, online only retailers are beginning to open brick & mortar stores to give customers a more tangible way to interact with merchandise.


traditional retailers{expand digital presence}


timberland

in-store

• transformed the traditional shopping experience into a dialog between the brand and the customer through in store interactive touch screens

• the system is designed to adapt, capture and learn from each store globally providing unique location specific content to individual stores

• also invites customers to provide feedback about products

9. “Digital Signage Universe” N.p., n.d. Web. <http://digitalsignageuniverse.typepad.com/digital_signage_universe/2012/02/timberland-launches-new-interactive-retail-concept-using-digital-signage-touchscreens.html>.


http://digitalsignageuniverse.typepad.com/digital_signage_universe/2012/02/timberland-launches-new-interactive-retail-concept-using-digital-signage-touchscreens.html




chanel

online

• remodeled their site to more effectively intertwine product browsing with content and imagery so that visitors become immersed in the brand world

• largest change is the way users navigate within each section

• the new site features higher resolution imagery, lots of video content and an exploratory feel


http://www.chanel.com/en_US/fashion.html%20

http://www.chanel.com/en_US/fashion.html%20

http://womenonly.chanel.com/en_US/gmtfp%23home/11

http://womenonly.chanel.com/en_US/gmtfp%23home/11

neiman marcus

mobile

• NM service app helps entice customers in stores

• targets set up around store entrances that make the app live

• customers can get updates specific to that store like, info on new arrivals and store events

• customers can also see availability and request their preferred associates who know their tastes and preferences10

10. Indvik, Lauren. "In-Store App Smartly Syncs Shoppers and Sales Staff." Mashable. N.p., 06 July 2013. Web.


online only retailers{open brick & mortar stores}


piperlime

• opened its first brick and mortar store in SoHo during the fall of 2012

• the store was opened in response to customer feedback who desired a four pronged omni-channel experience

• the store focuses on womenswear, shoes and accessories

• for products unavailable in stores, shoppers can purchase items via in store touchscreens and receive free overnight shipping11

11. Maheshwari, Sapna. "Gap's Piperlime Whips Web Into Reality With SoHo Store."Bloomberg.com. Bloomberg, 31 Aug. 2012. Web.


bonobos

• opening guide shops (8 so far) which are a cross between in store and online shopping experience

• shoppers book 45 minute window private appointments and visit the space to try on the brand’s inventory

• trained staff known as guides offer one-on-one assistance, fit advice and styling suggestions

• when customers are ready to buy guides place the order online and the products are delivered for free as quickly as next day12

12. St. John, Oliver. "Bonobos Opens Stores That Don't Sell Anything." USA Today. Gannett, 12 Mar. 2013. Web.


ebay + kate spade• new popup shop collaboration

between eBay and the Kate Spade Saturday line

• shop features a touchscreen built into the glass that allows shoppers to digitally navigate through the 30 products displayed in the window

• when a customer wants to buy he/she enters her cell phone number and then receives a text asking to schedule a delivery time

• payments are made via PayPal Here and the purchase is dropped off to the customer within the hour13

13. Brooke, Eliza. "EBay Gets Physical with a Street-Side Sales Kiosk for Kate Spade Saturday." TechCrunch RSS. N.p., 14 June 2013. Web.


omni-channeltrends


two trends

overview

The most successful omni-channel retailers will focus on two trends shaping the industry. The first is engaging online and mobile shoppers with custom predictive in-the-moment experiences. The second is using in-store technology and the power of data to remember individual customers, their preferences and shopping habits to further personalize their experiences.14

14. Buterbaugh, Alan. "Designing an Effective Omnichannel In-store Experience: 5 Key Considerations." Retail Customer Experience. Wireless Ronin Technologies, Apr. 2013. Web.


trend 1:{personalizing the onlineexperience}


personalizing the online experience

trend 1

Consumers want customer service and a personalized shopping experience to extend across all digital channels. In order to accomplish this retailers need to focus on the following:

1. enable online ordering and pick up in stores

2. establish shopping car continuity so customers can begin shopping on one device and continue on another one

