Holiday Retail Report

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January 2010
That whooshing sound heard on Christmas morning was not the sound of Santa’s sleigh launching its return trip to the North Pole.
It was the collective sigh of relief by America’s retailers, as they squeaked through an intensely uncertain holiday season with positive growth numbers. Put in perspective, though, a little bit of good news for the holiday season is a modestly upbeat flourish on
what is otherwise still a very challenging
retail market.

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Holiday Retail Report

  1. 1. Holiday Retail Wrap-Up: Financials, Performance, And a Prediction Positive Results and a Move to Mobile Commerce in 2010 Keynote Benchmark
  2. 2. 2January 2010 serious factor on the retail scene. calendar was probably largely negated byThat whooshing sound heard on Christmas an unusual early snowstorm that dumpedmorning was not the sound of Santa’s sleigh round-up of The numbers as much as 24 inches of snow on the mid-launching its return trip to the North Pole. The U.S. Census Bureau reports overall retail Atlantic and Northeast on December 19,It was the collective sigh of relief by America’s and food services sales up 5.4 percent for the the Saturday before Christmas, which wasretailers, as they squeaked through an month of December year-over-year, though supposed to be the busiest shopping day ofintensely uncertain holiday season with down 0.3 percent from November. The the season. It is likely that many of thosepositive growth numbers. Put in perspective, Census Bureau’s preliminary tally for all of snowbound shoppers moved online to makethough, a little bit of good news for the holiday 2009 shows a decline of 6.2 percent, another their purchases.season is a modestly upbeat flourish on confirmation that the economy is still far from The bottom line for the officialwhat is otherwise still a very challenging out of the woods, although the year ended holiday season, encompassing the full monthsretail market. with a positive trend, showing an increase of of November and December: a 1.1 percent Retailers and consumers played 1.9 percent October – December.iii increase to $446.8 billion, according to thea cat-and-mouse game from Black Friday Pure consumer shopping sales — not National Retail Federation.viright up until the night before Christmas. counting automobiles and gas — grew at a lessShoppers, still keenly uncertain about the jolly rate. Thomson Reuters put the December online Closes in on billion-dollar dayeconomy and their paychecks — and growth rate at 2.9 percent year-over-year, as markremembering last year’s unprecedented reported in The New York Times, noting also Online retail saw four times the growth ofpre-holiday discounts — held out for bigger that about 75 percent of retailers finished the overall sector for the full November-mark-downs, and aggressively shopped ahead of analysts’ estimates.iv The Wall Street December holiday period. comScore reports acompetitors for price, often on their phones Journal reports MasterCard’s SpendingPulse 4 percent boost year-over-year, with totalright in the store aisle. By December 9, tally of Thanksgiving-to-Christmas sales retail e-commerce sales of $29.1 billion. Theconsumers were only about 47% done their showing a 3.6 percent bump over 2008. season saw a handful of $800 million-plusshopping; almost 20 percent of shoppers had While that is a healthy growth number, it days, and the first-ever shopping day to breaknot even started yet.i And as late as December barely recoups the 3.4 percent hit sales took the $900 million barrier, with $913 million in22, more than 40 percent of consumers hadn’t in the same period in 2008.v online sales logged on “Green Tuesday,”finished their holiday shopping, according to a That last statistic is the big footnote December 15.viisurvey reported in The Wall Street Journal. to all the sales numbers: “as compared to “We continued to see an evolution ofThis was the highest rate of procrastination in a terrible 2008.” There wasn’t much growth customers continuing to use the Internet asa decade.ii beyond regaining ground that was lost in both a research tool and a purchase tool over Retailers, too, had last year’s 2008. The extra shopping day on the 2009 the Christmas holidays,” said Simon Rodrigue,panic-ridden season in mind, and kept theirinventories lean, held (mostly) to theirplanned promotion schedules, and waited outthe customers. In the end, consumers spent ata good rate and got decent deals, and retailersfor the most part eked out a bit of growth andavoided setting a consecutive record for worstyear ever. As has been the trend, onlineenjoyed significantly better growth than theoverall industry, though not the double-digitnumbers online retailers have previouslyenjoyed. Consumer satisfaction with the The five biggest online shopping days of the season were Cyber Monday and Tuesday, and the “Green” days at the beginning of theonline channel continued to improve week before Christmas.incrementally this year. And mobile became a Keynote Benchmark
