Trend-Report-Retail.Pdf

TREND REPORT: DIGITAL TRANSFORMATION IS CHANGING THE RETAIL SEGMENT FOREVER Shopping will never be the same Out of all industries, the retail segment was first in Shopping, as we know it, is changing forever. line to feel the full disruptive force of digital transfor- And digital transformation – deeply connected to mation. When Jeff Bezos launched Amazon.com changing consumer behaviors – is the driving force. in 1995 as a mere book-selling website and Pierre Omidyar started eBay under the name AuctionWeb the same year, shopping for products on the World EMARKETER PROJECTS NORTH Wide Web was still considered cutting edge. AMERICAN E-COMMERCE SALES TO RISE BY 14% FROM $329 TO $376 Fast-forward to 2015 and online shopping has long BILLION BETWEEN 2014 AND 2015. IN become the status quo for a growing number of THE UK THEY PREDICT E-COMMERCE consumers – and Amazon, plus countless other SALES WILL TOP $99 BILLION IN 2015. e-commerce players, deliver the full gambit of products and services right to their doorsteps. Nonetheless, only 7.1% of total retail sales come Within these past 20 years, the retail environment from e-commerce – people still like to shop at underwent a major seismic shifts – all either directly physical stores, although with much higher, digitally caused or intensified by digital transformation, enhanced expectations. Today’s hyper-connected leaving many too-big-to-fail retail conglomerates by consumers want more than just old school shopping the wayside. The graveyard of failed retail mainstays destinations. In the long run, physical stores that already includes high street chains such as Borders, are mere storehouses of product are headed for Circuit City, and Blockbuster in the U.S., as well as extinction. camera retailer Jessops and Virgin Megastores in the UK. And while these tremors first appeared as The retailers that will survive – and thrive – through shockwaves of the 2008 global economic crisis, this next stage of digital disruption are the ones something deeper was at work here… who learn to understand their customers and build relationship through meaningful, relevant engagement – online and offline. Because despite all these landmark changes in the retail segment, one thing never changed: The customer is king – 2 perhaps more now than ever before… Industry trend: The changing retail customer Never before in the history of mankind have consumers been given more choices on how, when, and where to purchase new products. Digital technologies – most of all smartphones and tablets – are putting a “BUY” button within consumers’ reach - 24 hours per day, seven days per week, 365 days of the year. This unprecedented freedom of choice – fuelled by digital transformation – is having a profound effect on consumer attitudes and shopping behaviors. In 2015, the average retail consumer wants to...

... BUY THE RIGHT PRODUCT AT THE RIGHT PLACE AND THE RIGHT TIME.

Consumers want to be able to buy what they want exactly when they want it – and the pressure is on retailers to make it happen. According to current research by the e-commerce software experts Nextopia, 44% of shoppers are more likely to purchase online if they are able to pick up their purchase in-store – preferably on the same day. And in the same study, 62% said they are more likely to shop online if given the option to return an item in-store. In other words: The retailers that will lead the way can do both online and offline with tightly integrated, omnichannel sales models.

... LEVERAGE ONLINE INFORMATION TO MAKE INFORMED PURCHASE DECISIONS.

Today’s hyper-connected consumers use smartphones to guide in-store purchase decisions. Globally, over 85% of consumers have used their smartphones inside a store (DigitasLBi Connected Commerce study), and 77% have been influenced by smartphones in their purchase decisions. Overall, 55% respondents in the study said that the Internet and mobile technology have changed the way they shop. According to a PWC study, 65% of U.S. consumers shop on at least two channels, while 21% use four to five channels.

3 … USE APPS AND MOBILE SITES TO SHOP AROUND THE CLOCK.

Marketers are well aware that the average consumer owns about 50 smartphone apps, while spending the majority of time on only five to seven apps (most of all, on Facebook). Nevertheless, a well-designed, secure e-commerce app goes a long way in winning over consumers. When it comes to conversions, 81% of shoppers using a tablet actually make a purchase, compared to only 52% using a smartphone (eMarketer).

… RELY ON SOCIAL MEDIA FOR RECOMMENDATIONS AND REVIEWS – AND EVEN MAKING PURCHASES.

Word of mouth is a valuable currency in this brave new world of shopping: According to research by Barilliance, 31% of e-commerce site revenues in the 4th quarter of 2014, came from personalized product recommendations, for instance Amazon product reviews. Customers who clicked on personalized recommendations also had a 5.5-times higher conversion rate than non-clickers. And for those shoppers reluctant to leave their Twitter or Fa- cebook apps to buy via dedicated apps, both platforms are adding “BUY” buttons in cooperation with major brands to catch those in-app purchases. According to Shopify, the amount of product orders from social media has grown 202% in 2014, and most traffic comes from paid apps on Facebook.

