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Presented by:
U.S. APPAREL RETAILING: DELIVERING A STRONG FINISH
Jahnia SandfordAnalyst
Mary Brett Whitfield
September 2013
Senior Vice President
© Copyright 2013 Kantar Retail
Agenda
– Update on Landscape
– Best-in-Class Mobile Shopping Apps
– Hot Growth Tactics
Presenters
Mary Brett Whitfield
Senior Vice President
Jahnia Sandford
Analyst
Today’s Presenters and Agenda
3
© Copyright 2013 Kantar Retail
Agenda
– Update on the Landscape: What’s Required to Deliver a Strong Finish?
• Macro
• Financial
• Seasonal
– Best-in-Class Mobile Shopping Apps– Hot Retailer Growth Tactics
5
© Copyright 2013 Kantar Retail
Macro Trends Lend FavorabilityBut not all apparel retailers have been able to capitalize
6
• Consumer Confidence• Spending Sentiment• Material Costs• Inflation
• Weather• Strong Prior-Year Performance• Competition• Payroll Tax Increase• Housing Market Rebound
Diverts Discretionary Spending
Source: Conference Board, Kantar Retail ShopperScape®, research and analysis
© Copyright 2013 Kantar Retail
A Few Retailers Capitalized and Grew at the Top and Bottom
Source: Kantar Retail analysis and company reports 7
1.6% 1.5% 8%
5.6% 3.6% 8%
7.6% 2% | 5% 34%
13.0% 9% | 9% 30%
5.0% 3.6% 18%
4.8% 3.0% 3%
8.0% 3.0% 11%
© Copyright 2013 Kantar Retail
Top Retailers Not Able to CapitalizeTop and bottom line declines
Source: Kantar Retail analysis and company reports 8
-7.8% -14.0% -531%
-4.7% -15% | -10% -198%
-14.5% -17% | -12% -201%
-2.9% -5% | -7% -19%
0.5% -0.5% -4%
© Copyright 2013 Kantar Retail
Apparel’s Leaders Sum up Biggest ChallengesHave needed to be more promotional to drive sales
Source: Kantar Retail analysis and company reports 9
On Women’s Apparel challenges:
Ronald L. Frasch, President and Chief Merchandising Officer, Saks: “The customer … is very discriminating, and she is moving to where the fashion is and clearly letting us and the brands know that she's not going to buy something if it's not to her liking. So I would say we're probably in the middle stage into this, much more work to be done.”
On Teen Apparel challenges:
Thomas P. Johnson, CEO, Aeropostale: “Clearly, the teen sector is challenged, and I think it's a number of different things. One is the promotional activity is high, which you would think would induce more purchases. But what it basically does is lower everybody's AUR, so that's obviously challenging.”
Robert L. Hanson, CEO and Director ,American Eagle Outfitters: “AEO's women's business had the biggest miss to plan, comping down 9% in the quarter … we saw weakness primarily in core and core fashion styles”
“We believe that fashion always trumps weather.” —Urban Outfitters President and CEO Richard Hayne
“We believe that fashion always trumps weather.” —Urban Outfitters President and CEO Richard Hayne
© Copyright 2013 Kantar Retail
Seasonal UpdateDifficult spring leads to moderate/lackluster BTS
Source: Kantar Retail ShopperScape®, June 2013 and analysis 10
From a shopper perspective:
–Shoppers narrowed their destination sets
–Still choosing Walmart and Target as top destinations for supplies and apparel
–Season starting earlier and earlier … and the “season” is really all summer
Supplies 61% 36%
Clothing 39% 33%
Where Plan to Shop for BTS Category
Will Shop for BTS Clothing in Summer …
… as I see deals
… as budget allows
© Copyright 2013 Kantar Retail
Marshalls Turns BTS/C into a Gift Giving Occasion
Source: Kantar Retail research and analysis 11
© Copyright 2013 Kantar Retail
More Retailers Use Hashtags in BTS Campaigns
Source: Kantar Retail research and analysis 12
© Copyright 2013 Kantar Retail
Catalog SpreeModern catalog shopping puts retailers toe-to-toe
13Source: Kantar Retail research and analysis
Style and brand take prominence over price
© Copyright 2013 Kantar Retail
Walmart’s Cyber Monday in AugustLowest prices on back-to-school for one day
14Source: Kantar Retail research and analysis
Early access for Facebook fans
Also prominent on mobile app homepage in days leading up
© Copyright 2013 Kantar Retail
New Competition to ConsiderKroger Fashion Essentials and Meijer Style
Source: Kantar Retail store visits, retailer web sites 15
Full-family assortment
© Copyright 2013 Kantar Retail
Seasonal Recap and Looking Ahead
– Spending sentiment favorable at macro level, but retailers of discretionary goods will need to earn share of wallet
• Those that do will be in a position to drive growth at top and bottom line
– Competition not slowing requiring retailers to be more proactive and innovative
Expect similar environment headed into the holidays
Source: Kantar Retail analysis 16
© Copyright 2013 Kantar Retail
Agenda
– Update on the Landscape: What’s Required to Deliver a Strong Finish?
