Retailers' Digital Initiatives to prepare for the Holidays

With the holidays approaching, retail brands have reached its annual climax in unleashing marketing creativity. Given the growing popularity of online and mobile platform, brands like Sephora and Net-A-Porter have invested heavily on digital this year to forge an omni-channel shopping experience.

Sephora, the subsidiary brand of LVMH, has rolled out its first Flash Boutique in Paris, which served to ramp up its consumer experience through a mobile-connected experience. Consumers will be able to shop from a digital catalogue featuring more than 14,000 items from approximately 150 beauty markets in addition to its usual makeup collections. Should shoppers unable to locate certain products, they could virtually add the merchandise to their digital baskets that enable them to pick up the desired cosmetics from Sephora in the future.

In addition to digitalize its product catalogue, Sephora has opted to experiment its digital perfume testers, allowing shoppers to pick up a Communication tag for the scent so that they could scan it on a nearby screen to smell the fragrance and explore more about the product. Of course, if they are interested in purchasing the fragrance, they could simply add it to their digital basket.

Moreover, the Flash Boutique offers a selfie mirror to allow consumers snap photos whilst trying on new items. Sephora even offers customers the opportunity to win a 1,000 Euro gift card should they disperse their selfies across social media with appointed hashtags.

Net-A-Porter, the British online retailer, made use of Sky’s Adsmart platform to target ads at viewers based on a number of demographic factors so that different consumers will see different versions of its video campaigns. For example, for its most recent “All For You” advertisement, viewers who prefer to watch long and HD videos on YouTube would be shown the long version that delineates the retailer’s stellar service and transparency. On the other hand, should users demonstrate a viewing preference for short and catchy ads, the short 30-second version would appear.

Net-A-Porter has previously implemented multiple mobile initiatives this year. The social media app it launched in April – The Net Set, is now available for iPhone, iPad and Apple Watch. The app enables designers, brands, fashion personalities and consumers to interact with each other real-time, sharing inspirations and their own sense of style in a two-way dialogue. Consumers will also be able to scroll through a feed of trending fashion items from across the world, give friends shopping advice, share images, interact with style icons, and view personalized “love lists”.

According to the 2015 GPShopper Holiday Mobile Shopping survey, 35 percent of consumers plan to create shopping lists and 24 percent intend to check product inventory from their phones. Pinterest has upgraded Product Pins so that they allow retailers to automatically update their merchandise inventory information through their product posts. Facebook, Instagram and Tumblr have planned to implement similar initiatives such as collaborating with fashion bloggers to make social media channels the forefront of fashion enthusiasts’ discussions.

Given the current social media trend, brands should perhaps learn from Sephora and Net-A-Porter, and to synthesize digital and Brick-and-Mortar shopping experience by allowing greater transparency of their product inventory and pricing information, creating target contents for different customer segments, and fostering long-term customer relationships through interacting more with followers.


Links:

http://www.luxurydaily.com/sephora-blends-mobile-with-bricks-and-mortar-for-first-connected-boutique/

http://www.luxurydaily.com/net-a-porter-mr-porter-sway-holiday-shoppers-in-new-campaign/

http://www.luxurydaily.com/checking-product-inventory-goes-mobile-this-         holiday-season-report/

Looks like digital ad agencies will be happy this holiday season…and so will shoppers at Kohl’s

US sales during the holiday shopping season are predicted to increase 4% to nearly $490 billion this year. This is a huge number – and holiday advertisers want to capture as much of the pie as they can. Retailers make up the biggest share of ad spending during the holiday period according to Kantar Media (ad tracking firm owned by WPP). In the 2013 holiday period, retailers accounted for 15% of total ad spend – almost $5 billion of the total $32.5 billion. During Black Friday, retailers spent almost $790 million during that week alone (omg).

Guess which retailers spent the most on ads last year?

Wal-Mart, Macy’s, Target, and Sears – not surprising. Wal-Mart spent the most: $300 million. See the chart below for other top spenders.

