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ComScore State Of Us Online Retail Economy In Q3 09
 

ComScore State Of Us Online Retail Economy In Q3 09

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According to comScore in this 47 page overview: ...

According to comScore in this 47 page overview:
"- We're seeing clear signs that we‟ve hit the bottom of the decline in e-commerce spending, and comScore expects some modest growth in the holiday season compared to last year
Consumers continue to be very cautious about their spending given concerns about:
* The job market/unemployment/lack of job creation
* Declines in housing prices/Underwater mortgages
* Lack of credit and too much debt
* Rising gas prices
- E-commerce continues to attract more buyers, but they are spending less than a year ago by completing fewer transactions and spending less per shopping trip
- Retailers are hiring fewer workers and carefully planning their inventory so as to avoid heavy discounting post-season
- The holiday season will likely be characterized by heavy discounts/price wars, promotions/couponing, an earlier start to the season and an increased use of digital marketing"
Source: comScore State of the U.S. Online Retail Economy in Q3 2009.

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    ComScore State Of Us Online Retail Economy In Q3 09 ComScore State Of Us Online Retail Economy In Q3 09 Presentation Transcript

    • State of the U.S. Online Retail Economy in Q3 2009 November 12, 2009 Gian Fulgoni, Chairman, comScore, Inc. Note: A copy of this presentation will be sent to all attendees within 24 hours of today’s webinar
    • Data sourced from comScore‟s global panel of 2 million Internet users 360° View of Consumer Behavior Analysis Parameters Web Visiting  E-commerce data includes all worldwide buying on and Viewing U.S. sites  Unless explicitly stated otherwise, the term e- commerce refers to online retail spending, which Demographics Online / Offline excludes travel, autos and auction sites Life Stages Transactions  Behavioral activity through September 2009  Survey issued in October 2009, n=1046  Consumer Measurements: – Site Visitation – Buying – Mobile Search – Payment Method Video Behavior – Attitudes and Intentions – Demographics Media  Retailer Views Exposure – Multi-Channel vs. Pure Play © comScore, Inc. Proprietary and Confidential. 2
    • comScore Customer Knowledge Platform: A 360° View of 2 Million Global Internet Users WEB VISITING & VIEWING DEMOGRAPHICS • All Website/Page Click Stream • Self-reported and validated • Content Viewed • Appended Segments (e.g. Claritas, Acxiom) • Search Engine Queries • Individual & Household Level • Keyword Used ONLINE TRANSACTIONS SURVEYS • All Secure Session Activity • Email or Contextual “Pops” • Purchases and Subscriptions • Behavior-activated Surveys • Price Paid, Shipping & Handling, • Observation of All Surveys Taken Promotions Across All Suppliers • Applications/Configurations MARKETING STIMULI OFFLINE PURCHASING • Linked using Name and Address • Online Ads TV VIEWING • Client CRM Databases • Referral Links • Link to Digital Set Top TV Data Using Name & Address • Retailer Loyalty Card Data Designed to be representative of the online population Projectable to the total U.S. population TRUSTe certified for information privacy & security © comScore, Inc. Proprietary and Confidential. 3
    • State of the Economy: A Review of Key Macroeconomic Trends © comScore, Inc. Proprietary and Confidential. 4
    • Validation of comScore Sales Data: Comparison of comScore data to U.S. Department of Commerce Quarterly U.S. e-Commerce Sales ($ Billions) Source: comScore & U.S. Department of Commerce (DOC) Billions ($) % Change in e-Commerce Sales vs. YA Q2 ‟08 Q3 ‟08 Q4 ‟08 Q1 ‟09 Q2 ‟09 U.S. Dept. of 9% 5% -5% -6% -5% Commerce comScore 12% 5% -4% -3% -4% comScore Estimate = (Total Non-Travel – Event Tickets + Estimated Auction Fees and Autos) © comScore, Inc. Proprietary and Confidential. 5 Excludes travel and event tickets, but includes auction fees and autos
