true retail innovators & disruptors: who is ahead of the times #ric5

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True  Retail  Innovators  &  Disruptors:  

Who  Is  Ahead  Of  The  Times?

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RESEARCH BENCHMARKING EDUCATION

Where are you today? What you need to do to get better? How to hold team/vendors accountable?

BUSINESS INTELLIGENCE FOR DIGITAL

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Q2 – Q3: Digital IQ Index® Reports

UPCOMING DIGITAL IQ REPORTS

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OTHER UPCOMING RESEARCH

SOCIAL PLATFORMS Intelligence Report:

AMAZON Intelligence Report:

VIDEO Intelligence Report:

PERSONALIZATION Intelligence Report:

OMNICHANNEL Intelligence Report:

PREVIEW VIDEO 2015

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Study Methodology

OVERVIEW

L2 Intelligence Report: Video 2015 Overview of the digital video landscape and best practices across platforms Report covers Q4 2014 and Q1 2015 initiatives from 245 brands across 8 Verticals with a focus on Beauty & Hair Care !

ADVERTISING LOCALIZATION

PLATFORMS CONTENT

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1998 - 2013 U.S. Cable Prices vs. Inflation

RIPE FOR DISRUPTION

Source: FCC, Bureau of Labor Statistics

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Q1 2014- Q1 2015 VIACOM Viewership by Network

VIEWERSHIP, RATINGS IN DECLINE

-34% -34% -30%

-23%

Source: “Viacom Takes $785 Million Charge on Cable Woes,” The Wall Street Journal, April 6, 2015.

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2015 Oscars Viewership, Ratings & Advertising Rates

…AND AD PRICES ON THE RISE

2015 YoY Change

Viewership 36.6 M -16%

Ratings 10.8 / 26 -17%

Average Ad Cost (30s) $1.9 M + 5.6%

Data Sources: Nielsen, iSpot.tv

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2006

Cable Company Disruption 2005-2011

THE RESPONSE

2005 2007 2008 2011 2007 2010 YouTube

YouTube acquired

by Google

Apple TV

Amazon Instant Video

HBO GO

Roku

Netflix / Hulu

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2014 – 2015 Video Launches Social Takes on Video

SOCIAL RAMPING UP

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May 2015 Social Platforms Video Advertising Options

UNDERSTANDING ADVERTISING

Facebook Snapchat YouTube Instagram Twitter

Video Advertising Options

Promoted Video Posts

Live Stories, Discover

•  Skippable & Non-Skippable In-stream

•  Promoted videos in search and alongside YouTube videos

•  Homepage Takeovers

Promoted Video Posts

Amplify Pre-Roll, Promoted Videos

Targeting Capabilities

Sophisticated •  Location •  Demographics •  Interests •  Behaviors •  Education •  Connections •  Data Partner

Categories

No Targeting for Live Stories; Discover Ads are specific to Discover News Streams

Sophisticated •  Demographics •  Geography •  Language •  Interests •  Remarketing •  Data Partner

Categories •  User Type

Limited •  Age •  Gender •  Country

Sophisticated •  TV Ad Targeting •  TV Conversation

Targeting •  Interests •  Gender •  Geography •  Keyword And Hashtag

Usage

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Q4 2014: Beauty & Hair Care Social Video

SOCIAL VIDEO: BRAND VIDEOS

Platform % Brands Posting Average Video Length (seconds)

Average Views per Video

77% 61 150,506

63% 12 N/A

30% 15 N/A

77% 112 219,744

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Q1 2015: Average Video Posting Frequency (weekly)

POST FREQUENCY BY PLATFORM

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March 2015 US Market Share of On-Demand TV Service Providers

ON-DEMAND TV MARKET SHARE

Source: Morgan Stanly Research *TV shows on free sites includes network sites (ABC.com, MTV.com, etc)

6%

8%

9%

16%

19%

25%

27%

38%

GoogleTV

AppleTV

iTunes

Netflix DVD Plan

Amazon Instant Video

TV shows (free sites)*

Hulu (free version and Plus)

Netflix Streaming

Offers Video Advertising

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CHANGING THE MODEL

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2011 - 2015 Hours Spent per Day with Video by US Adults

WHO WINS?

