“Same old, same old”: Retailers are sending the same e-mails to the same people.

As with so many aspects of marketing these days, data segmentation is key to the success of retailers’ sales efforts.

E-marketing may well be the most cost-effective method for reaching customers and driving business, but a recent analysis by Gartner of retail e-marketing activities shows that many retailers are employing tactics that are neither well-targeted … nor particularly compelling.

The Gartner analysis was performed earlier this year and published in a report titled Discount Emails — The New Playbook.  The analysis covered more than 98,000 e-mail campaigns conducted by 100 national retail brands.

Trumpeting discounts is one of the oldest tactics in marketing, of course, so it comes as little surprise that those sales messages are pervasive in e-marketing as well.

In fact, Gartner finds that more than half of all e-mail campaigns by retailers feature discounts in their subject lines.  Those discount messages are typically sent to nearly 40% of the retailers’ e-mail list — meaning that discount messaging targets broad segments of customers.

Gartner finds that those discount offers generate a ~16% open rate, on average.

Contrast this with retargeting and remarketing e-mails. They make up a much smaller fraction of the e-mail volume, but pull much higher open rates (around 31%).  Abandoned shopping cart e-mails generate an even higher average open rate of 32%.

“Welcome” e-mails tend to do well, too — in the 25% to 30% open rate range.

Gartner’s conclusion is as follows:

“Brands that employ less frequent, but timely, relevant e-mails triggered by customer site engagement or transaction outperform their peers.”

Gartner also found that the average national retail brand has more than 25% of its e-mail database overlapping with other national retailer e-lists, making it even more important for brands to differentiate the language of their e-mail subject lines and to engage in more data-driven e-mail targeting in order for their marketing to stand out from the pack.

Let’s see if the national retail brands get better at this over the coming year.

Amazon and its sellers need each other.

If you speak with small businesses that sell products online, many will tell you that they chafe under the strong-arm tactics of Amazon and its seller policies.

On the other hand, what’s their alternative?

The reality is that it takes about the same amount of time and effort to run a Walmart or eBay store as it does to run a store at Amazon.

The difference? The sales revenue of a Walmart or eBay store is typically less than 10% of what businesses would generate on Amazon for that same amount of work.  That interesting informational nugget comes from James Thompson, a partner at the Buy Box Experts e-tailing consultancy.

(And for small retailers attempting to run their own e-commerce sites, the revenue stream is even lower.)

But even with Amazon’s ascendancy in the world of online commerce, its retail platform remains a frustration to small sellers due to its level of responsiveness to questions and concerns (low) and its sudden, sometimes inexplicable policy changes.

Consumer advocates would counter-argue that Amazon’s seller policies are focused in the right place:  looking out for the end-user customer. But others contend that Amazon’s actions aren’t even-handed, nor applied equally.

Take Amazon’s policies on dealing with product shipments and defects. When a seller’s defect order rate goes as high as 1%, Amazon deactivates the vendor’s account automatically.  To be reinstated, a seller has to go through an arduous vetting process, during which time Amazon holds all monies due to the seller until every order is shipped and received – even orders that are in dispute.

To make matters even more onerous, the customer service phone number of the seller disappears, making it next-to-impossible for the vendor to clear up any misunderstandings with an end-customer other than by going through the Amazon portal.

Here’s another example:  Without prior notification, last month Amazon instituted a new “Pay by Invoice” policy that allows corporate customers a pay period of 30 days.

While this is a great move from the customer’s point of view, most small businesses are used to being paid in two weeks.  The new invoice payment policy squeezes the resources of smaller sellers, which often operate under tighter cashflow conditions than larger retailers.

It is true that bigger brands make up an increasing share of volume in the world of Amazon sellers. Those brands bring in the most money, but small businesses round out the portfolio and remain an important component of realizing Amazon’s aims of becoming the big behemoth with an “always and everywhere” presence in the world of retail.

