eMarketer Webinar: Omnichannel Retail—Seven Trends in 2015

2. © 2015 eMarketer Inc. Agenda  What is the state of omnichannel?  Are physical stores losing their importance?  How are consumers using their phones to shop?  Will location-based services like beacons change the retail world this year?  How are retailers using personalization to help attract shoppers?

11. © 2015 eMarketer Inc. Foot traffic is down in retail stores 7.1% drop in holiday season foot traffic in the US* * November 30, 2014, to January 3, 2015, compared with same time period in 2013, as measured by RetailNext

12. © 2015 eMarketer Inc. … and ecommerce sales do represent a growing portion of retail sales  US retail ecommerce sales will grow by $43.4 billion in 2015  US retail ecommerce sales growth will be 14.2% in 2015

13. © 2015 eMarketer Inc. But physical stores still dominate for sales generation  Total US retail sales will grow by $173 billion in 2015  75% of the growth in total retail sales will come from offline

15. © 2015 eMarketer Inc. Pure-play ecommerce companies are finding benefits in a physical store presence “The world has become lonelier through technology and through urbanization. Having a great human one-to-one experience is unique these days.” —Andy Dunn, CEO and founder of Bonobos “We did not predict just how much promise physical stores would have for our business from a profit perspective.” —Jennifer Fleiss, co-founder and head of business development at Rent the Runway

16. © 2015 eMarketer Inc. Even Amazon is looking into ways to approximate the brick-and-mortar experience  Amazon locker  Pop-up store in San Francisco  Refitted food truck selling Kindles  Same-day delivery  Firefly visual-search tool Source: @emilysteel, twitter via HuffingtonPost

18. © 2015 eMarketer Inc. Consumers want flexibility “ One of the things we’re always trying to do at Barnes & Noble is serve our customers in ways in which they want to be served, in ways in which they’d like to consume content. In the book world we’re used to dealing with not just channels but formats, so the point is: We want to mix and match those channels and formats so that we can find the right customer experience where someone’s going to go, ‘Oh, that’s perfect.’ —Jaime Carey, chief merchandising officer at Barnes & Noble

20. © 2015 eMarketer Inc. Stores can play a central role in enabling quicker and cheaper online fulfillment through ‘distributive fulfillment’ Image source: Shopatron Online Order Order management system

23. © 2015 eMarketer Inc. 1.6% of total US retail sales in 2015 will be made directly from mobile devices  Mcommerce will grow 32.2% year over year in 2015  Mcommerce will account for 22% of ecommerce sales in 2015 $4.524 trillion in offline retail sales $76.79 billion in mcommerce sales $252.27 billion in other ecommerce sales Source: eMarketer

25. © 2015 eMarketer Inc. Mobile’s influence will only increase “ I absolutely see mobile impacting 80-plus percent of every in-store purchase over the next few years. I see mobile becoming the dominant sales driver over time.” —Jeff Simpson, director at Deloitte Consulting

26. © 2015 eMarketer Inc. Smartphones used mostly to enhance the in-store experience Leading Uses: 1. Find local store 2. Take a picture of a product to share with a friend 3. Search for a coupon in-store

27. © 2015 eMarketer Inc. Smartphone metrics are up across the board  Smartphone visits and orders grew at twice the rate of tablet orders and visits during the 2014 holiday season* * on Branding Brand’s platform

31. © 2015 eMarketer Inc. Location is important, but it works in tandem with behavioral data “ Location is a useful trigger, but it’s not the only one. For me, behavior is by far the most important one. Knowing that someone added something to their cart and didn’t check out is far more interesting than knowing if they’re near a store. Location is only a secondary trigger off of something else, probably behavioral.” —Paul Adams, VP of product at Intercom

34. © 2015 eMarketer Inc. Beacons’ real power is contextualization “ In the 1.0 approach [to beacons], retailers used them as another form of delivering coupons. Brands and retailers are realizing that where these devices are really powerful is in the personal delivery of information and contextualization. ... I want the store to be tailored to me.” —Maya Mikhailov, co-founder and CMO at GPShopper