4:35 4:38 4:31 4:22 4:15

0:21 0:36 0:50 1:03 1:16

2011 2012 2013 2014 2015

TV Digital Video

Source: eMarketer, April 2015

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Share of Internet Users, July 2014 Top 10: Digital Video Viewer Penetration by Country

GLOBAL AUDIENCE EVEN LARGER…

78% 80%

84% 84% 85%

90% 90% 91% 92%

96%

U.S. U.K. India

Argentina Canada

China Mexico

Italy Spain

South Korea

Source: eMarketer, August 2014

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Q4 2014 Share of Total Online Adult Audience U.S. Monthly Online TV Program Viewers, by Age Group

ONLINE VIEWERS ARE YOUNG…

22%

29%

21%

15%

9% 5%

18-24 25-34 35-44 45-54 55-64 65+

Source: MarketingCharts analysis of Nielsen

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2015 Next 12 Months Plans to Cut the Cord Across Income Groups

…AND WEALTHY

0% 5% 10% 15% 20% 25%

<$25k

$25k-$49k

$50k-$74k

$75k-$100k

$100k+

Source: Morgan Stanley, 5th Annual Streaming Video Survey, March 2015

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2013 - 2016 Annual Growth of US Advertising Revenue by Format

ADVERTISING DOLLARS ARE UP

-2.8%

-13.9% -16.8%

8.6%

19.5%

2.9%

Source: Interactive Advertising Bureau, BI Intelligence Estimates, September 2014

TV Newspaper Radio Search Online Video Ads Display Ads

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March 2014 Obstacles to Video Marketing

CONTENT QUALITY IS AN OBSTACLE

11%

20%

25%

28%

34%

36%

41%

46%

Lack of Management Buy-in

Distributing Video Content

Producing Studio-Quality Video

Lack of Effective Strategy

Lack of In-House Resources

Attributing a ROI to Video

Lack of Budget for Video

Creating Compelling Content

Source: Ascend2, "Social Media Strategy Research Summary Report," Dec 15, 2014

Related to Content Quality

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April 2014 – April 2015, n=73 Beauty & Hair Care YouTube Brand Channels YouTube TrueView In-Stream Advertising Beauty & Hair Care YouTube Channels: Share of Organic and Paid Views

YOUTUBE VIDEO ADS

Paid Views 50%

Organic Views 50%

Data Source: Strike Social

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0%

65% 81%

90%

Low Average High Outlier

April 2015, n=65 Beauty & Hair Care Brands, Top-5 Viewed Videos per Brand Uploaded in Q1 2015

Beauty & Hair Care Brand Videos, Classified by View Count Percent of Videos that Use TrueView In-Stream Advertising

YOUTUBE VIDEO AD IMPRESSIONS

Data Source: Strike Social View count ranges correspond to quartile classification of sample distribution

0% 14% 88% 84%

Average Share of Views from Advertising n=67 n=132 n=25 n=43

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Q1 2015, n=267 Brand Videos Beauty & Hair Care Share of YouTube Video Views From TrueView In-Stream Ads vs. Total Views

SUCCESS = CONTENT QUALITY + SPEND

R² = 0.1442

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

YouT

ube

Vide

o Vi

ew C

ount

Share of Views from TrueView In-Stream Advertising

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KEY FINDINGS GOLDEN AGE OF INNOVATION IN ONLINE VIDEO SPOILS ARE ENORMOUS WINNING = SKILLS VS. CAPITAL…FOR NOW. BLEEDING EDGE TO SALAD DAYS SHIFTING SUCCESS ALGORITHM

FORCES ON THE HORIZON CUSTOMER ENGAGEMENT:

28 Source: Deloitte Digital, “The New Digital Divide,” 2014.

Digital Influence Projection +/- 10% Sensitivity Range

Percent of Retail Sales Influenced by Digital Digital Influence Projections

DIGITAL INFLUENCE

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CONTENT IS EXPLODING

30

75%

Source: Nielsen, “The Role of Content in the Consumer Decision Making Process,” March 2014

March 2014 Percent Lift Purchases $50-$350 Impact of Content on Purchase Intent

…AND CAN DRIVE CONVERSION

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CUSTOMER IS OMNICHANNEL

24%

43%

47%

50%

51%

57%

82%

Usage of social media for access

Sophisticated mobile site

Consistently personalized shopping

Easy access to profile data across

Option to receive in-store receipt via

Buy online/via mobile, pick up in-store

Check in-store availability online

Important Omnichannel Retail Capabilities for US Digital Shoppers September 2014

Source: the e-tailing group, "Holiday 2014 Omni-Channel Gift Behavior" sponsored by MarketLive, Oct 9, 2014

Best in class omnichannel solutions provide convenience, transparency, and personalization

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ATTITUDES ARE CHANGING….