Considering everything, it would seem that Amazon and its sellers should recognize each other’s worth and how much they mean to each other. Amidst everything, there has to be a win-win position that can be reached to the benefit of everyone.

Diamonds in the rough: Retail jewelry stores take a hit.

As disruption wends its way through the retail marketplace, jewelers are the latest sector being upended.

In the world of retail, it makes total sense that e-commerce would be making certain sectors such as traditional bookstores a thing of the past. After all, the products they sell are identical to what’s available online — even down to the UPC barcode.

The only difference is a higher price tag – along with a few other impediments like store hours, the hassles of parking and the like.

But as time’s gone on, it’s become clear that the impact of e-commerce is affecting shopping behaviors in retail segments that might never have been thought to be susceptible.

Consider retail fine jewelry. If ever there was a segment where consumers could be expected to want to “see and feel” the merchandise prior to purchasing, it would seem to be this one.

However, a recent analysis by gem and jewelry industry specialist Polygon has found that the U.S. retail jewelry industry is reeling from the triple phenomenon of falling diamond prices, store closures and a liquidity crunch that has persisted since 2016.

Super-competitive pricing offered by online-only retailers and their foreign suppliers has put relentless pressure on gem prices at every step in the supply chain, it turns out. Profit margins have slipped badly as a result.

Consequently, an increasing number of jewelry businesses in the United States have found that economics of maintaining physical stores just aren’t working out.  Since 2014. a raft of store closures has affected both independents and chain operations.

At the top of the supply chain, the biggest international producers of gems are responding to the industrywide pressures by cutting costs through mine closures, employee layoffs and assets sales. Probably the most prominent example of this is Anglo-American PLC, which laid off more than 85,000 workers at the beginning of this year, along with putting more than 60% of the company’s assets up for sale.

Par for the course, the relative bright spot in the overall picture is online jewelry sales. Online is taking up the slack of the other channels – but at lower sticker prices.  Online retail sales of fine jewelry continue to grow in the high single-digits, even as the rest of the industry struggles mightily to maintain a business model that has become precarious in the new “online everything” world of retail.

I have my doubts that jewelry stores will disappear completely from the shopping malls, like we’ve seen happen with retailers of movies and music. But the days of a jewelry store outlet anchoring every major crossroads intersection at the shopping mall are probably history.

More information on the Polygon report can be found here.

Holiday shopping behaviors: Black Friday is losing some of its luster.

It’s the beginning of October – which means that the holiday shopping season will soon be upon us.

… If it isn’t already, based on the holiday displays we’re already seeing cropping up at some major retail chain stores.

Of course, U.S. retailing firms have been gearing up for the season for months now, in terms of building merchandise inventories and so forth. But what sort of consumer shopping dynamics will they be facing this year?

According to new research published by Euclid, Inc. in its 2017 Evolution of Retail report which covers holiday physical and digital retail trends, Cyber Monday has now overtaken all of the other holiday-season shopping days in terms of consumer excitement.

That finding is based on a survey of ~1,500 U.S. consumers age 18 and older. While majorities of respondents report that they are excited about each of the three biggest revenue days of the holidays, for the first time ever Cyber Monday heads the list in terms of consumer interest and excitement:

  • Cyber Monday: ~72% of consumers report being excited about this shopping day
  • Black Friday: ~62%
  • Day after Christmas: ~55%

Clearly, online shopping continues to build momentum year over year. But the Euclid research also reveals that physical stores continue to have a major role in the “buying journey.”  Even among consumers in the 18-34 age group, three out of four respondents report that they visit physical stores on a regular basis to see products “in the flesh” – even if they purchase them online later.

Not surprisingly, “price” remain the biggest driver in consumer shopping behaviors during the holiday season, but convenience is another factor as well. It isn’t simply a store’s location that matters, but also how quickly shoppers can get in and out of the store that affects their views of “convenience.”