    • Q1- Q3 retail e-commerce sales are down 1% versus year ago, while travel sales are down 6% e-Commerce Dollar Sales Growth ($ Billions) Source: comScore e-Commerce Measurement +7% +17% $221 +20% $200 -3% +22% $171 +9% +26% +12% $153 +29% $143 +13% $117 +20% -6% $93 +26% $72 +33% +6% +21% +24% Travel +24% -1% +26% +26% Non- Travel © comScore, Inc. Proprietary and Confidential. 6
    • We‟re seeing clear signs that we‟ve hit the bottom but still no positive growth …. Quarterly e-Commerce Sales Growth vs. YA Source: comScore e-Commerce Measurement 23% 19% 17% 13% 11% 6% 0% -1% -2% -3% Quarterly Retail & Food Services Sales Growth vs. YA Source: U.S. Department of Commerce (DOC) 4% 4% 5% 4% 2% 1% -8% -10% -9% Note: The U.S. Department of Commerce calculation includes total retail and food service sales, which also includes motor vehicles and parts dealers © comScore, Inc. Proprietary and Confidential. 7
    • Sales trends through the third quarter of „09 mirror last year and show no growth e-Commerce Dollar Sales ($ Billions) Source: comScore e-Commerce Measurement % Chg vs. Prior +43% -15% -3% +5% +38% -20% -2% -1% +26% -18% -3% -2% Quarter $39.1 $38.1 $33.0 $31.2 $30.6 $30.3 $31.0 $30.2 $29.6 $28.4 $28.0 $27.2 Billions ($) Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 “Retail sales showed further signs of stabilization in October, according to new data from Mastercard‟s SpendingPulse unit, but they're not posting the kind of gains that would significantly boost the economy.” --WSJ Blogs, November 12, 2009 © comScore, Inc. Proprietary and Confidential. 8
    • All income segments showing declines in e-commerce spending Q3 2009 e-Commerce Sales vs. YA by Income Segment Source: comScore e-Commerce Measurement Income Segment Online Retail Spending Bracket Share of Change vs. YA Online Retail Online Retail Income Segment Online Retail Under $50,000 -5% 21% Spending $50,000 - $99,999 -1% 45% $100,000 or more -3% 34% Total -2% 100% © comScore, Inc. Proprietary and Confidential. 9
    • As the older mid-to-upper income households save to re-create their lost wealth, they are cutting spending. The 18-44 age group is purchasing more versus year ago, particularly in the high income segment Q3 „09 Ecom Sales Age & Income Segment % Chg vs. YA $50K - $99.9K  18-44 yrs of age…………………………….. +3%  45 yrs or older……………………………… -5% $100K or more  18-44 yrs of age ………………………….. +10%  45 yrs or older……………………………… -12% © comScore, Inc. Proprietary and Confidential. 10
    • While no positive growth as of yet, the monthly trend in e-commerce sales in Q3 is somewhat encouraging Monthly e-Commerce Sales Growth vs. YA Source: comScore e-Commerce Measurement Month Growth Rate vs. YA January 2009 +2% February 2009* +2% March 2009 -1% April 2009 0% May 2009 -4% June 2009 -1% July 2009 -5% August 2009 -1% September 2009 0% *February 2009 growth rate is seasonally adjusted to account for the leap year (2008). © comScore, Inc. Proprietary and Confidential. 11
    • E-commerce continues to attract more buyers but they are spending less than a year ago Key e-Commerce Buyer & Transaction Measures Source: comScore E-commerce Measurement There are % Chg in Q3 „09 vs. YA more people buying online E-commerce Sales Growth -2% vs. YA but Buyer Change +19.6% they are Dollars Per Buyer Change -18.4% spending less via fewer Dollars Per Transaction -2.4% Change transactions and fewer Transactions per Buyer -16.4% dollars per Change transaction © comScore, Inc. Proprietary and Confidential. 12
    • Consumer sentiment about the current state of the economy has improved – albeit marginally – among those earning less than $100K Consumer Fear Factor by Income Segment Q. To what extent do you agree with the following statement: “I am more afraid of the economic future than ever before.” Source: comScore Surveys – July & October 2009 -2% -2% 0% %age Pt. Change vs. Q2 77% 75% 73% © comScore, Inc. Proprietary and Confidential. 13