Prefer that retailers respect my privacy rather than receive

relevant offers

53%

Prefer receiving relevant offers and

am not as concerned about

privacy

47%

Source: IDC, "Business Strategy: Green Lights and Bright Red Lines - Relevancy and Privacy Challenges for 2014," May 5, 2014

Attitudes of U.S. Consumers Regarding Personalized Retail Offers December 2013

Nearly half of consumers prefer relevancy to privacy

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FIGHTING PERCEPTION PROBLEM

26%

24%

16%

11%

7%

6%

1%

10%

Share or sell information with a third party

Target ads towards me

Send me brand catalogs or email newsletters

Send me personalized offers specific to my

Assist me with my next purchase

Follow-up with me after my purchase

Won't do anything

I don't know

Perceptions of U.S. Affluents on How Brands Use Their Data March 2013

Source: Luxury Institute “Luxury Brand Wealth Survey: Privacy Trends,” March 13, 2013

Half perceive negative use of

their data

Only 1-in-5 perceive

customer service benefits

CUSTOMER ENGAGEMENT:

DATA CAPTURE & PERSONALIZATION

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2012: HORRIFIED… AND INSPIRED

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January 2015 Client-Side Marketers, Worldwide Primary Area of Focus for Improving Customer Experience

TOP OF MIND

4%

5%

7%

10%

12%

29%

33%

Mobile-friendly

Expedited process

Fun and fulfilling experience

Security and reliability

Consistency across channels

Consumer value

Personalization and relevance

Source: “Quarterly Digital Intelligence Briefing: Digital Trends 2015,” January 2015

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Data Sources Used by Client-Side Marketers to Understand the Customer Journey

UNDERSTAND WITH DATA

76% 66%

55% 54%

37% 29%

20% 16% 4%

Online Analytics

Email Data Customer Survey Data

CRM Data Call Center Data

Social CRM Data

Mobile App Analytics

Electronic POS

None of these

% of Respondents, March 2015

38

67%

47%

43%

34%

30%

27%

24%

16%

11%

Human Capital / Resources

Ability to Dynamically Create Content

Other Site Priorities

Capital

Data Limitations

UX and Design Workload

Not Convinced of ROI

Management Buy-In

Concerns About Data Privacy

February 2015 Top-3 Challenges to Implementing a Personalization Strategy

…BUT CHALLENGES ABOUND

Source: FitForCommerce, “Let’s Get Personal: Omnichannel Personalization in a Hyper-Connected World,” February 2015

RESOURCES

CAPABILITIES

DATA ISSUES

BUY-IN

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February 2015 Availability and Usability of Data for Personalization

A THIRD, A THIRD, A THIRD

35%

33%

32%

Source: FitForCommerce, “Let’s Get Personal: Omnichannel Personalization in a Hyper-Connected World,” February 2015

We have data, it’s not usable, and we don’t know how to use it

We don’t have enough data

We have data, it’s usable and we know

how to use it

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February 2015 Level of Satisfaction with Personalization ROI

ROI POINTS POSITIVE

45%

24%

21%

6% 4% Too Soon to Tell

No Formal ROI Tracking in Place Yet

Seeing Some Early Success

Expensive, But Necessary

Very Satisfied

Source: FitForCommerce, “Let’s Get Personal: Omnichannel Personalization in a Hyper-Connected World,” February 2015

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PERSONALIZED NAVIGATION

Very.co.uk uses algorithms based on browsing behavior and purchase history to predict customer behavior and optimize individual homepages with targeted products and offers.

