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AC Nielsem - Retail Coping Strategies
 

AC Nielsem - Retail Coping Strategies

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AC Nielsem - Retail Coping Strategies AC Nielsem - Retail Coping Strategies Presentation Transcript

  • Retail Recession Realities Coping in a Challenging Retail Environment March 11, 2009 Ken Cassar Vice President, Industry Insights [email_address]
  • Today’s Agenda
    • Market Overview
    • Coping strategies in a tough environment:
    • Gain insight into customer acquisition strategies from competitors
    • Migrate from newspaper to online
    • Don’t forget about display advertising!
    • Continue to drive multi-channel integration
    • Closing Points
    • Questions
  • Today’s Agenda
    • Market Overview
    • Coping strategies in a tough environment
    • Gain insight into customer acquisition strategies of competitors
    • Migrate from newspaper to online
    • Don’t forget about display advertising!
    • Continue to drive multi-channel integration
    • Closing Points
    • Questions
  • Declining Consumer Confidence: Current expectations at record lows – February plummets Source: The Conference Board – Nine census regions, 5,000 US households 80 2001 2002 2003 2004 2005 2006 2007 2008 Recession 9/11 Corp Scandals War Gas Prices Decline 20 40 60 100 120 140 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Housing Energy Credit Economy War Rebound Huge Job Gains Katrina Spike in Gas Prices
  • Retailers in Discretionary Categories were Pounded in January Source; Jan ‘09 results (excl fuel) for all but Kroger, Safeway, SuperValu, Dollar General, Family Dollar, Dollar Tree, CVS, Whole Food, Home Depot – latest report Targe t Nordstrom JCPenney Home Depot Kohls Stock Up & Save Discretionary Spending Value & Convenience Same Store Sales Growth SuperValu Macys Whole Foods
  • The Discretionary Nature of Online Categories Led to a Plateau of Sales as the Recession Hit Source: U.S. Census Bureau. Excludes services, such as travel, ticketing, financial services Dollars (Millions)
  • Holiday 2008 Traffic was much more volatile than in years past – particular weakness during period historically the strongest Source: Nielsen Online NetView. Daily UVs indexed to the Monday before Thanksgiving through December 27, 2005-2008 Black Friday Cyber Monday Weekend Weekend Weekend Christmas Indexed Daily Unique Visitors Peak sales period historically
  • Opening Thoughts
    • While you might not grow revenue or profits over the next year or two, there are significant opportunities to grow market share
    • Online growth is still likely over the next few years—but the strongest online categories tend toward “discretionary.” This will be a strong headwind that all online retailers are going to fight
    • While consumers are looking to cut back this year and possibly next, high-speed Internet access is likely to be the last thing people will cut, as they can make calls, watch TV, chat with friends, and read the newspaper online for free
    • The months ahead will present brick and mortar retailers a compelling opportunity to quickly migrate a material piece of their marketing efforts to the Web. The rewards are big: continued consumer relevancy and cost savings
  • Today’s Agenda
    • Market Overview
    • Coping strategies in a tough environment
    • Gain insight into customer acquisition strategies from competitors
    • Migrate from newspaper to online
    • Don’t forget about display advertising!
    • Continue to drive multi-channel integration
    • Closing Points
    • Questions
  • There is Significant Value in Looking at How Your Competitors are Attracting Customers to their Sites Source: Nielsen Online Referral Effectiveness Analysis, May 2008 Source of Visits 65% 1% 13% 21% Source of Transactions (session) Source of Transactions (week) 71% 1% 11% 15% 81% 2% 19% 0% 20% 40% 60% 80% 25% 0% 50% 100%
  • The Averages Do Not Tell the Whole Story Direct-to-site visits as percentage of total visits Source: Nielsen Online Referral Effectiveness Analysis. May 2008 Individual Retailer Observations Total Retail Universe = 65% QVC – 82% Nieman Marcus – 20% Direct-to-Site Visits as Percentage of all Visits
  • The Averages Do Not Tell the Whole Story Search visits as percentage of total visits Source: Nielsen Online Referral Effectiveness Analysis, May 2008 Search Driven Visits as Percentage of all Visits Total Retail Universe = 13% Dick’s Sporting Goods – 45% Shutterfly – 4% Individual Retailer Observations Sports Authority – 38%
  • Even Two Large Retailers with Comparable Product Mixes Drive their Businesses Differently Source: Nielsen Online Referral Effectiveness Analysis, May 2008 64% 1% 15% 20% 47% 2% 25% 25% Direct-to-site Adv & Partners Comparison Search
  • Agenda
    • Market Overview
    • Coping strategies in a tough environment
    • Gain insight into customer acquisition strategies of competitors
    • Migrate from newspaper to online
    • Don’t forget about display advertising!