3. tailor product suggestions and recommendations on home pages or in emails

4. create retail applications that add value to the in store shopping experience


frank & oak

personalized recommendations

• StyleScape platform uses information provided via a customer questionnaire, style preferences and past purchases

• frank & oak also monitors trending styles in each shopper’s home market and the present seasonal climate to improve recommendations

• recommended products continually update in real time as customers browse online

• the company uses insight gained from its personalization platform to drive the creation and design of new products15

15. Etherington, Darrell. "Frank & Oak Debuts StyleScape, a New Personalization Platform with Pinboard-Style Collections." TechCrunch RSS. N.p., 15 Aug. 2013. Web.


nasty gal

cart continuity

• online only retailer that offers both new and vintage clothing, shoes and accessories for women

• recent site redesign that is now mobile optimized

• new site also features shopping cart continuity across platforms

• this allows customer to begin shopping on one device and continue that experience on another (meanwhile all products are stored in the cart without having to login)


http://www.nastygal.com/

http://www.nastygal.com/

gilt

personalized sales

• Gilt has already adopted tailored emails, now they are adding user specific sales to their site

• these completely unique personalized sales are determined by factors like purchase history, geographic location and browsing behavior

• the flash sale site hopes that personalized sales will help customers access relevant options quickly so they never miss out on an item they want16

16. Brooke, Eliza. "Gilt Launches Personalized Sales, Because Personalization Is Where It’s at." TechCrunch RSS. N.p., 26 Aug. 2013. Web.


men’s wearhouse

personalized emails

• Men’s Wearhouse will leverage CQuotient’s technology to tailor emails to individual shoppers

• the system will capture data from every customer touch point, mine behavioral signals and use advanced predictive algorithms to deliver relevant and tailored email messaging

• customer satisfaction is the company’s highest priority, Men’s Wearhouse believes that personalization goes a long way17

17."Men's Wearhouse Delivers In-store Experience via Email." RetailingToday. N.p., 20 May 2013. Web.


bloomingdales

in-store app

• mobile app allows customers to use certain functions depending on whether they are shopping in stores or at home

• features - store locator to find in store events and special offers, wedding registry management tool, bar code scanner that lets customers view additional product details and read customer reviews

• customers can also manage rewards points and pay via the app18

18. Kats, Rimma. "Bloomingdale's Enhances Consumer Shopping Experience via Mobile App." Mobile Commerce Daily RSS. N.p., 21 May 2012. Web.


trend 2: {personalizing the in-store experience}


personalizing the in-store experience

trend 2

Customers want to engage with technology in stores and on the go, and as a result are demanding more tailored experiences. In order to do that retailers should focus on the following:

• leverage in store kiosks that allow customers to locate pre-selected products in stores

• use interactive touch screens to deliver brand stories and store customer preferences

• deploy iPads in stores to give sales associates access to detailed customer information

• develop apps that allow customers to add products to fitting rooms and schedule times to try on merchandise


hointer

in-store app

• offering a new tech savvy way to try on jeans in Seattle and Palo Alto

• all of the denim is merchandised hanging up so shoppers can easily view the details of the denim

• shoppers download an app, tap the NFC enabled tag attached to each pair of jeans, select their size, then choose try on

• the denim is automatically sent to the customer’s fitting rooms

• buying jeans is easy customers tap their phone to an in store pay station and swipe their credit card

• the Palo Alto Store has a partnership with Google Shopping allowing customers to receive same day delivery

• pricing of all merchandise is set to either match or beat Amazon’s listed prices19

19.Soper, Taylor. "Amazon Vet's Robot-powered Apparel Startup Now Beating Amazon Prices, Partners with Google Shopping." GeekWire. N.p., 16 July 2013. Web.


burberry

in-store ipads/interactive screens

• digitizing the in store experience and placing mobile at the center of their customer 360 model

• associates are armed with iPads that contain info on customer purchase history and preferences

• the data is so powerful that employees at any store can identify a previous customer the moment they walk in

• instead of greeting them by name they can engage with customers via specifics of their shopping history “how did your wife like the trench coat you bought her?”