    • However, a slightly improved outlook means little when you consider the impact of consumer debt on one‟s ability to spend on discretionary items Impact of Debt on Spending for Non-Essentials by Income Segment Q. How has your current level of debt impacted your ability to spend on non-essentials? Source: comScore Survey October 2009 4% 4% 6% % Spending More on Non-Essentials 50% 46% 65% % Spending Less on Non-Essentials © comScore, Inc. Proprietary and Confidential. 14
    • Unemployment/job security continues to be a top concern among all consumers Percent of Respondents Citing Their One Most Important Concern Q. Based on your current situation, which one of the following economic conditions most concerns you? Source: comScore Survey October 2009 Among All Consumers Among Consumers Earning $100K or more Unemployment/Job 42% 34% Security Rising Prices 32% 19% Financial Markets 13% 27% Real Estate/Home 8% 15% Values Other 5% 5% © comScore, Inc. Proprietary and Confidential. 15
    • Consumers remain most concerned about unemployment, with little overall change in consumers‟ most pressing issues over the past several months Percent of Respondents Citing Their One Most Important Issue Q. Based on your current situation, which one of the following economic conditions most concerns you? Source: comScore Surveys - January, April, July & October 2009 Rising Unemployment/ Financial Real Estate/ Prices Job Security Markets Home Values Jan April July Oct Jan April July Oct Jan April July Oct Jan April July Oct 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 Total 29% 28% 32% 32% 46% 46% 40% 42% 14% 15% 13% 13% 7% 8% 8% 8% Household Income $100K or more 15% 7% 22% 19% 42% 44% 28% 34% 20% 34% 30% 27% 19% 11% 11% 15% $50K-$99,999 21% 22% 27% 28% 50% 50% 44% 43% 18% 17% 15% 13% 9% 10% 10% 12% Under $50K 36% 38% 40% 39% 44% 44% 39% 42% 10% 8% 6% 9% 3% 7% 6% 4% “The U.S. jobless rate jumped up 0.4 percentage point to 10.2% in October, the highest level since April 1983. The government‟s broader measure of unemployment shot up even more, rising half a point to 17.5%.” –WSJ, Nov. „09 © comScore, Inc. Proprietary and Confidential. 16
    • Just over half of consumers believe it will take more than a year for the unemployment rate to show signs of improvement Unemployment Rate Predictions Q. When do you think the unemployment rate will begin to improve? Source: comScore Surveys - July & October 2009 +1% +2% +5% -6% 0% %age Pt. Change vs. Q2 © comScore, Inc. Proprietary and Confidential. 17
    • Inflation concerns are again beginning to surface. To no surprise, as HH income decreases, rising prices become more worrisome Consumer Concern Over Rising Prices by Income Segment Q. Are you afraid that prices are going to rise in the next 3 months? Source: comScore Survey – October 2009 85% 76% 71% Yes No 15% 24% 29% © comScore, Inc. Proprietary and Confidential. 18
    • Some pundits are optimistic about the recession being “technically over,” but there are still many factors that will impact the speed of recovery October 23, 2009 October 29, 2009 “25% of U.S. mortgage holders are “underwater” on their mortgages, with more than 10,000 additional U.S. homeowners entering the foreclosure process “A total of 690,000 new vehicles were sold under the Cash for every day – and millions more homeowners only a Clunkers program last summer, but only 125,000 of those (missing) pay check away from joining that were vehicles that would not have been sold anyway, category.” [according to Edmunds.com]…[Because the] overwhelming majority of sales would have taken place anyway at some Note: According to the blog, The Big Picture, time in the last half of 2009…that means the government “nationally, 22% of all homes are underwater…Back ended up spending about $24,000 each for those 125,000 out the mortgage-free homes, and we get 33% of all additional vehicle sales.” mortgaged homes are underwater.” November 6, 2009 November 9, 2009 “U.S. consumer credit fell in September for an eighth “The U.S. jobless rate jumped up 0.4 percentage point to straight month, the longest series of declines on 10.2% in October, the highest level since April 1983. The record, as thousands of Americans lost their jobs government‟s broader measure of unemployment shot up and banks tightened access to loans… More than even more, rising half a point to 17.5%.” 100 banks have failed this year, and lenders are requiring tougher conditions for the credit they extend to consumers and businesses.” © comScore, Inc. Proprietary and Confidential. 19
