The Compete Online Retail 2011 Q1 Review


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The online retail channel continues to increase in complexity – social media, online-to-offline, online taxation – it can be difficult to stay in touch with the latest trends. Don’t you wish there was a way to gauge retailer performance online with a few key metrics? Wouldn’t it be great if there was some data to help decide dhow successful headline-making announcements in retail have been? Want to know how Facebook functions as a marketing tool for online retailers? Check out the slides from our inaugural Quarterly Retail Update based on our Shopper Intelligence Survey!

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  • Today, we’ll have two presenters. My name is Damian Roskill and I am the Managing Director of Marketing here at Compete. I’ll be leading the webinar.Our supporting presenter today is Jason Caine. Jason is a Director at our Retailpractice here at Compete.Jason will walk us through specific examples that highlight how competitive intelligence is being leveraged by Compete’s retail and consumer products clients to increase their marketing effectiveness across the online funnel.
  • But before we begin, some webinar logistics.Today’s webinar will be recorded – we’ll email a link to the recording after the webinar.If you have any questions during the webinar, please enter them into the questions box on the right. We’ll work through all the questions at the end of the webinar and try and answer as many as we can.If you’re having technical difficulties viewing the webinar, try using a different browser such as Firefox.Finally, we’ll be tweeting during the presentation, so, as a reminder, the Twitter hashtag for today’s webinar is #oce.
  • Let me also take a minute to give a little background on Compete.Compete is a leading provider of marketing effectiveness products and services. We help marketers measure advertising and promotional effectiveness, website effectiveness, search marketing and competitive benchmarking.We do this by leveraging a panel of over 2 million US consumers to give marketers insight into consumer behavior.Compete combines these products with industry specific expertise to offer our clients insights tailored to their industry and needs.Compete is part of Kantar Media, a subsidiary of WPP – which enables us to offer our clients a holistic view of consumers by leveraging other companies in the Kantar family such as Kantar Retail and Dynamic logic.
  • Increase in home improvement traffic could be sign of improving economyDeclines in electronics retailer traffic likely due to lack of new hot products
  • Office supply retailer conversion rates likely helped by decreased trafficHealth & beauty retailers likely losing some market share to mass merchants
  • Walmart plans to offer more real-time “pick-up today” at all stores by summerBest Buy was one of the first to introduce this offering; likely cause for flat numbers
  • Retailer point of differentiation in offering this service might be weakened as free shipping goes more mainstream
  • Gas prices will likely weigh on costs associated with ship to store vs. traditional shipping in the short-term
  • Walmart has experienced success by creating a community-oriented dialogue intended to spotlight and get to know its customers (vs. pushing its products)
  • Retailers are successfully creating awareness but do not capitalizing on an opportunity to build deeper relationships with their customers
  • Opportunity: Integration of more community oriented product reviews from friends on Facebook pages could increase their influence
  • Some states have begun requiring online retailers with a physical presence in a state to charge a sales tax.
  • The Compete Online Retail 2011 Q1 Review

    1. 1. Retail Spring Update<br />May 2011<br />
    2. 2. Today’s presenters<br />Damian Roskill, Managing Director, Marketing at Compete<br />Jason Caine, Director, Retail practice at Compete<br />
    3. 3. Webinar logistics<br />Today’s webinar will be recorded. You will be emailed a link.<br />Please enter your questions in the Questions box. We will answer as many as possible at the end.<br />If you have technical difficulties, try loggingback in or use a different browser<br />The Twitter hashtag for today’s webinar is #competeretail<br />
    4. 4. <ul><li>Founded in 2000, joined WPP/Kantar in 2008
    5. 5. Passionate about understanding consumers to inspire great marketing
    6. 6. Largest integrated online consumer behavior and survey panel in industry.
    7. 7. Expertise in the automotive, consumer goods, financial services, media, mobile, online, retail, telecom and travel markets.