Interestingly, when comparing just in-store shopping plans, more respondents in the Euclid survey expect to be shopping on the day after Christmas (63%) than on Black Friday (60%) this year.

Perhaps the decisions by some big retailers to curtail store hours on that traditional first day of the holiday shopping season are being driven by more than simply altruism …

The complete Euclid report for 2017 can be downloaded here.

America’s shopping malls struggle to avoid becoming dinosaurs.

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America’s department store chains – and anchor stores at countless shopping malls across the country – are reporting another rounds of disappointing sales and profit figures following the 2016 holiday season.

It underscores what we’ve been seeing all over the country – dead or dying malls.

In fact, retail industry analyst Jan Rogers Kniffen predicts that about one-third of malls in the United States will shut their doors in the coming years.

That’s about 400 of the ~1,100 enclosed malls.

Equally startling, of the ~700 that remain, all but around 250 are expected to continue to struggle.

The problem is multi-faceted. At an estimated 48 sq. ft. of retail space for every man, woman and child in America, that’s a footprint that gotten too big.

“On an apples-to-apples basis, we have twice as much per-capita retail space than any other place in the world,” Kniffen says, adding that the United States is “the most over-stored” country anywhere.

The oversupply of retail space is challenged by changing customer tastes, too. Online shopping is a huge problem for malls, as is the rising popularity of off-price stores in lieu of the department stores like Macy’s and Penneys that have served as important anchors for mall properties all over the country.

Now we hear reports that Macy’s is planning to close numerous store locations during 2017, joining Sears and Penneys which have been doing the same thing over the past several years.

How will malls survive in the future? Recently, the McKinsey & Co. consulting firm issued a report that highlighted five ways malls can remain relevant to consumers today and in the future:

Mall of America (Bloomington, MN): Expansion Rendering
Mall of America (Bloomington, MN): Expansion Rendering

Entertainment – Even in the age of “interactive everything,” consumers – particularly younger ones – continue to seek out gathering places and “experiences.”  It’s one reason why some shopping malls have had to deal with large numbers of young people flooding their spaces – not always with pleasant results.  Malls seeking out tenants that provide entertainment hubs — such as theme parks and gaming parlors, edutainment, and even virtual-reality content and immersive experiences — will be able to draw customers from a wider geographic area who crave social interaction.

Food and drink – “Food is the new fashion,” some people like to say.  Successful malls are getting on that action, incorporating popular dining options along with unique ones as a way of becoming destination locations.

Retail – Still a core aspect of malls, but with new twists, such as creating retail centers that are also learning zones that bring together consumers, retailers and entertainment.  McKinsey uses the example of a sporting goods store that also includes a fitness studio, or offline showrooms for online retail players.  More reconfigurable spaces that can be used for pop-up stores, special product launches and seasonal offerings are also options with potential.

Transportation – Getting to and from mall properties with ease is growing in importance, and where some creative thinking might go a way towards making some malls more attractive than others.

Technology – The more that malls can create a “seamless chain” between online and on-site shopping, the better their chances are for staying relevant in the new retail environment.  McKinsey posits a number of initiatives, such as creating “virtu-real” formats that provide consumers with a more interactive retail experience through the use of touchscreen navigation portals, virtual fitting rooms, allowing smartphones for e-checkouts, and click-and-collect services to help blend the offline and online shopping experience.

In sum, for shopping malls it means fundamentally rethinking their role — and then adapting their strengths to those of the virtual/interactive world.

If we check back in another five years or so, we should have a pretty good idea which tactics have been successful – and which mall properties, too.

Hopefully, the shopping mall closest to your home won’t look like the one at the top of this article.

Holiday online shopping dynamics: The 2016 season’s results are already coming in.

ohsOne of the neat aspects of online shopping is the ability to learn about consumer behaviors almost in real-time. No waiting around for published reports that are released months after the fact.

Moreover, we can know quite a bit more than simply gross sales figures, including traffic stats.

