2016 Retail Holiday Pricing, Promotional Strategies & Plans for the New Year

BDO KNOWLEDGE Webinar Series ‒ 2016 Retail Holiday Pricing, Promotional Strategies & Plans for the New YearPage 1

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

2016 Retail Holiday Pricing, Promotional Strategies & Plans for the New YearDecember 13, 2016


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YOUR PRESENTERS

Natalie KotlyarPartner, National LeaderRetail & Consumer BusinessBDO USA, LLP

[email protected]

Ted VaughanDallas Office Managing PartnerRetail & Consumer BusinessBDO USA, LLP

[email protected]

mailto:[email protected]

mailto:[email protected]


TODAY’S AGENDA

1. Holiday Season Projections & Early Results2. Promotional Strategy3. Pricing Pressures4. Data Management5. Implications for 2017 6. Discussion / Q&A


Holiday Season Projections+ Early Results


BDO RETAIL COMPASS SURVEY OF CMOs

11th annual survey of 100 leading retail CMOs

Covers holiday season projections, strategy & planning

Independent telephone survey fielded in September and October 2016


RETAILERS SET SIGHTS HIGH FOR HOLIDAYS

Retail chief marketing officers project a bullish 4.7% increase in holiday sales this year.

Source: BDO 2016 Retail Compass Survey of CMOs


ECONOMIC FACTORS IMPACTING SALES

Despite low jobless claims in recent months, unemployment remains chief among the economic factors retailers worry will stymie holiday sales.



CONSUMER CONFIDENCE


EARLY RESULTS: THANKSGIVING WEEKEND

NRF: Shoppers spent an average of $289.19 from Thursday-Sunday, down nearly 3.5% from a year ago.

Adobe: Black Friday online sales reached $3.34 billion, up 21.6% from 2015. Mobile sales accounted for $1.2 billion of those sales.

CNBC: 108 million shopped online, compared to 99.1 million in stores.


Promotional Strategy


COMPANYE-COMMERCE SALES (IN USD MILLIONS)

SHARE OF TOTAL SALES

Amazon.com $79,268 74.1%Wal-Mart Stores $13,484 2.8%Apple $12,000 5.1%Staples $10,700 55.5%Macy’s $4,829 17.5%The Home Depot $4,267 5.0%Best Buy $3,780 9.4%QVC $2,699 42.7%Costco Wholesale $3,618 3.1%Nordstrom $2,699 18.9%

BRICK-AND-MORTAR VS E-COMMERCE

Source: Amazon, Wal-Mart Lead Top 25 E-commerce Retail List | WWD

The majority of U.S. retail sales occur in stores. In 2015, e-commerce accounted for about 7.1% of total retail sales. By 2019, it is estimated this figure will rise to 9.8%.

TOP 10 U.S. E-RETAILERS BY ANNUAL SALES

Source: US Retail Sales to Near $5 Trillion in 2016 | eMarketer

http://wwd.com/business-news/financial/amazon-walmart-top-ecommerce-retailers-10383750/

http://www.emarketer.com/Article/US-Retail-Sales-Near-5-Trillion-2016/1013368


OMNICHANNEL IS GETTING PERSONAL

Omnichannel is an approach to sales that seeks to provide the customer with a seamless shopping experience across channels

The approach leverages technology and data to deliver the consumer a better multichannel shopping experience

Top brands are now creating personalized omnichannel experiences


TECHNOLOGY CONTINUES TO TRANSFORM THE CUSTOMER EXPERIENCE

BEACONS/PROXIMITY MARKETING

MOBILE PAYMENT OPTIONS

IN-STORE DIGITAL, LIKE SMART MIRRORS

VIRTUAL REALITY FOR SHOPPING FROM HOME

SOCIAL MEDIA BUY BUTTONS


HOLIDAY PROMOTIONAL PLANS

WHEN

55% of retailers say they plan to spread their promotions throughout the holiday season

WHERE

42% of retailers are equally focusing their holiday promotions in stores and online

39% are prioritizing the store for the majority of their promotions

HOWMobile and social media promotional tactics are on the rise


MOBILE DELIVERS E-COMMERCE SALES

58% of retail CMOs surveyed report that they are integrating mobile in their holiday marketing plans.

Of those, 32% will focus most heavily on delivery of targeted ads.



ONLINE PROMOTIONS GOES SOCIAL

87% of retailers say they will be using social networking sites as part of their holiday marketing strategies, up from 78% last year



RISE OF INFLUENCER MARKETING


Pricing Pressures


PRICE COMPETITION IS TOP HOLIDAY CHALLENGE


PRICE COMPETITION DRIVES DISCOUNTING

As retailers compete to attract customer dollars, discounting continues to be a widespread (yet unsustainable) tactic.

One-in-four retailers say they plan to offer more discounts and promotions during the 2016 holiday season than last year.

Behind Wal-Mart’s recent acquisition of Jet.com is a powerhouse pricing play.


Data Management


CONSUMER DATA IS AN OPPORTUNITY & CHALLENGE

91% of retail CMOs say managing and integrating customer data is challenging


CYBERSECURITY REMAINS A KEY CONCERN

100% of retailers in our 2016 Retail RiskFactor report cited cybersecurity as a top risk to their business.

Only 23% of retail CMOs believe that data breach risks during the 2016 holiday season are lower than last year.

Source: BDO Retail CFOs’ 2016 Forecast

Retailers are employing a wide range of tactics to shore up their cybersecurity:85% have begun using new software security tools

71% have created a security breach response

plan

43% have hired an external security consultant

19% have brought in a chief security officer


Implications for 2017


WHAT’S AHEAD FOR 2017

SALES

STRATEGY

PROMOTIONS/PRICING

CYBERSECURITY


2017: RETAIL SALES

Continued modest growth in spending

Consumer confidence trends positive, perhaps with a few dips linked to economic, market or legislative changes

Watch for Interest rates, global

market volatility

X-Factor


IPO market, emerging tech (virtual reality, IoT)

X-Factor

2017: RETAIL STRATEGY

Partnerships/JVs/M&A between traditional and digital players

Increased investment in real estate by e-commerce-only shops

Continued rightsizing of store footprint and space

Continued investment in mobile and social

Watch for


2017: RETAIL PROMOTIONS/PRICING

Walmart/JET synergies realized; Amazon starts to feel some pressure

Continued success for off-price retailers

Personalization earns a higher price tag

Watch for X-Factor Customer privacy/tracking

concerns, New features and/or consolidation in social media platforms, sharing economy


2017: CYBERSECURITY

Media attention focused on cybersecurity in government, healthcare, financial services, but retail remains a target

End-to-end supply chain vulnerabilities move retailers to increase investments, adjust vendor relationships and controls

EMV gets faster, but ultimately drives more mobile payments

Watch for Phishing attacks becoming

more sophisticated

X-Factor

; potentialCybersecurity regulations


Q&A


STAY UP TO DATE ON INDUSTRY TRENDS

Download our 2016 BDO Compass Survey of CMOsSubscribe to BDO’s Consumer Business Compass blog at blog.bdo.com

And be sure to follow our @BDOConsumer Twitter handle

BDO KNOWLEDGE Webinar Series ‒ 2016 Retail Holiday Pricing, Promotional Strategies & Plans for the New Year https://www.bdo.com/events/the-internet-of-things-has-arrived#sthash.HkDNmMwz.dpufPage 33

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BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com.

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