– Best-in-Class Mobile Shopping Applications• Who’s playing?
• Who’s winning among users
• Best-in-class features
– Hot Retailer Growth Tactics
17
© Copyright 2013 Kantar Retail
Why Discuss Mobile Shopping Apps?142 million shoppers own a smartphone:59% share of mobile market
Kantar Retail ShopperScape®, March 2013, comScore MobiLens, and analysis 18
© Copyright 2013 Kantar Retail
Use of Retailer Apps on Mobile Growing
19
2012: 7%
2013: 11%
Source: Kantar Retail ShopperScape®, January 2012 and January 2013
© Copyright 2013 Kantar Retail
Mobile by the Numbers!Retailers setting huge benchmarks
Source: Kantar Retail research, analysis and company reports 20
2011-2102 Y-O-Y mobile sales growth Number of fashion items sold per minute on eBay thru mobile
Portion of 2012 eCommerce sales from mobile
Position of fashion items among other categories based on mobile sales in U.S., U.K. Australia, and France
Portion of 2012 total sales from mobile
Expect 2013 results to eclipse these
© Copyright 2013 Kantar Retail
What do each of these retailers have in common???
Source: Kantar Retail research and analysis 21
[On the DSW mobile app’s impending launch] “That's one of the most requested thing from our customers … people don't shop on [native iPhone mobile browser] Safari, they shop on an app. They're conditioned to do that because it's more secure and it's easier.”
– Kelly Cook, SVP of Marketing, DSW Inc.
© Copyright 2013 Kantar Retail
Steady Demand for Tablets Supports Belk Anthropologie on Tablet Play … Smartphone Play Soon
Source: Kantar Retail ShopperScape,®, January 2012 and 2013 22
Upcoming iPhone app launch, after success of the Free People app launch in June ’13, which in in 3 short months achieved more than 80K downloads and a higher sales conversion rate than the brand’s online site
Digital currently the fastest growing business at Belk… ramping up investment in all areas
© Copyright 2013 Kantar Retail
Who’s Playing?
Source: Kantar Retail research, analysis, and iPhone iTunes app store 23
Last update as of 9/12/13*User ranking based on all iPhone versions to date
Retailer iPhone App Last UpdateUser Ranking*
(out of 5) # of Reviews
Ralph Lauren Ralph Lauren Collection Apr-09-13 3 8,932Sephora Sephora to Go Aug-19-13 3.5 3,232Tory Burch Tory Daily Aug-06-13 4 274JCPenney jcp for iPhone Jun-18-13 2 259Macy's Macy's Aug-23-13 3 6,969Dillard's Dillard's Mar-15-13 3 66Nordstrom Nordstrom Jul-05-13 3 744Saks Saks Fifth Avenue for iPhone Feb-12-13 4 201Sears Sears2go Sep-09-13 2.5 9,780Forever 21 Forever 21 Aug-24-13 4 15,636H&M H&M Jul-02-13 3 160Mango Mango MNG Jun-28-13 2.5 253TOPSHOP TOPSHOP ON THE GO Sep-02-13 2.5 5,172Zara ZARA for iPhone Aug-22-13 4 107Gilt Groupe Gilt - Shop Designer Sales Sep-07-13 3.5 23,044HauteLook HauteLook Aug-27-13 4.5 8,291ideeli ideeli Jun-04-13 3 855Rue la La Rue La La - Shop All Day Aug-09-13 4.5 9,684Zulily zulily Aug-19-13 4.5 9,684Target Target Aug-27-13 3 104,425Walmart Walmart Aug-12-13 3 47,277HSN HSN shop app Aug-14-13 3.5 3,254QVC QVC for iPhone Sep-09-13 3 6,417Amazon Amazon Mobile Aug-14-13 3.5 106,656eBay eBay Jul-02-13 4 205,158Fab Fab.com Sep-09-13 4.5 11,363Mod Cloth ModCloth Aug-19-13 5 2,321Athleta Athleta Feb-06-12 3 243Banana Republic BR Feb-07-13 3 892Bebe bebe Mobile Aug-21-13 3.5 1,864Express EXPRESS May-01-13 4 2,932Free People Free People Aug-02-13 4 53Gap Gap Feb-06-12 2 19,593Old Navy Old Navy Mar-18-13 3 11,466Victoria's Secret Victoria's Secret for iPhone Jul-04-13 3.5 32,328Abercrombie & Fitch Abercrombie & Fitch Aug-06-13 3 4,675American Eagle AE Aug-14-13 2.5 916Delia's dELiA*s eCatalog Apr-08-13 3.5 143Hollister & Co. Hollister Aug-22-13 4 4,168PacSun PacSun Jan-24-13 2.5 256PINK PINK Nation Aug-26-13 3.5 3,630Urban Outfitters UO Jun-27-13 2.5 1,788
Specialty Apparel
Category Specialists
Teen
Department Stores
Apparel at Mass
Fast Fashion
Non-store
Online-only
Flash Sales
© Copyright 2013 Kantar Retail
ModCloth’s Attention to Detail Aids in the Purchasing Decision
Source: Kantar Retail research, analysis, and retailer iPhone app 24
© Copyright 2013 Kantar Retail
Gilt and Rue La La Sync Sales to Shoppers’ Schedules
Source: Kantar Retail research, analysis, and retailer iPhone app 25
Add sales reminders one-day out