    • The promising Q3 „09 GDP report that showed 3.5% growth needs to be considered in the context of several short term stimuli that contributed to a temporary boost in the growth rate “More than one percentage point of GDP growth in the third quarter came from car sales, driven in a large part by the temporary "cash for clunkers" program. After surging in July and August, retail car sales dropped 10.4% in September.” --WSJ, Oct 30, 2009 “Q3 GDP was also propped up by home building, which rose for the first time since 2005…and contributed a half-percentage point to GDP growth. But much of the housing revival reflects government efforts to push down mortgage rates, prevent or at least slow foreclosures, and reward home buyers with tax credits.” --WSJ, Oct 30, 2009 “Banks are buying U.S. government debt in an effort to shore up their balance sheets…Bank lending is basically back to where it was two years ago, and shows no sign off rebounding...Lending to small business, the real engine of job creation, is sadly decreasing each month.” --John Mauldin, President, Millennium Wave Advisors, LLC © comScore, Inc. Proprietary and Confidential. 20
    • Job losses as a percentage of peak employment have dropped lower (and longer) than any other post WWII recession Percent Job Losses in Post WWII Recessions Source: CalculatedRiskBlog.com % Job Losses Relative to Peak Employment Month Number of Months After Peak Employment “The country has lost more jobs as a percentage of peak employment than any time since the Great Depression. This includes the recessions of the early 1980s, even when they are combined.” --The Business Insider, Oct. „09 © comScore, Inc. Proprietary and Confidential. 21
    • Gas prices are increasing again, while food prices are now back to year-ago levels Percent Change in Price vs. YA Source: U.S. Bureau of Labor Statistics 6% -42% -40% -40% CPI for Gasoline (all types) by Month in 2009 250 AAA‟s Daily Fuel Gauge Report 200 150 Regular Unleaded Gas 100 50 Avg. Price for Nov. 3, 2009: $2.89 0 % Chg vs. Month Ago Avg: +9% % Chg vs. YA Avg: +11% Source: U.S. Bureau of Labor Statistics © comScore, Inc. Proprietary and Confidential. 22
    • The Economy‟s Impact on Consumers‟ Online Shopping Behavior © comScore, Inc. Proprietary and Confidential. 23
    • The Books & Magazines category was a top performer in Q3 ‟09, and will be one to watch as we head into the holiday season, with a heated price war already underway Q3 2009 e-Commerce Sales Growth vs. YA by Retail Sub-Category Source: comScore e-Commerce Measurement Category Growth vs. YA Books & Magazines Up Consumer Electronics (x PC Peripherals) Up Sport & Fitness Marginally Up Computers/Peripherals/PDAs Marginally Up Video Games, Consoles & Acces. Flat Event Tickets Marginally Down Jewelry & Watches Marginally Down Apparel & Accessories Down Home & Garden Down Furniture, Appliances & Equipment Significantly Down Toys & Hobbies Significantly Down Flowers, Greetings & Misc. Gifts Significantly Down Music, Movies & Videos Significantly Down “The holiday period represents anywhere between 25% and 40% of the industry's annual sales and is make- or-break for some categories, according to NRF.” – WSJ, Oct. „09 © comScore, Inc. Proprietary and Confidential. 24
    • Pure play sites accounted for nearly six of every ten e-commerce dollars spent in Q3 „09, their highest share on record e-Commerce Dollar Share by Retailer Type Source: comScore e-Commerce Measurement © comScore, Inc. Proprietary and Confidential. 25
    • During the holiday season, buyers are more likely to make purchases on more than 1 site, buying on an average of 3 sites during the period % Buyers Making a Purchase on 1 Site vs. 2+ Sites by Quarter Source: comScore e-Commerce Measurement Average # of sites buyers purchased on, of those who 2.97 3.02 2.97 3.33 2.84 2.84 2.75 bought from more than one site. 42% 41% 40% 38% 36% 44% 48% 58% 59% 60% 62% 64% 56% 52% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 1 site 2+ sites © comScore, Inc. Proprietary and Confidential. 26