    • Continue to drive multi-channel integration
    • Closing Points
    • Questions
  • Newspaper circulation has been on the decline for the past two decades Source: Newspaper Association of America
  • While the national newspapers have held up comparatively well, regional newspapers have struggled Source: eMarketer, January 2009
  • As Newspaper Circulation Declines – Visitation to Online Coupon Sites has Grown Source: Nielsen Online NetView. US only. Nov 2007 to Dec 2009. Home & Work Combined.
  • Traffic to Circulars Has Been Growing Department and big box stores see large increases near the holidays Source: Nielsen Online NetView, US only. Nov 2007 to Dec 2009. Home & Work Combined. Discount DS Department Stores Electronic Stores Drugstores Grocery Stores 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Unique Audience (000) Nov 07-Nov 08 Circular Traffic 26%
  • Newspaper Circulars are Read 27 Times More Often than Online Circulars Source: Newspaper Association of America; Nielsen NetView October 2008
    • Distribution ↑ 80.1%
      • 0.3% of all
    • Redemption ↑ 140.5%
      • 1% of all
    • Values ↓ 7.4% (10¢)
      • $1.26 average
    • Rate = 2.64%
      • Up from 1.92%
    While Internet Distribution of Coupons is Growing Quickly, They Account for Less than 1 Percent of All Coupons
    • FSI Coupons
    • Internet Coupons
    • Distribution ↑ 4.6%
      • 88.2% of all
    • Redemption ↓ 7.7%
      • 52.0% of all
    • Values ↑ 7.8% (10¢)
      • $1.39 average
    • Rate = 0.50%
      • Down from 0.55%
    Source: Inmar CMS Promotions Services; excludes retailer coupons
  • Opportunities Abound for Retailers to More Effectively Use Search to Drive Circular Traffic Staples has not purchased sponsored link ads and has been crowded out of staples searches
  • Best Buy has not purchased sponsored links for the term ‘best buy circular’ Opportunities Abound for Retailers to More Effectively Use Search to Drive Circular Traffic
  • Walgreens buys sponsored links promoting store coupons and circulars Opportunities Abound for Retailers to More Effectively Use Search to Drive Circular Traffic
  • Stop and Shop is a rare example of a retailer that links directly to its weekly circular in searches that do not include the word ‘circular’ Opportunities Abound for Retailers to More Effectively Use Search to Drive Circular Traffic
  • Some Retailers are Decomposing their Weekly Circulars and Disseminating Through Search Target bought a sponsored link on Yahoo! referring prospective shoppers to its weekly circular, where the item is on sale
  • However, Retailers are not Pushing Items in Their Weekly Circulars into Search Macy’s has not bought Lancome keywords despite the fact that it is promoting a Lancome gift with purchase in its circular
  • Display Advertising is a Closer Proxy for Newspaper Circulation than Web Site Visitation However, the reach pales by comparison to print Key Statistics: 2008 Impressions: 47m Rank: 2 Key Statistics: 2008 Impressions: 101m Rank: 5 Key Statistics: 2008 Impressions: 30m Rank: 3 Source: Nielsen Online AdRelevance Jan 2008 – Dec 2008
  • Agenda
    • Market Overview
    • Coping strategies in a tough environment
    • Gain insight into customer acquisition strategies of competitors
    • Migrate from newspaper to online
    • Don’t forget about display advertising!
    • Continue to drive multi-channel integration
    • Closing Points
    • Questions
  • Display Advertising Currently Accounts for 20 Percent of Online Advertising Source: eMarketer, Nov. 2008 & IAB-PWC
  • The Most Commonly Used Search Terms Reflect Clear Consumer Propensity to Sites mapquest hotmail aol myspace.com amazon aol.com target msn best buy bank of america you tube myspace youtube ebay facebook yahoo google craigslist yahoo mail walmart gmail yahoo.com white pages pogo google.com weather youtube.com hotmail.com gmail.com facebook.com amazon.com porn sears free porn espn redtube msn.com youporn facebook login my space toys r us sex webkinz red tube
  • Investing During a Recession Helps You Emerge in a Stronger Position Source: McGraw-Hill Research Companies that maintained sales and marketing spend during the early 1980’s recession experienced substantially higher growth in the five years following the recession Revenue growth in 5 years following recession
  • Case Study: Quantifying the Sales Impact of a Display Campaign for a National Drug Retailer
    • Campaign Overview
      • In summer/fall of 2007, retailer X was featured 15 week on-line marketing campaign. Ads promoting this store and the featured products were served to Yahoo! visitors identified as target consumers through Consumer Direct
    • Campaign Objective
      • The objective of the campaign was to build penetration and base sales in retailer X
    • Campaign Dates
      • July 16, 2007 - October 28, 2007
    • Campaign Size
      • 65.5M Impressions
  • Analysis Timeline Analysis/Campaign Start Campaign End Analysis End Purchase History (Matching Period) Campaign Period Extended Purchase Cycle 7/16/06 7/15/07 7/16/07 10/28/07 10/29/07 11/3/07 Test Period
  • Sales Impact – Dollar Purchases July 16, 2007 - November 3, 2007 Retailer sales per US household