Add sales reminders multiple days out
© Copyright 2013 Kantar Retail
And these??Giving shoppers other ways to connect in lieu of full mobile store app launch
Source: Kantar Retail research and analysis 26
© Copyright 2013 Kantar Retail
American Apparel’s Shopping Assistant Syncs all Channels
Source: Kantar Retail research, analysis, and retailer iPhone app 27
Augmented Reality Experience
Check-out from device using scanner and PINMust create an
account or sign-in to use full app
© Copyright 2013 Kantar Retail
International Retailers Apart of U.S. Shoppers’ Routines
Source: Kantar Retail research, analysis, and retailer iPhone app 28
Interactive weekly fashion/lifestyle magazine
Singing alarm clock and weather reporter
© Copyright 2013 Kantar Retail
Kate Spade SaturdayUses pending mobile launch to direct traffic online
Source: Kantar Retail research, analysis, and retailer iPhone app 29
© Copyright 2013 Kantar Retail
Ann Wants to Be Your BFFUses corporate culture to connect with users
Source: Kantar Retail research, analysis, and retailer iPhone app 30
If you love the brand so much why not work there…
Allows users to save favorite mantras, dates, trends from the community and career opportunities
© Copyright 2013 Kantar Retail
lululemon’s Lifestyle ApproachTargeting yogi community
Source: Kantar Retail research, analysis, and retailer iPhone app 31
Upcoming classes automatically load when app is opened
© Copyright 2013 Kantar Retail
Neiman Marcus’ Unique ApproachSells gifts and shoes only (SWAS concept on Mobile)
Source: Kantar Retail research, analysis, and retailer iPhone app 32
NM Gifts Today's Shoe
Free expedited deliveryFree gift wrapping
© Copyright 2013 Kantar Retail
Other Standout Features
Source: Kantar Retail research, analysis, and retailer iPhone app 33
One Click Ordering
“Personalization is even more important on mobile because of the more limited screen real estate.”
–Steve Jacobs, CIO, Gilt.com
Personalization
Timing and Overall use of Notifications
Convenience/ Omni-shopping
© Copyright 2013 Kantar Retail
Apps Eliminate Need to Carry Around Physical Card, Ups Convenience Factor
Source: Kantar Retail research, analysis, and retailer iPhone app 34
© Copyright 2013 Kantar Retail
Retailers Driving Cross-Channel ShoppingPac Sun gives online shoppers 5 reasons to go mobile
Source: Kantar Retail research and analysis 35
PacSun sells its mobile phone app’s uses and benefits to online shoppers
Shopper won’t have to click thru to app stores to find out
© Copyright 2013 Kantar Retail
Others Enhance the Store Locator Feature
Source: Kantar Retail research, analysis, and retailer iPhone app 36
© Copyright 2013 Kantar Retail
And Some Retailers Highlight other Brands
Source: Kantar Retail research, analysis, and retailer iPhone app 37
Though 4-separate apps available, Gap allows users to shop all banners from any of the apps, eliminating the need to download each one
Introduces shoppers to newest banner and growth brand with brief back story
Shows sneak preview of merchandise and app layout
© Copyright 2013 Kantar Retail
In Targeting Gen Y, Games and Interactivity Take Prominence Over Shopping
Source: Kantar Retail research, analysis, and retailer iPhone app 38
6+ different gaming options
© Copyright 2013 Kantar Retail
Mobile App Recap:
– Have a mobile presence and showcase product whether selling or not! Shoppers are looking
– Mirror shopping at other channels but keep in mind space and time constraints
• Showcase most relevant targeted messages upfront on app to engage immediately
• Mobile app should be easiest shopping platform of all channels, strive for fewest clicks
– Applying CRM insights just as important here as with other channels and mediums
– Focus on practical but “wow” details such as store locator features and virtual wallet
– Market mobile app and its features across other channels, use as competitive differentiator
– Incorporate key store/ online strategies, i.e., exclusives (styles and deals), early access, shops
Fast growing, highly relevant selling channel attractive for retailers and shoppers
Source: Kantar Retail analysis 39
© Copyright 2013 Kantar Retail
Agenda
– Update on the Landscape: What’s Required to Deliver a Strong Finish?