    • With more cross-shopping and less consumer loyalty toward a given retailer during the holiday season, it‟s no wonder aggressive pricing is taking center stage Amazon vs. Wal-Mart Buyer Overlap Source: comScore e-Commerce Measurement 3% 3% 8% 3% 4% 3% 77% 79% 70% 80% 78% 83% “Borders Group Inc took the latest step in 23% 20% 18% 17% 19% 15% the battle for book buyers this holiday season, promising customers it will ship items to their homes for free when they're Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 out of stock in the company's bookstores.” – Reuters, Oct. „09 Walmart Only Amazon Only Overlap © comScore, Inc. Proprietary and Confidential. 27
    • In Q3, a few retailers were able to increase buyer conversion while experiencing heightened visitation compared to year ago Average change in Buyer Conversion vs. year ago among top retailers: -3% Q3 „09 UV‟s 4.7 37.0 10.8 14.8 (MM) © comScore, Inc. Proprietary and Confidential. 28 Source: comScore e-Commerce Measurement & Media Metrix
    • While luxury department stores have taken a hit in this economy, invitation-only e-luxury sites are flourishing – at least in visitation Unique Visitors and Growth vs. YA for % Composition by HH Income for September 2009 September 2009 Source: comScore Media Metrix Source: comScore Media Metrix 118%* 500 Total Gilt 450 HauteLook Ideeli RueLaLa +199% +222% Internet Groupe 400 Unique Visitors (000) 350 Less than 28% 25% 24% 21% 14% 300 $40K +40% 250 $40K-$74.9K 35% 33% 31% 32% 23% 200 150 $75K-$99.9K 15% 17% 14% 20% 22% 100 50 $100K or 0 22% 25% 31% 27% 41% more *Note: comScore began tracking Hautelook in October „09 therefore its above growth rate is calculated vs. Jan „09 instead of vs. YA Groupon.com – a relatively new “deal-of-the-day” site with a slightly different model and broader appeal – has grown 250% from July 2009 to September 2009. © comScore, Inc. Proprietary and Confidential. 29
    • PayPal B2C Market Share has grown steadily over the past four years to almost 10% of B2C Transactions; 2008 Holiday-promotions drove an increase in PayPal dollar share for retailers PayPal B2C e-Commerce Market Share Source: comScore e-Commerce Measurement 9.5% 6.5% 7.5% 4.5% 4.1% 5.0% 2.3% 3.5% 2006 2007 2008 1H 2009 Dollars Transactions PayPal Share of Dollars at Specific Online Retailer Site Source: comScore e-Commerce Measurement Point In Q4 08, Overstock.com customers were Q3 08 Q4 08 Change presented with 15% cash back on a $100 purchase when using PayPal 15.0% 18.6% 3.6 Overstock.com Dell.com gave PayPal preferential Dell.com 1.9% 7.0% 5.1 treatment, positioning the payment option right under Dell‟s payment plan and above AE.com 3.0% 8.0% 5.0 all other credit card options © comScore, Inc. Proprietary and Confidential. 30
    • Retailers have increased their discounting in response to sluggish consumer demand % Change in Offers per Retailer in 2009 vs. YA Source: ShopLocal 350 +10% +22% +16% 300 Offers per Retailer +11% +7% +3% 250 +5% -5% +16% +15% 200 150 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2008 2009 “Shoppers are „testing the waters a little more aggressively," said Ken Perkins, president of Retail Metrics Inc., a retail research firm. "They've gone from dipping their toe into the discretionary pool to stepping in a little further, maybe up to their ankles.” – WSJ, Nov. „09 © comScore, Inc. Proprietary and Confidential. 31
    • Coupon sites continue to grow in importance during these tough economic times, and as we saw in Q4 „08 we‟ll likely see visits and UVs spike in Q4 „09 Growth in Unique Visitors & Total Visits to % Composition of Coupon Users on Selected Coupon Sites vs. YA Retail Sites in September 2009 Source: comScore Media Metrix Source: comScore Segment Metrix © comScore, Inc. Proprietary and Confidential. 32
