retail fact sheet (digital marketing) by wsi online

7/31/2019 Retail Fact Sheet (Digital Marketing) by WSI Online

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Copyright 2011 by Research and Management. All rights reserved.

Industry Overview

The retail industry is one with immense socio-economic influence. In North America alone, this industry commands

annual revenue of over $4 trillion. Retail sectors include mass merchandisers (like Wal-Mart), auto dealers, and Internet

or catalogue retailers. Similarly, retail formats can vary as well, from large superstores with massive selections, to kiosks,

which allow companies to set up a scaled-down version of their retail operations.

On the sales and marketing front of this industry, common vehicles include TV, print, radio, newspaper advertising,

direct mail, the Internet, and events. Now, more than ever before, social media outlets like Facebook and Twitter are

also used by companies to promote special deals or sales in a word-of-mouth nature. Subsequently, the Internet has

significantly affected the retail operating model by allowing consumers to price compare more effectively, as well as

radically diminishing overhead costs from a physical store.

Business Challenges

The highly competitive environment of this industry opens retailers up to a number of difference challenges, all of which

affect small specialty retailers, as well as the larger market-dominating retailers.

Evolving Trends Means Evolving Demand: Consumer preferences are, by nature, fickle and they change rapidly.Consequentially, this shapes the demand for retail items. The unpredictability of fads and product life cycles

cause retailers to struggle in making future merchandising decisions, thereby creating many missed

opportunities.

Protecting Customer Information: Retailers often access and store confidential consumer information, such ascredit card payment data. And in the rise of security breaches in which hackers have successfully stolen sensitive

customer data, the retail sector is increasingly becoming the center of scrutiny. Unfortunately, adopting new

systems can be slow and costly.

Demand Depends on the Economy: Consumer spending in this industry is greatly shaped by economic factors,such as personal income, consumer confidence, job growth and interest rates. During recessionary periods,

retail sales can slow drastically and even decline. Further, greater consumer spending leads to an increase in

personal debt, and rising interest rates also affect consumer credit and their ability to finance large retail

purchases.

Industry Opportunities

In an industry as competitive as this one, the race to stay ahead of the curve is inevitable. The growth and adoption

of new strategies and technologies is immense and is only geared to explode even more in the future.

Internet Sales: In light of the Internet boom, retailers have not been lefts behind and the Internet has developedto become a powerful sales and marketing channel for retailers. Much of it has been in response to the growing
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number of consumers choosing to shop online in an effort to save time and travel costs. Brick-and-mortarretailers are working to mitigate declining in-store sales by enhancing their online presence and social

networking efforts.

Alternate Payment Systems: Enhanced payment technologies enable retailers to process transactions faster andreduce customer wait times. Implementation involves contactless payments via radio frequency identification

(RFID) tags/ cards, and even mobile payment devices in lieu of checkout counters.

Loyalty Programs: Leveraging discounts or free items as an incentive for frequent buyers or large purchaseshelps retailers retain customers. Customer information collected by loyalty programs provides valuable market

research data concerning consumer habits. Social media platforms, like Facebook, are proving useful to retailers

when rewarding customers and sharing notifications of special store events.

Digital Marketing Trends

Top Online Merchandising Tools

According to a recent statistic released by eMarketer, site search

tools were ranked as the leading online-specific merchandising

tool used by online retailers worldwide (85% of respondents). The

second most popular online merchandising tool used by online

retailers is cross-sell and/or upsell tools, according to 77% ofrespondents. Meanwhile, 69% of online retailers said they use the

concept of emailing a friend as a merchandising tool, while social

commerce was reportedly used by 69% of online retailers.

Social Media Usage Among Retailers and Wholesalers

When evaluating the use of social media among retailers and

wholesalers worldwide, we see that more than half are currently

using social media. According to eMarketer, 64% of those in the

retail and wholesale industry currently use social media as part

of their marketing strategy. Twenty-one percent of respondents

said they are planning to use social media in the near future. On

the other hand, only a small percentage (12%) of worldwide

retailers and wholesalers said they currently do not use social

media or have no plans on using it. Overall, the retail/wholesale

industry is ranked as the top 4 industries worldwide currently

using social media.


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Social Media Marketing Activities

When we look at the reasons that retailers worldwide use social media

marketing, we see that the majority use social media to promote new

or existing products (according to 56% of respondents). About 36% of

retailers worldwide use social media to provide customer service, such

as monitoring and addressing customer enquiries. Thirty-two percent of

respondents said they offer coupons and other purchase incentives

through social media, while another 32% said they use social media to

engage in direct dialogue with their customers to understand

sentiment. Meanwhile, collecting competitive information was anotherkey social media marketing activity among retailers worldwide

(according to 28% of respondents).

Social Media Channels Used to Communicate with Customers

Facebook was ranked as the most common social media channel used by

worldwide retailers to communicate with customers (58% of respondents).