  3. 3. 3AVP of e-commerce and interactive marketing slightly lower. Go down a tier or so, though, like the Christmas holiday season. Surges infor Sears Canada. “And I think that and except for Kohl’s, which moved ahead traffic and page views, and complex checkoutaccelerated even more this holiday season. A 8.8 percent (4.7 percent same-store), transactions, if not accurately anticipated, canlittle more than we expected. I think it was most department stores were flat or down.ix overtax a site’s infrastructure and underminecustomers wanting to make sure that they As might be expected in a persistent the user experience. Like the financial results,were getting the best value for their dollar in down economy, discounters enjoyed solid the performance report for the 2009 holidaythis economy.” (See Benchmark’s full interview gains, with T.J. Maxx, Marshalls, and season shows modest improvement, withwith Simon Rodrigue.) Ross all putting up double-digit mixed results for some individual sites. Typically, Green Monday, the growth numbers.x “Retailers are getting better as aMonday that falls with at least 10 days to go Interestingly, teen-targeted stores whole,” says Keynote Director of Internetbefore Christmas, is the biggest online posted a gaping spread of results, from a Technologies Ben Rushlo, “but surprisingly,spending day. It was impressive at $854 precipitous drop of 19 percent for we’re still seeing sites struggle around Blackmillion, but this year it dropped back to be Abercrombie & Fitch, to Aeropostale at Friday, Cyber Monday, and intermittentlythe fifth busiest online day, behind Green the opposite extreme, which logged a 10 throughout the holiday season. It’s surprisingTuesday, Cyber Monday, Cyber Tuesday, and percent gain.xi that we continue to see issues at theGreen Wednesday. All told, comScore reports Online, the biggest category gainers magnitude we’re seeing them, given that retailnine days that broke the $800-million mark in November–December were jewelry and is certainly no longer a niche market online.online in the holiday season.viii The Green watches at 20 percent, consumer electronics It’s a real channel for these retailers.”days, in particular, lived up to their name for at 15 percent, followed by event tickets, Many of the large retailers areonline retailers. computer hardware, and books and magazines delivering an acceptable customer experience. at 8, 7, and 6 percent respectively, according to Indeed, overall satisfaction with online retailMixed BaG of Winners & Losers comScore.xii Apparel, which was a big driver for the holiday season was up nearly 7 percent,Patterns are difficult to discern in the various overall according to the National Retail according to ForeSee Results’ E-Retailretail sectors. In December, high-end Federation, evidently did not even move the Satisfaction Index. But like the financialdepartment stores did very well, according needle online. results, a good bit of the improvement wasto Retail Forward. Nieman Marcus bumped recovering from poor numbers in 2008. None5.9 percent, Nordstrom jumped 10.8 percent, WeB PerforManCe Mirrors ModesT of the top 40 sites measured registered aand Saks led the pack at 11 percent for Gains decline in satisfaction. Amazon was at the topoverall sales growth; same-store sales tracked No other time of year puts stress on retail sites of the list, with an 87 on ForeSee’s 100-point scale, followed by QVC at 83, Cabela’s at 82, and Apple at 81. Not surprisingly, pure-play Internet retailers had a four-point edge over their multi-channel peers.xiii One site that performed beyond expectations was Sears Canada, though no doubt it was somewhat of a cliffhanger for their Web staff — Sears Canada rolled out a complete overhaul of their site just prior to the busy holiday season. “We essentially changed everything from a platform perspective, a navigation perspective, a technology perspective,” Rodrigue explained. “It really allows us to saks enjoyed some of the biggest growth of the major retailers have a platform that can build for the future. during the holiday season, posting 11 percent overall sales growth (9.9 percent same-store). source: retail forward. Keynote Benchmark