In fact, we already have extensive information available about consumer online shopping activities in the 2016 holiday season, thanks to data released by firms such as Connexity’s Hitwise division, which measures consumer behaviors across desktop, tablet and smartphone devices.

From Hitwise, we know that its Top 500 retail websites received more than 335 million visits on Thanksgiving Day alone. That averages out to just under 14 million visits per hour … but the time period of 8 pm to 11 pm had more than 50% greater traffic compared to the hourly average for the day.

Amazon.com was among the retailers receiving extensive traffic volume from 8 pm onward – in its case ~25% of its total traffic on Thanksgiving came in those final four hours of the day.

One supposes that after the “big meal,” the “big game” and the “big cleanup,” consumers decided cap off the day by plunking down at their computers or smartphones for some heavy-duty online shopping.

Hitwise found that Black Friday online shopping dynamics were different, with the top retail sites being busiest in the late morning hours, when site visits were around half again larger than Black Friday’s daily hourly average.

As for Cyber Monday, Hitwise found that consumer online shopping dynamics weren’t very much different from any other typical Monday – except that the overall volume (nearly 330 million visits) was substantially higher than the typical Monday volume of ~200 million visits. That, and a slightly greater-than-average share of online shopping happening in the early morning hours of 6, 7 and 8 am.

hwlAs for the persistent belief that Cyber Monday has more people shopping online during their time in the office, Hitwise is not seeing that phenomenon any longer.

Again, not very surprising in that more consumers have 24/7 access to digital devices in 2016 than they did ten or even just five years ago.

The Hitwise report for 2016 includes extensive findings not just on hourly shopping patterns, but also on product searches and key traffic drivers for the major online shopping websites. More data can be found on the Connexity/Hitwise website.

Will consumer spending bring holiday cheer to businesses in 2016?

hdsThe holiday season isn’t yet upon us, and already there are a plethora of prognostications being made as to how holiday sales will stack up compared to prior years.

These predictions come courtesy of numerous forecasters including the National Retail Foundation, Deloitte, Kantar Media, eMarketer, the International Council of Shopping Centers, Market Track and others.

So what’s in store? On balance, forecasters predict that holiday sales in the United States will post an increase of approximately 3.5%.  That’s higher than the 10-year rolling average of 2.5% but down a tick from last year’s 3.7% increase.

Still, at more than $655 billion in total sales, holiday spending continues to be the biggest single driver of the U.S. consumer market.

Hardly surprising, e-commerce sales are expected to continue their double-digit growth over last year’s holiday season, with various predictions ranging from 14% to 17% growth in this sector. Not only are consumers attracted by the convenience of online shopping, many of them believe they can find products at the cheapest price via online sources rather than taking a trip to the shopping mall.

Another factor that drives at least some people to shop on their online devices is their aversion to the crush of holiday shopping at the stores. A McKinsey study has found that nearly one-third of U.S. consumers basically hate Black Friday (the day after Thanksgiving), and make it a point to stay as far away from it as possible.

But there’s one drawback for businesses about online holiday shopper dynamics, however:  Those consumers tend to be less brand loyal than is typical. RJ Metrics calculates that the typical e-commerce business acquires nearly 25% of its new customers during just the months of November and December.  Tempering that healthy statistic is the lifetime value of those consumers, which RJ Metric has determined is about 13% lower than the lifetime value of customers acquired at other times of the year.

You might be wondering what amount of money the typical U.S. consumer will spend on his or her holiday shopping this year. Wait for it:  The 2015 per capita amount is expected to be $935.

That figure may seem quite rich … but it’s actually a little bit lower than 2015’s average spend-per-person, which at $953 happens to have been the all-time high ever recorded.

Does the new $935 forecast signify a reversal of a trend … or is it just a pause in an otherwise ever-increasing amount of money that consumers are willing to plunk down as part of their celebration of the holiday season?

Check back in about a year and we should have an answer.