Ranked in second place was Twitter. According to 35% of worldwide

retailers, Twitter was used as a leading channel to communicate with

customers. Meanwhile, 27% of worldwide retailers use social media to

enable comments/reviews in their online catalogues. Twenty-one percent

of retailers worldwide upload videos to YouTube as a form of

communication to their customers.

Effectiveness in Measuring Social Media Activities

The majority of retailers worldwide (45%) said the effectiveness in

measuring their social media activities was average, stating they have

basic metrics in place (such as monitoring the number of fans, followers,

views and shares). About 11% of retailers worldwide said social media

measurement presented an above average level of effectiveness. They

admitted they mine social media for deeper insights, such as customer

sentiments, satisfaction and share of voice. Four percent of respondents

said their social media measurement efforts offered exceptional

effectiveness, stating that they have advanced metrics in place and can

tie their social media campaigns directly to retail sales.


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Monetizing Social Media Investments

Approximately 6% of worldwide retailers said they are able to

conclusively demonstrate monetization on their social media investment

(as of June 2011). Thirty-two percent of retailers admitted they believe

that monetization has occurred, but cannot demonstrate it definitively.

In other words, they have seen evidence of social media monetization

but havent been able to effectively track or report it. Meanwhile, almost

a quarter of respondents (24%) said they dont know if they were able to

monetize their investment in social media.

Understanding Online Customer Experiences

Web analytics is the #1 technology used by worldwide retail executives

to understand online customer experiences, according to 91% of

respondents. Ranked as the second most popular technology used to

decipher online customer experiences was online surveys (66% of

respondents). Meanwhile, 44% of worldwide retail executives said that

user testing was a way to understand how customers experience their

brand online. Another 43% of respondents said they understand

customers online experiences using AB and/or multivariate testing.

Offline focus groups and customer interviews were used by 42% of

online retail executives worldwide as a way to understand how their

customers experience their brand online. Thirty-nine percent of

respondents said the same about social media analysis tools. On the

other hand, 38% of retailers use online reputation and buzz monitoring

tools to gain insights into how consumers experience their brands

online. Other tools used for this purpose include: offline surveys, online

focus groups and session replay technology.

Smartphones Driving Store Traffic

According to 31% of worldwide retailers, the value of smartphones

in driving traffic to their stores brought a lot of value to them.

Meanwhile, more than half of respondents (56%) said that they

received some value in smartphones driving traffic to their stores.

Only a small percentage of retailers worldwide (13%) said they

received no value in smartphone traffic to their stores.


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Digital Marketing Opportunities

Immediate Areas of Focus for Social and Mobile

When we look at the latest digital marketing opportunities of social media and mobile for businesses in the retail sector,

their main considerations and focus should be on how they can use these technologies to increase their brand

awareness, increase customer engagement, and expand their customer base. On the social front, retail companies are

leveraging social technologies like Facebook, Twitter, and YouTube to promote new/existing merchandise, provide

customer service, offer coupons or other purchase incentives, engage in director dialogue to understand customer

sentiment and collect competitive information. They are also looking at news feeds and social alerts to understand what

is being said about their brand online.

On the mobile front, companies in the retail sector are primarily focusing on how they can make it easier for their

customers to research their products and pricing, read reviews, receive coupons and promotions based on their location

and purchase via their mobile devices. When it comes to social technologies and mobile marketing, below is where we

see the majority of retail companies making considerations from a strategy standpoint.

Social TechnologiesBlog Facebook Twitter LinkedIn YouTube News Feeds/

Social Alerts

Social

Bookmarking

Forums Review

Sites

Mobile MarketingMobile

Site

Mobile Local

Search

Mobile

Ads/ Text

Mobile

Apps


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Popular Pay-Per-Click Keywords

Keyword Advertiser

Competition

Global Monthly

Searches

Estimated

Cost per Click

wholesale 0.87 165000 $0.95

retail 0.09 110000 $0.66

tesco jobs 0.21 201000 $0.34

handbags 0.97 135000 $1.06

wholesale clothing 0.94 74000 $1.04

purses 0.87 60500 $0.99

retail jobs 0.7 60500 $0.55cheap clothes 0.96 49500 $0.87

wholesale jewelry 0.91 40500 $1.62

fashion designer 0.33 40500 $3.17

wholesale shoes 0.91 40500 $0.85

wholesale handbags 0.82 33100 $0.96

retail choice 0.1 27100 $0.15

fashion design 0.41 27100 $3.15

fashion designers 0.5 27100 $1.94

cheap handbags 0.71 14800 $1.15

costume jewellery 0.84 14800 $0.77

inretail 0.23 14800 $0.21

cheap jewelry 0.84 12100 $1.08

handbags wholesale 0.94 12100 $1.15

retail fact sheet (digital marketing) by wsi online

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