    • Savvy Smartphone Users are Shopping Using Mobile: Is the smartphone to mobile advertising what broadband is to the PC? Category % Reach Among Mobile Phone Users Accessed Via Mobile Device Source: comScore MobiLens, US, 3-month average ending August „09 Source: TechCrunch, October 2009 © comScore, Inc. Proprietary and Confidential. 33
    • 2009 Holiday Season Preview “Holiday shopping in 2008 was defined by the huge discounts that were available - and available very early in the holiday season.” – Reuters, October 2009 What will this year bring? © comScore, Inc. Proprietary and Confidential. 34
    • Burning questions we‟re answering for retailers this holiday season:  In-store sales is still the primary metric we focus on. How do I prove that my holiday marketing spend drove incremental sales in my physical retail locations?  I‟m advertising heavily across multiple channels this holiday season. What mix of marketing channels (digital and traditional) have the most significant impact on my brand?  Have retailers‟ market shares shifted during the holidays within the Consumer Electronics category? – Same question for Apparel  I know which digital marketing tactics (search, display, email, etc.) are driving traffic to my site. Which are most successful in driving online sales? How does this compare to my competitors?  What do my category buyers do before ultimately purchasing? What sites do they visit? What do they search for?  We‟ve ramped up our search spend this holiday season. How do I validate that this spend drove incremental sales that we wouldn‟t have gotten if we didn‟t spend?  I know where to find my demographic target online, and I know where to find heavy visitors to my category. How do I determine where my category buyers are online so I can design my media plan accordingly? © comScore, Inc. Proprietary and Confidential. 35
    • A net 46% of consumers earning under $50K anticipate spending less this holiday season; meanwhile a net 38% and 32% of those earning $50K to $100K and more than $100K respectively anticipate spending less Plans for Holiday Spending This Season Q. Do you anticipate your spending for the holiday season to be...? Source: comScore Survey October 2009 Overall, 50% of consumers anticipate their spending to be less this holiday season 7% More than I Typically Spend 8% 9% 55% 45% About the same 37% 46% 39% 55% Less than I Typically Spend Share of Online Retail Spend: (21%) (45%) (34%) © comScore, Inc. Proprietary and Confidential. 36
    • Of those who intend on spending less this holiday season, more than half say it‟s because they have less money Reasons Consumers are Planning to Spend Less This Holiday Season Q. Why are you planning to spend less this holiday season? (check all that apply) Source: comScore Survey October 2009 © comScore, Inc. Proprietary and Confidential. 37
    • One-fourth of consumers typically travel during the holidays, with half planning to stay with family and friends and 15 percent saying they‟ve cancelled their plans completely Holiday Travel Source: comScore Survey October 2009 Q. Which of the following Q. Do you typically travel during the holidays? describes your travel plans this holiday season? (check all that apply) Yes No © comScore, Inc. Proprietary and Confidential. 38
    • Retailers are reaching into their marketing toolboxes this season to find ways to provide value to consumers and incentivize spending… Smart merchants will look at consumer behavior and apply free shipping and Promotions other promotional offers to specific customer segments during specific time periods. (Internet Retailer, Oct. ‘09) Layaway plans making a comeback for holiday shopping season: Driven by the credit crunch and sagging economy, Toys-R-Us has joined a growing list of Layaway retailers reviving the once-popular payment plan in an effort to boost sales. (Chicago Tribune, Oct. ‘09) Walmart plans to reduce prices as the season advances in areas including home, food and gifts. (Bloomberg, Oct ‘09) Price Discounts Discount retailer Target is offering up to half off of popular toys like Barbie and Fisher Price to lure bargain hunters this holiday season. (CNNMoney.com, Oct. ‘09) With an understanding that many of today’s shoppers use Facebook and Twitter regularly, and because these tools are more cost-effective than Social Media traditional advertising, 47.1 percent of retailers surveyed will be increasing their use of social media this holiday season. (Shop.org, Oct. ‘09) © comScore, Inc. Proprietary and Confidential. 39
