The Future of Retail Report

The Future of Retail
Key Trends, Data & Insight
June 2014

© Digital Royalty Inc. 2014
Identify areas of
opportunity and learnings
that can be applied to
Hilton Worldwide initiatives.
Objectives
Provide a comprehensive
overview with key insights
and trends within the retail
industry.
21

Methodology

Key Learnings
Customization &
Localization
A Consistent
Customer Service
Strategy
Unique Mobile
Experience
Satisfied Customer
• Big Data + Customer behavior
• New technology
• Ambassador Programs
• Surprise & Delights
• Consistent experience across all
channels
• Taking care of the issue where it
happens
• Treating it as a lifecycle vs. an app
• Customization & Customer Service

Retail Industry
Value Mobile Social
3 Industry Drivers for E-Commerce

Retail Industry
$71.2 billion was the 2014 first quarter US retail e-commerce sales, a 2.8% increase from fourth
quarter in 2013.
!
2.2% is the total retail sales increase and GAFO (General Merchandise, Apparel, Furniture and Other) sales
decreased by 0.6% which is a sign that retail is slowing.
!
25-34 year olds lead the way in smartphone usage in-store, comparing pricing, reviews, buying products
and engaging with brands on social while in physical stores.
!
50% of Millennial’s say they regularly browse for items that they don’t plan to buy. 36% say they only buy
items they deem as necessary. One-third are willing to pay full price.
!
44% of all US commerce transactions in Q1 2014 began by Google Search.
Content sources: The Census Bureau of the Department of Commerce, Custora and CMO (2014)

US Mobile
2013
U.S. mobile
commerce
sales grew
63% YOY to
$34.2 billion
Content sources: 2014 Internet Retailer Mobile 500 Guide, Google Think Insights and Goldman Sachs
2018
U.S. mobile
retail sales
expected to
grow to $173
billion

UK Mobile
2014
Mobile will
account for
24% of retail
e-commerce
sales
2017
Mobile will
account for
35% of retail
e-commerce
Content source: RIS

Big Data
•Retail brands are looking to leverage “Big Data” to maximize profits through real-
time analytics that fuel dynamic pricing in store.
!
•Dynamic pricing will allow brands to make a more customized experience based on
historical trends and POS trends.
!
•Predictive analysis will allow brands to up-sell offers to customers based on
customer sentiment and past purchase history. This will allow for customer service
agents to recommend “next-best-actions.”
!
•Big Data will drive $34 billion of IT spending in 2014.
!
•Major brands such as Target, Gap, Nike and Zappos have invested in innovation
labs that allow them to innovate and introduce new concepts into the market.
Content sources: RIS, brand interviews and Forrester

Brick and Mortar vs. Online
•Major retailers (Macy’s, Nordstrom, J.C. Penney’s, etc.) are concentrating their
stores as “Hub Destination Centers” (HDC) to combat online buying and compel
consumers to visit the stores rather than strictly purchase online.
!
•While online specific brands such as Amazon and Rent the Runway have brick
and mortar locations on their roadmap, major retailers are closing locations.
!
•2014 is the year when retailers are focusing efforts on making a seamless
customer experience from online to mobile and in-store.
Content sources: Forbes, Future of Commerce

Showrooming vs.Webrooming
Showrooming
The practice of examining merchandise in a traditional brick and mortar retail store without purchasing it, but
then shopping online to find a lower price for the same item. Online stores often offer lower prices more
frequent than their brick and mortar counterparts, because they do not have the same overhead cost.
!
Webrooming
The new and emerging showrooming, meaning customers will do their research online but ultimately buy
products offline or in-store.

Differentiators
Content source: Merchant Warehouse

Showrooming vs.Webrooming Stats
Content source: Merchant Warehouse
69% of people with smartphones in the 18-36 year demo have web roomed, while
vs. 50% have showroomed.
!
71% of people 37-48 years have webroomed vs. 53% who have showroomed.
!
$1.8 trillion in sales will result from webrooming by 2017, versus $1.2 trillion in
2012.
!
$307 billion in all e-commerce sales in 2017.