• the London flagship store contains over 500 speakers and 100 mirrors/screens to engage customers

• every product is equipped with an RFID tag that enables customer to hold up merchandise to the interactive screens and watch videos on the product, see how its made or view coordinating items20

20. Gaudoin, Tina. "Burberry Opens an Innovative London Flagship." Architectural Digest. N.p., Dec. 2012. Web.Monday, September 23, 13

nordstrom

in-Store integrated touchpoints

• discussion around placing iPads in dressing rooms to elevate the customer experience

• iPads would enable customers to easily look up information to see if products are available in another size, color department or store

• iPads would also sync with customer’s selections from home to have products waiting at the dressing room upon arrival

• they would also sync with customer’s previously purchased products to suggest other complementary items21

21. Shea, Erin. "Nordstrom Contemplates Dressing Room IPads to Elevate Customer Experience." Luxury Daily RSS. N.p., 28 Aug. 2013. Web.


strategicretailpartners


technology partnerships

In order for retailers to activate these omni-channel trends in stores and across their digital channels many are seeking the help of 3rd party technology partners. These partners have experience working with a variety of retail clients and understand how to leverage data and technology to achieve greater customer personalization.


simply 42

• their system relies on collecting data from retailer’s POS system and shoppers emails at checkout

• retailers can see purchase patterns, identify customers and understand them individually. (ie. who shops sales, who visits the store most often)

• they also have access to a social page that provides sentiment analysis from twitter and instagram to quantify how customers feel about individual brands22

22. Perez, Sarah. "42 Is The Answer To Everything…In Personalized Analytics For Retail."TechCrunch RSS. N.p., 29 Apr. 2013. Web.


bloomreach

• BloomReach uses data to personalize the shopping experience for customers

• the platform provides smart product recommendations, has a predictive search function, a trending section and cross device personalization

• all benefits are available to shoppers without having to log in and they extend across all platforms web, tablet and mobile23

23."Give Them a Mobile Experience That Delights." Bloomreach. N.p., n.d. Web. <http://bloomreach.com/mobile/>.


http://bloomreach.com/mobile/

http://bloomreach.com/mobile/

demandware

• provides retailers with a set of solutions to power omni-channel experiences

• central customer record management to measure performance of cross channel shoppers

• tailored content that is optimized for specific channels

• responsive web design that allows retailers to deploy content on any device

• improved inventory visibility that gives customers the flexibility to buy products through any channel and pick them up anywhere24

24."Digital Commerce for the Changing Face of Retail." Demandware. N.p., n.d. Web. <http://www.demandware.com/product/the-big-picture>.


http://www.demandware.com/product/the-big-picture

http://www.demandware.com/product/the-big-picture

futureofretail


summary

The retail industry is not dependent on one channel alone. Every type of retailer, whether traditional or online is realizing that in order to be the most successful they need to have some presence in every channel. By doing so they are ensuring customers have access to the best shopping experience that fits their needs. In addition to cross channel operation, retailers will need to focus incorporating technology into the in-store and online experiences to further personalize the shopping process.


opportunities for retailers

• apps that push relevant updates to customers when they walk through the doors of a retailer (coupons/sales & suggested products)

• apps that allow customers to shop and schedule times to try items on in stores

• easy mobile payments and scheduling of deliveries via retailer apps

• interactive touch points (smart tvs, iPads) that allow customers to locate merchandise in stores or order out of stock items online

• a platform that tailors the shopping experiences to each customer (remembering purchases, saving items in their shopping carts, sending customized emails with smart recommendations)

• in store platform for associates access to customer shopping history, preferences & feedback


propane studio | 1160 battery street, suite 350 san francisco, ca 94111 | 415.550.8692 | www.propanestudio.com

propane studio is a full-service digital agency focused on developing experiences and solutions that fuel the way people connect with brands and each other.


http://www.propanestudio.com

http://www.propanestudio.com

Retail Industry Analysis 2013

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