35. © 2015 eMarketer Inc. For beacons, 2015 will be about resolving four major challenges: 1. Scaling beacons requires a middleware layer 2. App penetration is low for most retailers 3. Beacons only work with existing customers in stores 4. Marketers lack experience building a notification strategy that enhances the shopping experience

37. © 2015 eMarketer Inc. Clienteling apps are transforming sales Burberry Customer 360  Customers share shopping history  Information is piped to iPads held by sales associates  In-store customer behavior is tracked with RFID Dick’s Sporting Goods  “Endless aisle” showing range of options for customers  Integrated inventory view for associates

38. © 2015 eMarketer Inc. Enterprise mobile extends expertise to broader range of associates “ We’ve been able to take the expertise of the A associate [the expert], and give this selling experience via mobile device to the new associates—what we would call B, C or D associates. It’s a win for the retailer and it’s a win for the customer.” —Ken Morris, partner and co-founder, Boston Retail Partners

39. © 2015 eMarketer Inc. Retailers are getting better at providing information to their associates via mobile Edgell Knowledge Networks found that: 35% of retailers let associates track and manage orders on their mobile device 32% of retailers provide associates with customer information 29% of retailers let associates track and manage inventory on their mobile device Source: EKN, 2014

41. © 2015 eMarketer Inc. Ultimate expression of digitizing the physical store turns it into a showroom for online store  Restoration hardware converted its stores to design galleries  Associates with iPads have access to digital catalog  Trailing 12-month (TTM) revenue had 20.4% growth (as of Jan. 31, 2015)  3-year CAGR for revenue is 24.9%

44. © 2015 eMarketer Inc. A unified customer view also boosts growth rates  Based on McKinsey’s analysis of big-box stores with unified analytics compared with otherwise similar competitors without unified analytics.* * McKinsey, “Digitizing the Customer Decision Journey,” June 2014 10% 2% Without unified analytics With unified analytics

50. © 2015 eMarketer Inc. Consumers love some in-store omnichannel technologies, but cringe at others Cool % of US internet users who rate tech as ‘cool’  In-app scanner linked to product reviews: 76%  Interactive store map with directions from current location to searched items: 69%  Personalized mobile notifications triggered by in-store location: 44% Creepy % of US internet users who rate tech as ‘creepy’  Facial recognition technology informing sales associates that you’re a high-value customer: 75%  Salesperson greets you by name as you enter based on mobile device ID: 74%  Videos triggered by facial recognition technology: 73% Source: RichRelevance 2015

51. © 2015 eMarketer Inc. Use data discreetly to minimize privacy intrusions “ People don’t need to know we’re sending them a message because of where they actually are. We just need to get them the right messages at the right time in the right place, so it feels magical.” —Jennifer Kasper, group VP for digital/new media and multicultural marketing at Macy’s

52. © 2015 eMarketer Inc. Takeaways Seven trends will influence omnichannel this year: 1. Brick-and-mortar stores still play the dominant role in retail 2. Consumers expect flexibility in shopping and fulfillment 3. Mobile is the new retail hub 4. Context is more than just location 5. Enterprise mobile is becoming more important 6. Data integration underpins all of omnichannel 7. Personalization is key but requires trust Final point: Omnichannel is now intrinsic to retail

53. © 2015 eMarketer Inc. Learn more about digital marketing with an eMarketer corporate subscription Around 200 eMarketer reports are published each year. Here are some recent reports you may be interested in: Q&A Session Made possible by You will receive an email tomorrow with a link to view the deck and webinar recording. To learn more: www.emarketer.com/products 800-405-0844 or webinars@emarketer.com Yory Wurmser Omnichannel Retail—Seven Trends in 2015  Omnichannel Trends 2015: Mobile is the New Retail Hub  Holiday Shopping Preview  Visual Search & Recognition: On the Cusp of a New Era in Retail  Product Listing Ads Google Dives into Comparison Shopping