Customer Service Evolution
•As social evolves, it requires a greater transparency for brands.
•Brands are focusing on creating a seamless omni-channel experience for the
consumer whether on mobile, desktop or in-store.
•Brands are investing in dedicated social media customer service teams that are
trained to handle customer service issues where they take place.
•Although voice is still the most preferred customer service channel for consumers, live
chat and virtual agents are becoming popular as they provide customer ease.
•Pre-purchase and post-purchase engagement will become more popular, as brands
monitor how customers interact with the company, navigate websites and spend time
on specific pages. This insight coupled with “big data” will allow brands to contact
consumers directly through chat, offers, email or through social channels.
Content source: Forrester, 2014

New Technology
Shoppable Videos:
!
• Shoppable videos provide a unique
experience for consumers that allows them
to shop the look/product of a video while
consuming.
•Some videos become too distracting and
take-away from the content of the video.
•Target developed a series with well-known
talent that allows consumers to shop the
look on the right hand side while watching
the video.

Niche Brands & Collaborations
•Niche brands & collaborations are becoming more popular and
are targeting Millennial’s and customer ease.
•Customizable based on clothing preferences determined during
sign-up phase and then curated collections based on interest.
•Subscriber base service and encourage consumer collaboration/
feedback.
•Ambassador program and localized through meet-up events.
•Hunt Club: VIP customers who receive free shipping, returns,
discounts and try-on service.

International Trends
•E-Commerce Growth: 2014 is expected to be the first time that consumers in Asia-Pacific will spend
more on e-commerce purchases than those in the US. Argentina, Mexico, Brazil, Russia, Italy and
Canada also expected to drive worldwide e-commerce growth. Growth largely to do with large
populations and first time online shoppers.
!
•Globalization: Fueled by consumer preferences and localization. Additionally growth in emerging
markets will impact globalization. Shoppers continue to spend an increased amount online year over
year in China. Online sales expected to reach $650 billion by 2020, up from $210 billion in 2012.
!
•Cross-Boarder Presence: Retailers are establishing a presence in Asia-Pacific regions as well as the four
BRIC countries: Brazil, Russia, India and China, which account for more than 40% of the worlds
population. This will allow for retailers to have faster shipping periods, lower shipping costs and
localization.
!
!
!
!Content sources: McKinsey & Co., eMarketer,

Methodology
•Listening software was manually trained to analyze global conversation surrounding
“online retail” and the “shopping experience” from 2011 to current.
!
•Data has been pulled from websites, forums, blogs, Twitter, Facebook.
!
•There are more than 11 million relevant posts that are being analyzed to provide the
following slides.
!

Demographics
Demographics provided for 2011 - current surrounding the conversation of retail / online shopping.

ConversationVolume
Relevant conversation
continues to increase
surrounding online shopping
as irrelevant volume stays
consistently low.
!
!
!
!

Consumer Sentiment
Consumer sentiment (blue) of
“Online Conversation” around
shopping experience has
steadily increased over the
past three years.
!
This significant increase in
conversation proves the
importance of a brands online
presence and customer
service strategy.
!
!

Content Sources
Conversation around retail and online
shopping experiences includes posts on
the following outlets. Since 2011, the
conversation has increased
exponentially on Twitter. Twitter
conversation has increased 15% since
2011:
!
•Twitter: 77%
•Blogs: 13%
•Forums: 5%
•News: 3%
•Facebook: 2%
!
!

Conversation
2011 2014

Zappos
• Customer Experience: Personalization is key for customers, and larger brands are struggling to
compete with curated experiences. Zappos competed with this through their niche speciality
brand.
!
• Mobile Strategy: Mobile continues to grow, with higher consumer spending, specifically
amongst loyalists. Approach mobile strategy as a consumer lifecycle vs. an application. Key is
not to over-serve with push notifications. Zappos has specialized teams working on each
version of the app, i.e. iOS vs. Tablet.
!
• VIP Customers: All consumers are VIPs. Premium customers purchase 3x a year. Surprise &
Delight is a marketing strategy with the main goal for the consumer to be attracted to Zappos.
Social team has free-reign to surprise & delight as often as they see fit.
!
• Customer service best practices: Refer to the customer by name, send them directly where
they need to go and match the same level of service as the phone. Deal with the customer
service issues where it takes place, i.e. Twitter vs. having them email customer service or
directly them elsewhere.
!
• Social Revenue: Facebook drives 80% of social revenue, Pinterest drives 17% and Twitter
equates to 2%.
!Content source: Zappos

Mobile Experience
•Zappos’s mobile experience
incorporates their customer
service approach, through easy
one-click access to call-center
and live chat features.
!
•Products have the ability to be
sorted as pleased, including
recently viewed, highest priced
and most popular.