  4. 4. 4Not only did we make the site faster for our PrePPinG for 2010 and will likely be a driving factor in 2010customers, we made it easier for them to use.” It’s a new year. And that means retailers have holiday sales. In the 2009 season, according to While no site roll-out is perfect, a new opportunity to get it right for the 2010 a Deloitte survey reported in The New YorkSears Canada managed to debut its new site holiday season, which is just 10 short months Times, 20 percent of shoppers intended to usewithout major glitches. “We did heavy load away. Those sites that will be the big winners their mobile phones for shopping; of those, 45testing up front and then full monitoring in 2010 are evaluating their 2009 percent would use them for research, 32throughout the season,” Rodrigue says. “It performance while it is still fresh, and making percent for coupons or reviews, and 25definitely [performed] above our their plans to deliver fast, flawless experiences percent to actually make purchases.xivexpectations.” for shoppers all year, and particularly for the Twenty percent is a number that holidays. can’t be ignored, and it is no doubt aa Bar ThaT KeePs MovinG UP “Performance management, harbinger of things to come. In the 2009The Internet never stands still, and that’s a especially for retailers, has to be top-of-mind season, the iPhone still owned the lion’s shareproblem for most sites, but especially for as much as search optimization,” Rushlo says. of the mobile browsing market. But withhighly competitive retail sites. No sooner does “You have to care about the user experience Android handsets coming on strong, and thea site get all its kinks worked out, delivering a from a performance perspective. From that major carriers aggressively vying forsatisfying experience to the consumer, than a flows a lot of things, like load testing early. smartphone customers, 2010 could very wellnew technology or functionality debuts that You have to be thinking about load testing in be the year when mobile commerce achievesquickly becomes de rigueur and sends the the summer at the latest.” significant traction.Web quality team scrambling to integrate. Successful performance From a performance perspective,And in the process, new performance management is ingrained in the culture of an though, mobile still has a long way to go.challenges are created. organization. It’s a matter of recognizing that Keynote measured mobile performance for “On one level, it’s like they’re you can have the best content in the world, the period from late November to therunning uphill,” says Rushlo. “They optimize and the best deals, but if you’re not beginning of January, and found home pageand the site’s running well, and then the next consistently delivering a fast, successful user load times ranging from a best case of 8.3thing you know everyone wants to have very experience, shoppers will go elsewhere. seconds to a worst case of more than 34large images with zoom, or additional “Performance for us is one of the seconds. (Benchmark has previously reportedtracking, or ads, or something else. So it’s a streams we focus on all of the time,” says Sears that, on their computers or the “wired” Web, achallenge for them to keep their performance Canada’s Rodrigue. “For us it’s 12 months of large percentage of users will abandon siteswhere it needs to be.” the year. It’s not just going to be as we go into that take longer than two seconds to load.) Q4. It’s — how can we improve performance all the time so it doesn’t become that rush MoBiLe PaGe Load ranKinGs, hoLidayCyber monday sTresses siTes towards the end of the year?” 2009Black Friday was busy, but Cyber Monday “The complexity of sites now Inconsistency is the rule rather than thepushed a number of the major sites in the demands constant scrutiny and attention,” exception when it comes to mobile commerceKeynote Top Retailers Index past the breaking Rushlo adds. “Retail sites in 2010 are sites. On six out of ten sites measured, a smallpoint. “We saw a total of six sites that we exponentially more complex than retail inwould classify as ‘meltdown’ on Cyber 2005, or even in 2007. That complexity makesMonday, versus two on Black Friday,” Rushlo it flat-out harder to manage. It makes itsays. “We also had nine sites with major harder to improve, harder to drive long-termslowdowns. Cyber Monday was definitely the performance improvements. You have to haveworst day. There were many more issues. ongoing measurement in place.”And as we’ve typically seen, apparel wasagain lagging. Apparel typically is a bit MoBiLe: a PrevieW of ThinGs To CoMe Best Buy delivered the best overall mobilemore problematic in terms of quality than experience for the holiday season, consistentlyother verticals.” It’s safe to say that mobile played a bigger role delivering the fastest page-loads — fast being a in the 2009 holiday season than ever before, relative term for mobile browsers. Keynote Benchmark