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ADAPTIVE SEARCH

Edgecase technology provides personalized, adaptive navigation with filters that align to unique language and preferences. Early adopter Crate and Barrel increased conversation rate by 44%

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HYPER-PERSONALIZATION

Abandoned Cart Personalized promotional email Browsing behavior

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April 2015, n=25 brands With Average Number of Available Options per Data Field Percent of Beauty Brands Adopting Account Customization Fields

BEAUTY: ACCOUNT CUSTOMIZATION

32% 28% 20% 20% 16%

4% 4%

9

5

8

5

8

10

6

0

2

4

6

8

10

12

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Skin Concerns

Skin Type Skin Tone Eye Color Hair Color Hair Concerns

Hair Type

Percent of Brands Adopting Average Number of Options

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INCENTIVIZING DATA CAPTURE

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L’OREAL PARIS GETS PERSONAL Data Fields # of Options Possible Personas

Skin Type, Skin Concerns, Target Areas, Skin Condition, Age, Skin Care Goals, Time and Effort 29 12,096

Skin Tone, Skin Undertone, Skin Shade, Skin Type, Skin Concerns, Foundation Benefits, Foundation Formula 32 1,580,554

Eye Color, Beauty Style, Lash Look, Eyeliner 24 825

Hair Texture, Hair Thickness, Hair Condition, Hair Concerns, Chemical Treatments, Salon Visits 21 8,748

Hair Goals, Natural Color, Natural Shade, Grey Level, Color Treatment, Current Color, Current Shade, Current Tone, Chemical Treatment, Desired Permanency, Desired Tone

42 151,795,445,760

Total Possible Personas 20,944,492,105,217,700,000,000,000,000

(“2.1 octillion”)

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FROM DATA TO DOLLARS Personalized Email Targeted Content Product Recommendations

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IMPLICIT VS. EXPLICIT DATA CAPTURE

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IMPLICIT VS. EXPLICIT DATA CAPTURE

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UNDERARMOUR ACQUI-DATA MapMyFitness November 2013, $150M 20M registered users at purchase $7.50 / user MyFitnessPal February 2015, $475M 80M registered users $5.94 / user Endomondo February 2015, $85M 20M registered users $4.25 / user

Source: DC Rainmaker

$5.94 / user $7.50 / user

$4.25 / user

MyFitnessPal MapMyFitness Endomondo

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DATA + TALENT

SERVICE CUSTOMER ENGAGEMENT:

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Customer Service Channel Satisfaction

MOST SATISFIED WHEN…

64%

66%

71%

73%

75%

76%

78%

81%

Site

Social media

Email

Retail

Mobile app

Online chat

Mobile site

Phone

% of Respondents, Feb 2015 % of Respondents, Feb 2015

13%

19%

20%

22%

27%

50%

67%

73%

Effective online research

Proactive notifications

Good mobile experience

Ability to move between

Personalization

Simple navigation

Quick, effortless resolution

Clear information

Source: eMarketer

Important Attributes of Positive Digital Experience

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GUIDE CUSTOMERS TO A TOPIC

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SOPHISTICATED BEAUTY RETAILERS

Estée Lauder tailors the live chat experience to the specific page

An Aveda live chat agent offers an online discount for a product recommended during the chat session

56

FACEBOOK MESSENGER

Everlane is leveraging Facebook Messenger to engage with consumers on a more personal level.

57

OTHER APPAREL VENDORS: FITS.ME 1 2

3 4

1. Entry into the virtual fitting room 2. Select your body type 3. Provides recommended size for specified product with virtual depiction 4. Allows you to see what other sizes would look like on similar body type

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AUGMENTED REALITY?

The Ikea Catalog App allows customers to envision what product will look like in their own home before purchasing

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NEXT GEN FIT TOOLS

Yoox’s “Butler Service” in China sends packages via FedEx and has the FedEx worker wait outside while the customer tries on items and hands back a package for product they wish to return

60

WARBY PARKER VIRTUAL TRY ON

Warby Parker Virtual Try On enables customers to see what styles look like on their face by uploading personal photos

61

NEXT GEN LIVE CHAT: SMS/TEXT

Food delivery service Munchery

communicates with customers via text

message for delivery updates and follow up.