Online Marketing
Unique customer targeting
through banner ads reminding
customers to continue their
incomplete shopping
experience.
!

lululemon
• Mobile: Mobile buying habits are increasing and mobile is a huge initiative for 2014/2015
including push notification strategy.
!
• Click to Buy: lululemon is focusing their efforts on other non-traditional digital sites that drive
click to buy, including Wanelo, and have seen large dividends.
!
• International: Growth in Asia is a top priority and dedicated resources have been
implemented to place boots on the ground.
!
• Social Revenue: 40% of social revenue is generated by Facebook, 14% from Pinterest. Email
open rate is 50% and is the #1 driver to site.
!
• Customer Segmentation: Customer and product segmentation for all international markets,
US to Hong Kong and Canada is a priority for 2014/2015 to provide a unique experience.
Heavy focus mens wear and creating a unique marketing strategy from that of the women’s.
!
• Loyalty: Increasing surprise and delight budget to give customer service the freedom to
implement as needed.
!
• Content Strategy: Inspirational and pre-roll content performs the best. Emotional connection
is important for the target audience.
!Content source: lululemon

Customization
lululemon’s website is structured based on whether you are female or male. Once that’s established the shopper
has the ability to determine which type of “athlete” they are to continue their shopping experience. Their current
site is mobile friendly, but a dedicated app is on the horizon.

Content: Inspirational
•Content is highly visual and focuses on inspiring brand fans with a dominate focus on the mens line.
•Ambassador strategy (loyalists) includes YouTube series that feature a day-in-the-life to inspire consumers.

Major Financial Institution
• International Approach: The Brand first starts with a deep understanding of what’s important to consumers’ lives and
what matters to them. From there, brand a strategy is developed to maximize their gains and minimize their pains.
!
• Social Impact on Industry: Increased demands for greater transparency, better customer experience, more responsive
customer service. Social has also impacted the rise in online banking (remote deposits, online bill pay and transfers)
and less reliance on visits to the bank.
!
• Future of banking: There will be an emphasis on overall customer experience and the use of predictive analytics to
better serve customer needs.
!
• Mobile Impact: Mobile banking creates less friction, thereby making the experience easier, quicker and more pleasant
to purchase and bank.
!
• Future of Banking: Data will be used to predict needs to better serve customers. Consumers have higher expectations
when it comes to customized experiences.
!
Content source: Asked to remain anonymous

Rise of Shared Services
Content source: uber, airbnb, fobes.com
•The sharing economy had projected revenues of $3.5 billion in 2013.
!
•Millennial’s are culturally programmed to borrow, rent and share.
!
•An estimated $1 Billion in yearly gross bookings.
!
•A trend is being seen amongst larger retailers, including Home Depot who now rent
products from more than 2,000 stores. In 2011, GM invested more than $3 million in
their ride share programed called RelayRides to compete.
!
•More than 7 Million people are global members of a car-sharing service.
!

In 2008 there were 120,000 listings and in 2012 there were 300,000 listings
with 3 million guests who traveled.
Content source: Airbnb

© Digital Royalty Inc. 2014Content source: Forbes 2013 and Airbnb
•Airbnb is in 192 countries.
!
•Where travelers come from (in descending order): US, UK, France, Spain, Australia
Germany, Canada, Russia, Brazil, Singapore, Hong Kong.
!
•14% of Airbnb customers said they wouldn’t have visited the city without Airbnb.
!
•42% of hosts use the income to pay everyday living expenses.
!
•“Spillover Effect” - Airbnb rentals tend to be cheaper than a hotel, which encourages
people to travel longer and spend an average of $1,100 in a city, compared to hotel guests.

© Digital Royalty Inc. 2014Content source: TechCrunch 2013 & uber.com
•In more than 70 cities (including global).
!
•An estimated $1 Billion in yearly gross bookings.
!
•An average of 80,000 sign-ups a week.
!
•Strategy is driven by unique partnerships/alignments.
!

Unique Partnership
•Uber and AT&T joined forces to deliver seamless Uber
access to customers by pre-loading the app on Android
carriers phones.
!
•News came after Google announced they were adding
Uber data to their maps.
!