    • …And, on the cost side of things, they‟re also doing more to try to boost profit margins and finish the year strong Because of the economic downturn this year, many retailers are under- ordering products – Baird notes that retailers’ inbound container shipments are down 16% from a year ago. (Bloomberg, Oct. ‘09) Inventory Management Shoppers willing to pry open their wallets may find a surprise on the shelves this season: not as many brands, a diminished palette of colors, and fewer deep discounts. (Boston Globe, Oct. ‘09) Nearly half the nation's 25 biggest retail chains expect to hire fewer holiday Personnel/ workers this season than they did last year, another sign that retailers aren't Staffing counting on recession-strained shoppers to relax the tight grip on their pocketbooks this year. (Wall Street Journal, Oct. ‘09) The web will influence one in three holiday purchases this year, and retailers are using the Internet not only as a sales channel but also as a marketing Tweaking vehicle. (Shop.org, Oct.‘09) Marketing Mix The proliferation of mobile applications and social networks may yield new opportunities to pursue targeted advertising, build brand loyalty and measure campaign effectiveness. (Retail Trading, Sept. ‘09) © comScore, Inc. Proprietary and Confidential. 40
    • Two thirds of consumers have not yet started their holiday shopping Timing of Holiday Shopping Q. Have you started shopping for the holidays? Source: comScore Survey October 2009 No 68% Yes 32% © comScore, Inc. Proprietary and Confidential. 41
    • Free shipping has become increasingly more prevalent; the percentage of transactions with free shipping increased 11 points since Q1 „08 to account for 42% of all e-commerce transactions Percentage of e-Commerce Transactions with Free Shipping Average Order Value (AOV) Source: comScore e-Commerce Measurement Free Versus Paid Shipping Free Paid Time Shipping Shipping Period AOV AOV Q1 08 $113 $86 Q2 08 $120 $88 Q3 08 $115 $91 Q4 08 $116 $96 Q1 09 $114 $87 Q2 09 $104 $88 Q3 09 $106 $90 © comScore, Inc. Proprietary and Confidential. 42
    • Current Predictions for the 2009 Holiday Season…  Retail Predictions The International Council of Shopping Centers: +1% Deloitte Research: flat Retail Forward: flat Archstone Consulting: - 1% National Retail Federation: -1% E-commerce Predictions Historical Comparison Forrester: +8% Dept of Commerce Forrester Q1 2009 -5.8% +11% Q2 2009 -4.5% +12% comScore forecast will be issued w/o November 23 © comScore, Inc. Proprietary and Confidential. 43
    • Key Takeaways © comScore, Inc. Proprietary and Confidential. 44
    • Key Takeaways  We‟re seeing clear signs that we‟ve hit the bottom of the decline in e-commerce spending, and comScore expects some modest growth in the holiday season compared to last year  Consumers continue to be very cautious about their spending given concerns about: – The job market/unemployment/lack of job creation – Declines in housing prices/Underwater mortgages – Lack of credit and too much debt – Rising gas prices  E-commerce continues to attract more buyers, but they are spending less than a year ago by completing fewer transactions and spending less per shopping trip  Retailers are hiring fewer workers and carefully planning their inventory so as to avoid heavy discounting post-season  The holiday season will likely be characterized by heavy discounts/price wars, promotions/couponing, an earlier start to the season and an increased use of digital marketing © comScore, Inc. Proprietary and Confidential. 45
    • QUESTIONS? Please contact us at learnmore@comscore.com if you have any additional questions or comments. © comScore, Inc. Proprietary and Confidential. 46
    • Thank You! Note: A copy of this presentation will be sent to all attendees within 24 hours of today‟s webinar.