    8. 8. Strategic partnerships within the WPP and Kantar family of companies that enable marketing optimization and more holistic view of consumers.</li></ul>Compete connects the dots from online insights to marketing ROI<br />About Compete<br /><ul><li>Advertising and promotion effectiveness
    9. 9. Shopper quality and brand consideration
    10. 10. Website effectiveness
    11. 11. Segmentation and targeting
    12. 12. Search marketing performance
    13. 13. Customer satisfaction and loyalty
    14. 14. Competitive tracking and benchmarking</li></li></ul><li>What is the Compete Retail Update?<br />Quarterly update to provide an update on key industry trends<br />Follow 2-3 standard metrics to monitor industry health using Compete behavioral data<br />Review performance of new and emerging retail trends using Compete Online Shopper Intelligence survey<br />
    15. 15. Today’s agenda<br />We will highlight some of the key trends in Retail using Compete’s panel of 2M consumers and our Online Shopper Intelligence quarterly survey. <br />Ship to Store<br />Facebook Effect on Retail<br />Online Sales Tax Impact<br />
    16. 16. Retailers have made some decisions that could signal next evolution in online retail business model. <br />LL Bean announces free shipping on all orders…is this the beginning of the end of shipping charges?<br />Walmart begins home-delivery pilot in San Jose market…will home grocery delivery finally go mainstream?<br />Best Buy is latest retailer to announce plans to reduce its store square footage…could a day come when a retailer moves its business entirely online?<br />
    17. 17. The Numbers<br />
    18. 18. Retail segments that offer essential household items and “one-stop” shopping experienced the largest traffic increases.<br />Total Online Visits – by Retailer Segment<br />(in millions)<br />Largest YOY Declines<br />Largest YOY growth<br />
    19. 19. Office supply and department store retailers both experienced healthy YOY gains in conversion rates.<br />Online Conversion Rates – by Retailer Segment<br />Largest YOY Growth<br />Largest YOY Declines<br />
    20. 20. Consumer intent to purchase online appears strong during the next 6 months.<br />What categories do you intend to buy online in next 6 months? (n = 3269)<br />Source: Compete Online Shopper Intelligence – Q1 2011 Survey<br />
    21. 21. Looking ahead<br /><ul><li>Traffic healthy across majority of online retail segments during the winter
    22. 22. Trends indicate home improvement retailers primed for success during their peak spring and summer seasons
    23. 23. Increased focus on monitoring and stealing market share from competitors
    24. 24. Traditional mass-merchants need to identify ways to differentiate themselves from Amazon’s growing online reach</li></li></ul><li>Ship to Store<br />
    25. 25. One of the ways traditional retailers are trying to differentiate themselves is by offering to ship to store.<br />What is Ship to Store?<br />Retailer delivers order or pulls from shelf<br />Consumer picks up order at store<br />2<br />Consumer places order on Retailer site <br />3<br />1<br />Select Retailers That Offer<br />
    26. 26. Ship to store has become an increasingly popular shipping option for shoppers in the last year.<br />% of visits that ship-to-store is selected during checkout<br />
    27. 27. Consumers choose ship to store because it is cheaper than paying shipping costs.<br />Why do you choose the ‘in store pick up’ or ‘ship to store’ option? (n=1611)<br />Source: Compete Online Shopper Intelligence – Q1 2011 Survey<br />
    28. 28. The main reason consumers do not select ship to store is due to the inconvenience of picking up the order.<br />Why don’t you choose the ‘in store pick up’ or ‘ship to store’ option? (n=1357)<br />Source: Compete Online Shopper Intelligence – Q1 2011 Survey<br />
    29. 29. Looking ahead<br /><ul><li>Ship to store growth likely as more retailers decrease store footprint and shift inventory online
    30. 30. Will be counteracted by online retailers who offer free shipping and eliminate inconvenience of visiting store
    31. 31. “Buy online, pick up in store” marketing likely to become more focused on instant pickup of in-store products
    32. 32. What about applying this concept to grocery?