… RECEIVE PERSONALIZED OFFERS, COUPONS, AND PRODUCT INFORMATION.

The days of one-size fits all product bulletins and weekly flyers are coming to an end. Consumers in 2015 want to be engaged on their individual tastes and shopping histories. Over 64% of Millennial consumers actively use their smartphones to browse for coupons before making a purchase (eMarketer). According to the DigitasLBi study, 71% of U.S. consumers would also welcome receiving personalized rebate vouchers or special offers sent to their smartphones. In return, these customers are also willing to – get ready marketers, here’s the magic word you like to hear – opt-in to sharing their contact information and receiving tailored communications based on their profiles.

4 The changing face of retail: Viewed from a retail perspective, the profound changes in consumer habits translate into a clear-cut list of to-do items. For instance, consumer demand to buy the right product at the right place and the right time is driving traditional brick-and-mortar retailers into the e-commerce segment. And it’s also driving pure-play online vendors into opening their own physical stores to bring the multi-channel customer experience full- circle.

Five major disruptive trends Once again proof: Shopping, as we know it, is changing forever. Faced with digital disruption – and the graveyard where failed retail operations loom – today’s most innovative retailers are driving the following five disruptive trends to keep customers coming back:

HYBRID SALES MODELS: CLICK AND COLLECT It may sound unlikely, but the number one retailer giving Amazon a run for its e-commerce money is quintessentially American powerhouse Wal-Mart. In the 2015 fiscal year, Wal-Mart’s global e-commerce sales increased by 22% to $12.20 billion, while time-honored retail giants such as Macy’s, Costco, II and Nordstrom are also reporting double-digit growth in e-commerce. Their secret lies in aligning their inventory management systems and store networks seamlessly with online sales platforms to offer services such as buying online and picking up in-store, or having the store deliver orders to customers’ homes.

Click-and-collect – buying products online for in-store pick-up – is emerging as a major trend according to a new Forrester Research report: A stunning 70% of the 3,000 respondents in the U.S. said they use “buy online, pickup in-store” services mostly to avoid shipping costs. “Click-and-collect” is a major consumer trend in the UK, and the main reason why the overall share of e-commerce purchases is double the U.S. number at 14%. Meanwhile, e-commerce start-ups such as eyewear platform Warby Parker have already opened brick-and-mortar stores, while European online fashion giant Zalando may be next.

SAME-DAY HOME DELIVERY: CHANGING THE GAME While Amazon home delivery with drones will most likely land in the near future, the company’s Prime Now service already delivers purchased goods within central London in less than one hour. Paired with easy and hassle-free returns, same-day delivery provides another reason to skip the trip to the IIII store. When it comes to household essentials, Amazon in July introduced push-to-order Dash Buttons: One push, and the Internet-connected buttons automatically place orders for water, paper towels, and other basics. Competitors, including the eBay-owned Shutl offer delivery times around 13.57 minutes in London, while Google Express, Yummy.com, and a slew of other providers bring customers what their hearts desire at a wave of their smartphone.

5 LOCATION-AWARE NOTIFICATIONS: GREAT TO HAVE YOU BACK Shoppers at Apple stores, Starbucks, and other locations already receive push notifications on their smartphones right upon walking into the door. Behind the scenes, beacon technology identifies registered users’ signatures, which opens the door to targeted, personalized customer engagement. U.S. IIIIII retail conglomerate Target is currently testing beacon technologies at 50 stores across the country. Shoppers with the Target iPhone App installed, will be asked to opt-in to receive personalized recommendations and deals on their phone. But even at this early stage, Target knows the biggest pitfall of this approach: Notifications are limited to two per store visit to avoid churn. Smart move.

PERSONALIZED COUPONS AND OFFERS: A SPECIAL DEAL – JUST FOR YOU According to UK-based website Voucherbox, the number of customers seeking discounts while making purchases online grew from 23% in 2014 to 33% in 2015. Use of online voucher codes is also up 43% on last year. The only thing IVIV customers like more than rebate coupons, are personalized rebate coupons – reflective of purchase histories and preferences. According to a Monetate infographic, 75% of consumers would like retailers to use their personal information and shopping history to improve their experience. Customized emails also prove efficient in driving conversions; emails generate twice as much traffic to e-commerce sites as social media messages (Venturebeat). Selligent customer SECRETSALES manages its relationships with more than 3 million registered members via Selligent’s data-driven marketing software. By sending members highly personalized content features, SECRETSALES is driving higher online sales and strengthening loyalty.