The Stats
Content source: Compete 2013

The Stats
Content sources: Twitter 2014

Paid Products
Content source: Twitter 2014
•Website Cards: Allows retailers to drive to web with a rich
product specific experience within the card.
!
•Lead Gen Cards: Allows retailers/brands to grow their CRM
database directly through a Twitter card.
!
•App Cards: Brands can promote a mobile app and encourage
sign-up directly from the card within a users timeline.
!
•Click to Call (not available yet): This product will further
enhance the customer service experience for consumers,
allowing followers of a brand the ability to call a brand with a
single click in a promoted tweet.
!
!
!

Case Study - Amazon Cart
Content source: Amazon 2014
•#AmazonCart: Once a shopper has a Amazon cart/account, all
they have to do is reply to a tweet with an amazon link and use
the hashtag #AmazonCart and it will save within the cart. This
allows the product to stay top of mind and give purchasing
ease.
!
•Purchasing Cycle: Combining the Twitter TV Conversation ad
products and TV spots, brands can encourage consumers to
purchase products via TV spots and also reach them on Twitter
while they are watching. 65% of Twitter users access Twitter
when watching TV.
!
!

•Pinterest shoppers are spending significantly more per
checkout averaging between $140 - $180 per order
compared to non-Pinterest users which average $80-$60.
!
•Mom’s are 61% more likely to visit Pinterest than the
average American.
!
•70% of brand engagement is generated by users, not
brands.
!
•18% of engagement for fashion and retail brands is
generated by brands, 82% generated by users.
Content Sources: Nielsen, Rich Relevance, Digitas

Paid Products
•Rich Pins: Provide a unique experience for
users, and includes product information and
pricing.
!
•Promoted Pins: A paid product offered by
Pinterest that partner brands pins will appear
on the search and category feeds.

Case Study
Customization:
!
•Nordstrom has more than 4.4
million followers on Pinterest.
•To enhance the user experience,
they’ve created a “Popular
Pinned” section on their website
and incorporated an in-store
Popular Pinned products display.
•This not only eases the customer
experience, but also increases
awareness of their online
presence.

!
!
•10.5 billion minutes are spent on Facebook each day.
!
•Of the social outlets, Facebook is the highest referrer
of site traffic, at 63%.
!
•Facebook tops conversion rates when compared to
other social channels.
!
•Facebook users typically only make one action on
Facebook, i.e. Like, Click, Share. That insight should
be reflective in content based on whether the goal is
to convert a sale/purchase.
Content source: Shopify 2014

Paid Products & Targeting
•Autoplay Videos: Allow retails to drive to web with a rich
product specific experience within the card.
!
•Paid Posts with Call-to-Action: Designed to drive to web and
encourage purchase.
!
•Targeting: Facebook’s advanced targeting allows for brands to
deliver highly targeted content to consumers. Targeting
includes: Look-A-Like Audience Targeting, Demographic
Targeting (life events, relationships, generations), Demographic
targeting (net worth, education, industry, home value, life
events, political status/affinity).
!
!
!

!
!
•45 million users globally.
!
•Users are 352% more likely than the mobile
average to find a store location on their mobile
phone.
!
•Foursquare users are 326% more likely than
average mobile users to check product availability
in-store.
!
•Users are 206% more likely than the mobile
average to have purchased goods/services in a
month.
Content Sources: Comscore Mobilens, 2014

!
!
•Post Check-In Ads: Brands can serve consumers
Post Check-In ads after they’ve checked at a
specific location, i.e. lululemon could target yogi’s
who check in at a local yoga studio with a special
offer.
!
•Offers: Offers are ads that appear at the top of a
users timeline or send alerts for nearby locations
and help drive foot traffic into a retail/physical
location.
Content Sources: Comscore Mobilens, 2014
Paid Products

YouTube
•According to Google, YouTube influences
purchase more strongly than that of TV.
•The top 500 brands on YouTube grew
their views by 70% in 2013.
•187.8 million people in the US watched
46.6 billion online content videos in
March 2014. The average American
spent more than 17 hours watching
online video.
Content source: Google TNS October 2013

Shoppable Videos
Click to purchaseProduct Feature
Interactive navigation bar
Drive to web.

The Future of Retail Report

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (19)

Ähnlich wie The Future of Retail Report

Ähnlich wie The Future of Retail Report (20)

The Future of Retail Report