– Best-in-Class Mobile Shopping Applications– Hot Retailer Growth Tactics
• Partnerships and collaborations
• eCommerce
• In-store
40
© Copyright 2013 Kantar Retail
Recent and Upcoming CollaborationsPopularity not slowing
Source: Kantar Retail research and analysis 41
9.27.139.27.13
12.5.1312.5.13
11.14.1311.14.13
Feb 2014Feb 2014
20142014
© Copyright 2013 Kantar Retail
Three Signs that Partnerships Are Here to Stay
Source: Kantar Retail research and analysis 42
Extensions and Expansions
Acceleration/ Turn Around
Surprise Opportunities Revealed
© Copyright 2013 Kantar Retail
eCommerce Newbies
– TJX– Saks Off-fifth
The last of the top value players get in the game
Source: Kantar Retail research and analysis 43
H&M debuted U.S. eCommerce Aug. 1, 2013, simultaneously with mobile phone shopping application
TJX relaunched TJMaxx.com on Sept. 18, 2013
© Copyright 2013 Kantar Retail
Driving Traffic to StoreOld Navy creates an event around one product
Source: Kantar Retail research and analysis 44
Using the model on other products with higher price points
© Copyright 2013 Kantar Retail
Retailers Carve Out Space on the Selling FloorInfluences and accommodates a longer stay in store
Source: Kantar Retail store visits, research and analysis 45
Nordstrom Juniors Sitting area
Urban Outfitters Media Bar
Nordstrom Habitant Bar/Café
© Copyright 2013 Kantar Retail
More Space also Dedicated to Interactivity Fun and enjoyable elements targeted toward Gen Y
Source: Kantar Retail research and analysis 46
Urban Outfitters
Nordstrom
© Copyright 2013 Kantar Retail
Rack Does Mobile Checkout RightArming the store for an efficient digital checkout process
47Source: Kantar Retail store visits, research and analysis
© Copyright 2013 Kantar Retail
Cross-Merchandising Evolving, Blurring Department Lines
48Source: Kantar Retail store visits, research and analysis
Making every category relevant to the shopper
Urban Outfitters
Macy’s
Gap
© Copyright 2013 Kantar Retail
Macy’s Making Impulse a destinationApparel, beauty and shoes today … mens, kids, home/ kitchen next?
49Source: Kantar Retail research and analysis
© Copyright 2013 Kantar Retail
Delivering in the Back Half:
― Shoppers are more confident and willing to spend than they were a year ago.
― Each shopping touch point will be important in driving traffic, conversion and return trips. Consistent and thoughtful execution is essential.
― Extending value beyond price by communicating and delivering on shopping experience, exclusivity, brands, and convenience will bode well with shoppers when they make destination decisions.
― Mobile is an important and profitable touch point, especially during holiday where routine browsing and pre-trip planning takes place.
Environment no less challenging but full of opportunities
Source: Kantar Retail analysis 50
© Copyright 2013 Kantar Retail
–Delivering a Strong Finish
– Best-in-Class Mobile Shopping Apps
–Hot Retailer Growth Tactics
51
QUESTIONS?Submit questions on Q&A panel on right side of screen
© Copyright 2013 Kantar Retail
585 S. Front St.Suite 50Columbus, OH 43215
www.kantarretailiq.com
585 S. Front StreetSuite 50Columbus, OH43215
www.kantarretailiq.com
Jahnia Sandford
Analyst
T + 1 614 355 4045
Mary Brett Whitfield
Senior Vice President
T + 1 614 355 4010