I don’t know if this is surprising to anyone else, but last year retailers spent 45% of their November and December ad budgets to television ads. I personally would have guessed it would be a lower portion. I’m going to go ahead and guess that this number will drop this year, and much more significantly over the next few years as retailers move more advertising to digital. Internet advertising was just 17% of total spend last year, and I bet that will be much higher this year.

Now that we’re on the topic of the holiday season and Black Friday, I’d like to highlight an article from WSJ about Kohl’s. Maybe this is not so related to digital marketing, but I found it interesting. In such a competitive environment, Kohl’s has spent the last year trying to reach a deal to undercut competitors’ prices. Kohl’s took the approach of working backward from the price they wanted to offer, and then to find a product that fits the price. $5 is that price – and this year Kohl’s will be offering toasters, coffee makers, blenders, and slow cookers at five bucks a pop. Yes, you heard it correctly!

Kohl’s was able to reach an agreement with Select Brands to manufacture these products. You might be wondering “why would Select Brands agree to such a thing?”. Well, even though the margins will be quite slim, the volume and one-time shipment makes it worth it. Also, the $5 price tag is after a $10 mail-in rebate – which many people won’t even bother to redeem so they’ll actually be sold for $15.

Happy Holidays!

Beacon Technology

Beacons are the next big thing in mobile technology and are becoming the most rapidly adopted in-store technology since mobile card readers. The biggest problem with indoor spaces is that they often block cell signals and make it nearly impossible to locate devices via GPS. Beacons are a solution. Beacons are a low-cost piece of hardware (small enough to attach to a wall or countertop) that use Bluetooth low energy for communicating with beacon enabled devices such as smartphones and tablets. They are poised to transform how retailers, event organizers, transit systems, enterprises, and educational institutions communicate with people indoors.

Beacons offer the potential to target a consumer at the most opportune moment. Brands are no longer limited by shelf displays and point-of-sale campaigns to communicate their messages, and brand marketers can extend past the store floor or shelf to deliver a personalized, digital form of outreach to identified shoppers. This technology has enormous potential to enhance the shopping experience, making it quicker and easier for customers to access the information and products they are looking for, or provide special offers or discounts to loyal shoppers. It can also provide retailers with invaluable data about their customers’ shopping habits and staff activities and efficiency – allowing them to make improvements in store and maintain service standards and operations.

To unlock the massive potential of beacons, retailers need customers who want to use them. The main barrier to wide adoption of beacon technology is the fact that customers have to voluntarily download and install a smartphone app for it to work. And this is only the first layer of permission. Customers also have to turn on Bluetooth, accept location services on the relevant app, and opt-in to receive in-store or indoor notifications. To overcome this, retailers need to educate customers about the benefits this technology offers and demonstrate the unique benefits they wouldn’t get otherwise. One option for retailers is to provide a more personalized shopping experience by providing indoor maps, shopping tips, targeted product offers and offering special in-store only coupons and discounts. Another option for retailers is to integrate beacon technology with popular third-party shopping apps such as PayPal or ApplePay. The scope of beacon technology will expand once retailers allows these third-party apps to hook into their in-store beacon system. Customers may not download apps for every retailer they plan to visit, so it makes sense for the retailers to open up their beacons to outside apps in order to send alerts and notifications to their users.

U.S. retailers are currently racing to adopt beacon technology. According to Business Insider, half of the top 100 American retailers are already testing beacons in 2014, and they will have this new technology installed in about one-third of stores by the end of 2015. The samereport estimates the beacon installed base to witness a CAGR (compounded annual growth rate) of 287% over the next five years! It’s clear that beacons have the potential to play a significant role in retailers’ ongoing efforts to provide ever-more personalized and seamless consumer experiences. The long-term benefit of adopting beacon technology – in-store engagement becomes more relevant, interesting, and, ultimately, more profitable. 

Sources: Business Insider, GroupM Next, TechCrunch, and The Guardian