  5. 5. 5percentage of visitors experienced extremely Whether it’s through a site that’s part of the framework that we live in everylong home page load times. Several sites saw simplified and streamlined for mobile devices, day. 2010 is probably going to be a pretty goodperformance degradation of more than 25 or dedicated apps that create a uniquely year for that.”percent during their busiest traffic hours. Only mobile experience, 2010 is likely to be the yeartwo sites achieved overall availability better that mobile commerce comes of age. “Mobile sUCCeedinG in 2010than 90 percent (versus 99+ percent is like reliving the whole Internet experience Assuming the right product mix and the rightavailability on a computer), and three sites over again,” Rushlo observes. “Just like the price, the significant keys to online retailnever averaged above 80 percent availability. Internet and computers, it’s going to become success in 2010 will be performance and “Consumers on the wired Web are accessibility. Wired Web sites need to achieveused to much, much faster times, and often flawless availability, reach the magic two-expect pages to load in two seconds or faster,” second page load threshold, and not miss asays Keynote Senior Consultant Ken Harker. beat under the heaviest traffic volume. Mobile“Even the best mobile sites are two to three has to be taken seriously as a channel, with atimes as long as that, despite being optimized sharp focus on user experience, whether it’sheavily for the mobile phone experience. The through a mobile-optimized site or aworst sites are taking over half a minute on dedicated app, in either case leveragingaverage to load each page.” smartphones’ geo-location capabilities to drive store traffic or mobile purchases. Retailersis There an app for ThaT? that concentrate on these two areas early inMobile apps are an obvious and immediate the year will optimize their share throughoutsolution to the dismal performance of mobile the year and during the all-important holidayWeb sites. Side-stepping the performance season — no matter what whims the economyissues of mobile browsers and making the best follows.use of cellular bandwidth, apps give theretailer more control over the user experienceand can leverage the increasing capabilities ofthe iPhone, Nexus, and their rivals,particularly location-based services. “The difference between an app anda site on a phone is like night and day,” says retailers that invest in dedicated mobileRushlo. “Using a Web browser on the phone apps — like this from industry leader amazontoday makes you feel handicapped. But an app — are likely to achieve greater success inis built understanding the challenges, the attracting and keeping customers, andhandicap of accessing the Web through a actually completing purchases from mobilephone. If you’re serious about mobile devices, thanks to an app’s superior speed and customer experience. now is the time tocommerce, you have to make it as easy to use ready mobile platforms, expected to be a bigas possible. Apps definitely accomplish that.” factor in the 2010 holiday season.
  6. 6. 6endnoTesi. The Wall Street Journal, “Chain Stores Avoid Deeper Holiday Discounts,” by Elizabeth Holmes and Rachel Dodes, 12/18/09; survey by National Retail Federationii. The Wall Street Journal, “Holiday Cliff Hanger: Stores Hope Last-Minute Shoppers Boost Season,” by Elizabeth Holmes, 12/22/09; survey by America’s Research Group and USB Investment Researchiii. U.S Census Bureau News, “Advance Monthly Sales for Retail and Food Services, December 2009, ”U.S. Department of Com- merce, 1/14/10iv. The New York Times, “Retailers See Holiday Sales Rebound from Grim 2008,” by Stephanie Rosenbloom, 1/7/10v. The Wall Street Journal, “Late Holiday Shopping Puts Retailers Ahead,” by Ann Zimmerman and Rachel Dodes, 12/28/09vi. National Retail Federation, “Holiday Season Ends On High Note As Sales Increase 1.1%, According to NRF,” 1/14/10vii. comScore, “comScore Reports $29.1 Billion in U.S. Retail E-Commerce Spending for Full November–December Holiday Season, Up 4 Percent vs. Year Ago,” 1/6/10viii. ibidix. Retail Forward, “December 2009 Retail Sales”x. The New York Times, “Retailers See Holiday Sales Rebound from Grim 2008,” by Stephanie Rosenbloom, 1/7/10xi. ibidxii. comScore, “comScore Reports $29.1 Billion in U.S. Retail E-Commerce Spending for Full November–December Holiday Season, Up 4 Percent vs. Year Ago,” 1/6/10xiii. ForeSee Results, Holiday E-Retail Satisfaction Index (US), “Online Retailers Find a Reason to Celebrate in Dismal Economy,” by Larry Freed, 12/30/09xiv. The New York Times, “Mobile Phones Become Essential Tool for Holiday Shopping,” by Claire Cain Miller, 12/18/09 ............................................................................................................................................................................. © 2009 Keynote Systems, Inc. All rights reserved. The trademarks of Keynote Systems, Inc. include Keynote®, DataPulse®, CustomerScope®, Keynote CE Rankings®, Keynote Customer Experience Rankings®, Perspective®, Keynote Red Alert®, Keynote Traffic Perspective®, Keynote WebEffective®, The Internet Performance Authority®, MyKeynote® , SIGOS®, SITE®, keynote™, The Mobile & Internet Performance Authority™ and all related trademarks, trade names, logos, characters, design and trade dress are trademarks or registered trademarks of Keynote Systems, Inc. in the United States and other countries and may not be used without written permission. Keynote Benchmark

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