THE FUTURE OF RETAIL 2016 · MONEY SPENT ONLINE GREW BY $7 BILLION Source: comScore Online Spending...

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


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


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



0%

10%

20%

30%

40%

50%

60%

2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016




Food & beverage



NEARLY ONE IN FOUR ELECTRONICS PURCHASES HAVE BEEN MADE ONLINE EACH YEAR SINCE 2014


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



0%

10%

20%

30%

40%

50%

60%

2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016




Food & beverage



ONLINE FURNITURE SALES ARE RAPIDLY APPROACHING A QUARTER OF THE TOTAL MARKET


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


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…



0%

10%

20%

30%

40%

50%

60%

2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016




Food & beverage



ONE QUARTER OF PURCHASES OCCUR ONLINE


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


US E-Commerce Sales, By Category

Billions

$0

$20

$40

$60

$80

2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016






Food & beverage

E-COMMERCE WILL ACCOUNT FOR 8% OF ALL HEALTH AND PERSONAL CARE ITEMS SOLD THIS YEAR


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



0%

20%

40%

60%

2005 2006 2007 2008 2009 2010 2011 2012 2013 E2014 E2015 E2016




Food & beverage



EVEN THOUGH ONLY 2% OF ALL GROCERY SALES WILL TAKE PLACE ONLINE…


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


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


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


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


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


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…


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


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

MEET THE BI INTELLIGENCE E-COMMERCE TEAM

Evan BakkerSenior Research Analyst

THE FUTURE OF RETAIL 2016 · MONEY SPENT ONLINE GREW BY $7 BILLION Source: comScore Online Spending...

Documents

Transcript of THE FUTURE OF RETAIL 2016 · MONEY SPENT ONLINE GREW BY $7 BILLION Source: comScore Online Spending...