    33. 33. Consumer orders non-perishables online
    34. 34. Comes to store to pick out their own produce / meats (categories they are more protective of)</li></li></ul><li>Facebook’s Effect on Retail<br />
    35. 35. The profile of retailer and brand Facebook pages continues to rise.<br />Super Bowl Ads<br /><ul><li>Many household brands called out Facebook pages in Super Bowl ads</li></ul>Facebook Marketing Campaigns<br /><ul><li>Target ran a campaign to give away $1M during February 2011
    36. 36. Facebooks fans voted on charity to donate money to</li></ul>Source: Compete Online Shopper Intelligence – Q1 2011 Survey<br />
    37. 37. Interest in retailer Facebook pages is still fairly low despite all of the buzz surrounding Facebook as a marketing tool.<br />Facebook Fan Page UVs – February 2011 <br />76K<br />78K<br />86K<br />223K<br />952K<br />
    38. 38. About 26% of people visit an official retail or consumer product Facebook page at least once a month.<br />How often do you visit official Facebook pages of retail and/or consumer product companies? (n = 3269)<br />Source: Compete Online Shopper Intelligence – Q1 2011 Survey<br />
    39. 39. Consumers are treating retailer Facebook pages like an online circular.<br />Why do you visit a retailer Facebook page? (n = 1627)<br />Source: Compete Online Shopper Intelligence – Q1 2011 Survey<br />
    40. 40. Consumers still do not consider Facebook retailer pages as being very influential to making a purchasing decision. <br />How influential have Facebook pages been on your decision to purchase those products or from those retailers? (n = 1627)<br />Influence<br />Not at all influential<br />Extremely influential<br />Source: Compete Online Shopper Intelligence – Q1 2011 Survey<br />
    41. 41. Looking ahead<br /><ul><li>Facebook pages are a great low-cost marketing tool
    42. 42. Main purpose will likely be to:</li></ul>Deliver information where consumers are spending time<br />Develop deeper relationships with consumers<br /><ul><li>Marketing campaigns drive short-term awareness, but long term ROI is unclear
    43. 43. Look for more of an emphasis on integrating commerce on Facebook pages </li></li></ul><li>Online Sales Tax<br />
    44. 44. Online retailers are required to collect sales tax in any state they have a “physical presence.” <br />Recent debate over “physical presence”<br /><ul><li>Texas: Amazon has threatened to close an Irving, TX, distribution center if the state passes legislation that defines such structures as having a physical presence.
    45. 45. Illinois: Amazon’s Illinois affiliates were terminated when the state passed legislation requiring sales tax be collected because the affiliates constituted “physical presence” by Amazon in the state.</li></li></ul><li>About 1 in 2 consumers are likely to shift online spending if an online sales tax is enacted.<br />How would paying sales tax on your purchases from online-only retailers impact your online shopping habits? (n=1357)<br />48.9% would change online spending habits<br />Source: Compete Online Shopper Intelligence – Q1 2011 Survey<br />
    46. 46. Product categories that you can ‘touch and feel’ would most likely be negatively impacted by an online sales tax.<br />Categories that consumers would decrease online spending (n=1357)<br />Least likely to decrease spend<br />Most likely to decrease online spend<br />Source: Compete Online Shopper Intelligence – Q1 2011 Survey<br />
    47. 47. A potential online sales tax would cause consumers to be more price sensitive and maybe spend more offline.<br />Reasons spending would shift from online-only to offline retailers (n=1092)<br />Source: Compete Online Shopper Intelligence – Q1 2011 Survey<br />
    48. 48. What could be next?<br /><ul><li>Impact will depend on how many states elect to follow Illinois and Texas
    49. 49. 100% free shipping will likely be a defense that online retailers will need to consider if legislation expands
    50. 50. Opportunity for traditional big-box mass merchants like Target and Walmart to make a value/price play</li></li></ul><li>Questions?Damian RoskillManaging Director, Marketingdroskill@compete.comJason CaineDirector,<br />