62

VISUAL SEARCH

Neiman Marcus’ Snap. Find. Shop tool, (powered by Slyce) allows users to snap an image of fashion items and be instantly provided with all close matching products currently available on neimanmarcus.com

63

CONNECTED FITTING ROOMS

Neiman Marcus Memory Mirror records outfits as 8 second videos to enable 360 degree views, side-by-side comparisons and sharing capabilities

Rebecca Minkoff stores feature oversize screens to browse additional product and request items to try on, bridging online/offline experiences

OMNICHANNEL CUSTOMER ENGAGEMENT:

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Company Multichannel Sophistication

HARD BEFORE IT GETS EASY

6%

26%

38%

29%

Advanced: "Way ahead of peers"

Moderate: "We have id'd strategy & are executing"

In Process: "We are developing strategy"

Lagging: We have yet to set our long-term strategy"

2013

Source: SPS Commerce, “Retail Insight: 2015: Fulfilling Customer Expectations≈

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Company Perceived Multichannel Sophistication

HARD BEFORE IT GETS EASY

6%

26%

38%

29%

5%

26%

32%

37%

Advanced: "Way ahead of peers"

Moderate: "We have id'd strategy & are executing"

In Process: "We are developing strategy"

Lagging: We have yet to set our long-term strategy"

2014 2013

Source: SPS Commerce, “Retail Insight: 2015: Fulfilling Customer Expectations

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31%

21%

16%

16%

8%

8%

Online Channel Receives Full Credit for the Transaction

In-Store Channel Receives Full Credit for the Transaction

Credit for the Transaction Would be Split Between Channels

Irrelevant, Company Operates a Single P&L Across Channels

Credit for the Transaction Would be Accounted for Entirely Sperately from

Unsure / Other

INCENTIVES DRIVE PERFORMANCE Revenue Attribution for Omnichannel Sales U.S. & European Retailers, 2013

Source: Forrester, “Customer Desires Vs. Retailer Capabilities: Minding the Omni-Channel Gap”

68

CHECKOUT: APPLE VS EVERYONE ELSE

Single page however requires customer to enter all information and hit save between each step

One-Touch Pay

0

On / Off Gifting

0

Live Stock Status

0

69

HEAD TO HEAD WITH AMAZON

Everlane tested 1 hour delivery for New York and San Francisco. Delivery was available on weekdays from 9 am to 6 pm, $4.99 for one item and free for two pieces or more.

Sephora’s Flash Subscription: $10 for one year What you get:

-  Unlimited, FREE 2-Day Shipping -  No minimum purchase required

-  Applies to EVERY order for an entire year

-  Special overnight rate of $ 5.95 -  FREE for VIB Rouge Members

70

FROM CART TO CAR

1  Selfridges launched Click & Collect at all stores in May 2013.

2  In November 2013, the brand opens the world’s first department store Click & Collect Drive Through at its London Oxford Street store.

1

2

Selfridges expects its Click & Collect service to account for at least 25% of all online orders Source: Econsultancy

71

FROM CART TO CAR

Amazon’s partnership with Audi and DHL enabled delivery of packages to the trunk of customer’s cars

Volvo’s Roam Delivery service provided delivery companies with the location of your Volvo and a one-time digital key to leave packages inside

72

CHOOSE YOUR DELIVERY TIME

Delivery.walmart.com allows customers to select their delivery time in 2 or 4 hour slots.

73

NARROWING WINDOWS

Though not rolled out to every location, U.K. retailer, Argos, offers in-store pickup windows at small as 60 minutes; highlights reserve online, immediate in-store pick up during checkout

74

OMNICHANNEL BEHAVIOR ON PDP

75

1  Harvey Nichol’s new Click & Try service allows customers to meet with a Style Advisor, who will have the consumer’s order ready to try on for sizing.

2  The re-launched HN website (April 2014) includes a renewed focus on stores.

3  Services and events are prominently featured across HarveyNichols.com

1 2

3

Click & Try: Harvey Nichols

HIGH TOUCH: CLICK & TRY

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OMNICHANNEL ITERATION

The ability to reserve in-store is promoted on-site, in email marketing, and offline

Reserve in-store can be used on a mobile device to support shoppers on the go

SMS notifications let users know when their reserved items are available in-store

CUSTOMER ENGAGEMENT CONCLUSIONS:

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CONCLUSIONS / QUESTIONS 1.  What role does implicit & explicit data play in

customizing your brand’s customer journey?

2.  Have you shifted your priorities to tackle high touch and low touch customer service?

3.  Does your omnichannel strategy take into account convenience as well as conversion?

4.  How are you tackling next generation solutions for your most loyal customers?

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