    • Key Campaign Statistics
    • Total sales +11%
    • Penetration +7%
    • Dollar buying rate +6%
    • Purchase frequency +7%
    • Dollars/purchase +1%
    • % sales new/lapsed = 83%
    Source: Yahoo! Consumer Direct. Jul – Nov 2007
  • Incremental Sales Generated by the Campaign Came Largely at the Expense of Retailer B Test Period vs. Prior Year Period (Jul 07 – Oct 07 vs. Jul 06 – Oct 06) Difference in share exposed vs. unexposed Source: Yahoo! Consumer Direct. Jul – Nov 2007
  • Percent of Panel Reached 5% 1 Total Yahoo! Households x 68,286,182 2 Estimated Campaign Reach 3,322,191 hhlds Per Household Incremental $ $2.22 3 Total Incremental Sales from campaign $7,377,986 1 Percent of Panel Reached = Total Exposed Households ÷ Total Yahoo!/ACNielsen matched Panel 2 Total Yahoo! Households = Total Projected US households x Yahoo! Estimated Reach 3 Per Exposed Household Incremental $ = Total incremental $ ÷ Total Exposed Households How many were exposed X II Times how much each was worth (incremental) Equals total incremental sales Retailer X - “Short-Term” Incremental Dollar Sales July 16, 2007 – November 3, 2007 Source: Yahoo! Consumer Direct. Jul – Nov 2007
  • Today’s Agenda
    • Market Overview
    • Coping strategies in a tough environment
    • Gain insight into customer acquisition strategies of competitors
    • Migrate from newspaper to online
    • Don’t forget about display advertising!
    • Continue to drive multi-channel integration
    • Closing Points
    • Questions
  • Causal or Not, Multi-Channel Shoppers are the Most Valuable Source: Nielsen Online, Homescan Online * Total dollars spent per year in the brick and mortar store Total Spend Index* 100 100 100 100 100 112 115 113 104 97 138 137 161 161 157 0 100 200 Wal*Mart Sam's Costco Walgreen's CVS Average of Multi- Channel Shoppers Average of Online Shoppers Average of ALL offline shoppers
  • Even Among In-Store Buyers, the Internet is Considered the Most Valuable Source of Information Source: Nielsen Online MegaPanel survey. May 2008. n=659 All CE buyers Store buyers only Consumer Electronics The Internet Visits to local stores Reviews in newspapers/magazines Friends and family Other 8% 8% 25% 58% 0% 11% 8% 32% 49% 1% 0% 25% 50% 75% 100% Question: If you were only able to use one source of information to support your next CE purchase, which would you choose? Among those that indicated that they had made a CE purchase within the past 60 days
  • Bottom Line Supporting Research Online is Table Stakes for Brick-and-Mortar Retailers Thinking about your most recent consumer electronics purchase…. Source: Nielsen Online MegaPanel survey. May 2008. n=659 Question: Did you buy from the local store of the retailer where you had spent the MOST TIME doing online research? No 47% Yes 53% No 20% Yes 80% Question: Did you buy from a local store whose Web site you had visited as you were doing online research?
  • Agenda
    • Market Overview
    • Coping strategies in a tough environment
    • Gain insight into customer acquisition strategies of competitors
    • Migrate from newspaper to online
    • Don’t forget about display advertising!
    • Continue to drive multi-channel integration
    • Closing Points
    • Questions
  • Closing Thoughts
    • Retailers need to look a lot more closely at display advertising
    • Brick and mortar retailers have got to aggressively learn how to migrate their circular and coupon distribution strategies to the Web. Posting circulars online is not enough
    • Tools exist to allow food/mass/drug retailers to quantify the impact of their Web sites, and of their online advertising on offline sales to a precise degree. Migration of advertising to the Web is NOT an effort that retailers need to go into blindly
    • The impact of a retailer’s Web site on offline sales is particularly significant in research intensive categories. High quality content available online that is well integrated with the store experience is a minimal consumer expectation.
  • How We’d Love to Help You…
    • NetEffect for Retailers
    • What is the offline ROI of online advertising
    • How is my online advertising driving key offline metrics, such as buying rate and penetration?
    • Referral Effectiveness Analysis
    • How are my competitors attracting visitors and buyers to their sites?
    • What seems to work most effectively for my competitors?
    • Circular Migration Support
    • How effectively are my competitors driving usage of their online circulars?
    • In which markets do I have the best opportunity to migrate from print to online circulars?
    • What is the ROI of my online circulars?
    • Multi Channel Impact Measurement
    • What is the offline impact of my Web site?
    • How can I improve my multi-channel customer experience?
    • How well does my multi-channel experience stack up against my competitors’?
  • Agenda
    • Market Overview
    • Coping strategies in a tough environment
    • Gain insight into customer acquisition strategies of competitors
    • Migrate from newspaper to online
    • Don’t forget about display advertising!
    • Continue to drive multi-channel integration
    • Closing Points
    • Questions