State of Retail

State of Retail

The Top 3 Industry Challenges

The evolving expectations and demands of the consumer – this is the greatest challenge retailers are faced with today.

We have become hyper-connected, time-poor, mobile and social; changing how retailers must market, attract and retain their customers.

The key to success lies in harnessing the power of customer-centric and actionable data, to stay ahead.

In this report, we detail some of the top challenges that retailers face today. We also outline data solutions and recommendations to combat these challenges.

1. Discounts and Promotions

How and when to discount without discouraging the always-on shopper


Challenge: Discount & promo planning

2017 saw promotions starting earlier and lasting for longer.

Two key, interrelated events had influenced this:

– Cyber Week continued to grow and enter the mainstream psyche of the British consumer
– Anticipating these sales, October results had slumped, further advancing November’s promotions.

Desk research undertaken by retail association, IMRG also supported this trend. By the end of October, over 60 out of the 210 tracked retailers already started their peak promotions.

State of Retail: Discount Offered
Source: IMRG, Desk research of 210 retailers in UK, tracking homepage discount offer.
Solution: Differentiate Discounters vs. Always-on Shopper

The extending promotional period has brought an array of challenges for retailers.

In particular, how to sell to discount shoppers, without discouraging and hampering sales from the always-on loyal consumer.

One solution to this problem is through clear audience segmentation –differentiating the discounter to the always-on shopper.

For Ted Baker, this differentiation can be achieved by profiling people who search for “Ted Baker sales” (and variations of the term), and comparing them to Ted Baker’s standard audience.

State of Retail: Ted Baker Standard vs. Sales Searchers
Date Collected: 3 months to Jan 2017, Hitwise AudienceView Intelligence

By identifying differences in digital behaviours, Ted Baker could then tailor content and channels to the discounter vs. always-on shopper.

The below chart shows over-indexed sites that each segment regularly visits.
To target the discounters, Ted Baker could advertise end of season promotions on the Telegraph or Cosmopolitan.

State of Retail: Ted Baker Audience Behavior
Date Collected: 3 months to Jan 2017, Hitwise AudienceView Intelligence

To keep the always-on shopper engaged, the brand could also feature the latest collections on Vogue or Marie Claire.

2. The Retailer Black Box

How to overcome the blind spot between brand and retailer


Challenge: The Retailer Black Box

Very few brands only sell direct and must rely on third parties, such as multi-brand retailers and affiliates.

As a result, brands are left with little insight on their true performance on other partner sites:

– How does the brand perform on the retailer’s site vs. their competitors?
– Who is the brand converting or not converting, and by how much?

We call this “the Retailer Black Box” – the blind spot between brand and retailer.

Solution: Benchmarking Search Share

A way to overcome this blind spot is through greater data collection, such as: internal searches, page views and purchases on retailer sites.

The below example shows an application of this, detailing the search share that top sportswear brands received on Amazon.

State of Retail: Internal Search on Amazon
Shows week-on-week % change. Source: Hitwise 2017.

In the week of Nike and Amazon’s partnership announcement, searches going to Nike’s pages grew by 27% on Amazon.

How did Nike also perform vs. its competitors? New Balance’s search share dropped by 57%, but Adidas’ share still eclipsed that of Nike’s.

Solution: Leveraging Internal Search

To understand why, Nike could zoom one level deeper by understanding the search queries going to Adidas’ pages.

State of Retail: Adidas on Amazon
Week ending 09/07/2017. Source: Hitwise 2017

Top searches were branded products, but Adidas also won traffic from generic search, “running shoes”.

Armed with this insight, Nike could for instance respond by promoting their running shoes to win Amazon’s generic traffic.

Solution: Analyzing Conversions

A third layer of insight is understanding which products are purchased and at what converting rate on a third party site.

The below chart illustrates this for the top products purchased on Amazon, over November and December 2017.

State of Retail: Amazon Products
Source: Hitwise, Top Singular Product Purchases on Amazon in Nov & Dec 2017. Conversion Rate calculated as total number of singular purchase / page hits per product.

Depending on tracking frequency, a brand (or competitor retailer) could then benchmark which products are trending and leading to a sale.

For example, noting the success of Amazon’s 30%+ conversion rates on eVouchers, a retailer like John Lewis could then push and promote their own eGift offering.

3. Product Level Competition

How to compete online on a product and category level


Case Study: Tu Clothing

Tu Clothing, Sainsbury’s white label brand, needed insight on the jeans market and how they performed against competitors with similar price points.

State of Retail: Tu Clothing

This research uncovered that Tu Clothing only captured 1.61% of the female jeans audience, whilst competitors captured a significantly higher proportion.
Moreover, Tu Clothing also did not rank for the male jeans market.

Solution: Audience Profiling –Key Demographics

The process involved:

  1. Profiling the audience of denim jeans at the £15-49 price point (as shown in the chart below),
  2. Understanding the competitor landscape, and
  3. Devising ways for Tu Clothing to recapture this specific audience.
State of Retail: Tu Clothing Audience
Source: Hitwise Intelligence, 4 weeks ending 4th of November 2017
Solution: Targeting

A zoom into the audience’s digital behavior can also unveil tactics to capture your target audience.

The below example showed that females were more likely to visit blogs and photography sites, whereas males were more likely to visit gaming and emails.

These insights can then feed directly into Tu Clothing’s channel strategy.

State of Retail: Tu Clothing Targeting

Summary


Discounts and Promotions: Differentiation between loyal core segment and discount shoppers, to prepare for peak.

The Retailer Black Box: Greater data collection & insights to make affiliate and partnership decisions.

Product Level Competition: Audience analytics to help define, profile and acquire audience by category.