BEYOND SHOPPING: CREATING MEMORABLE EXPERIENCES When it comes to making a choice between visiting a store and shopping online, customers are looking for the kind of memorable in-store experiences only stationary retail can provide. Armed with data from customer profiles and loyalty programs, innovative retailers are creating special retail moments VV with birthday surprises or tailored rebates (see IV.), while the future holds anything from interactive mirror displays fed with personalized data, to personal robot stylists and bag carriers. According to research by Accenture, 51% of shoppers between ages 20 and 40 like the idea of “one-click checkout retailers who know how customers want to pay and have items shipped”. Upscale shopping mall stores in the UK and U.S. are already delivering bags straight to shoppers’ trunks. And ultimately, a company culture built on ethics and philanthropic engagement – including the TOMS brand “One for One” donation for each purchased item – connects companies and customers to a greater good for a lasting connection.

6 Showcase: These innovative retailers have customers lining up

The key to giving customers what they want, when they want, is simple: Customer data. Collect, analyze, leverage, personalize, and repeat – that’s the mantra for successfully building long-term customer loyalty. The following forward-thinking retailers are connecting to today’s consumers with data-driven marketing powered by Selligent’s omnichannel customer engagement platform for personal engagement across the entire customer journey.

1. BRILLE 24: BUILDING LOYALTY WITH PERSONALIZED MESSAGING Founded in 2007, Brille24 quickly established itself as the leading German online optician. With competitive prices, a wide range of products and high quality service it rapidly began to provide stiff competition for established brick and mortar giants who had yet to develop a functioning digital strategy. Today it delivers its products to more than 1 million customers in 117 countries.

Brille24 began using the Selligent platform to power its marketing in late 2011 – progressively introducing new campaigns and features to keep pace with the evolving habits of its connected consumers. In order to engage consumers with highly personalized content, the online optician launched its “Optician’s Journey” campaign in 2015. Brille24’s campaign creative encouraged users to provide their birthdate to receive automated customer loyalty rewards. One set of personalized communications—the “Glassify Your Horoscope” email—used a customer’s astrological profile as the basis for eyewear recommendations.

The recommendation engine also analyzed known and unknown data to determine product suggestions based on user behavior, browsing and shopping history (views, clicks, shopping cart items and wishlists). Behind the scenes, the Selligent platform allowed for personalization and dynamic content elements for each and every mailing, resulting in some 37,440,000,000 possible permutations of content.

KEY RESULTS 81.304 Emails sent 55.42% View Rate 8.16% Click-through 14.72% Click-to-open

7 2. V&D: DRIVING CONVERSION THROUGH PRECISION PERSONALIZATION As the largest department store chain in the V&D used email as the primary channel to drive traffic Netherlands, V&D attracts over 100 million visitors to to the site and outperform its previous year’s Price its 63 brick-and-mortar shops each year generating Circus results. Using Selligent to test and learn in the €630 million in annual sales. Early on, the company two-month period leading up to Price Circus, V&D had also made the leap into e-commerce with an created a customer contact strategy that leveraged online store carrying over 300,000 products from its existing email sales channel to increase touch 3,000 brands. points, boost engagement, and drive conversion. Enriching customer profiles with data from multiple But as digital transformation increased in the retail touchpoints allowed V&D to send customized emails segment, the company wanted to find meaningful through Selligent’s Dynamic Templates functionality. ways to engage their customers in new digital And thanks to targeted, relevant content, opt-out channels. As V&D’s twice per year, multi-week rates also dropped significantly, while sales increased sales event known as Price Circus (Prijzencircus) by a whopping 78%. approached, the marketing team used the Selligent platform to maximize the campaign’s potential as a major traffic and revenue driver.

KEY RESULTS

Number 1 online channel (both by visits, and by % revenue)

+78% sales

+40% open rate for personalized emails

-25% change in opt-outs for segmented targets during Price Circus

8 3. CHRONODRIVE: ONLINE ORDERS, READY FOR IN-STORE PICK-UP Selligent customer Chronodrive is a French grocery and all data is tied back to that customer. Selligent’s firm that offers a hybrid model of online ordering with industry-leading security protocols ensure that no customer drive-through pick up at one of 50 stores customer data is vulnerable, even as it is accessible across France. Before working with the Selligent for marketing analysis and segmentation through audience engagement platform, the company’s Selligent’s interface. business model had already gained traction, but lacked a personalized communications strategy, Within a single month, Chronodrive went from especially in customer emails. manually sending generic e-mails to using automated scenarios based on customer momentum, refined The results from implementing the Selligent platform with Selligent’s A/B testing tool. The company quickly proved nothing short of transformative for the retailer. saw the open rate of their newsletter rise by between Selligent’s “360° profiles” for customers made all the 3–5% and ROI increase dramatically. difference: Each customer received a unique ID

9 Outlook: Looking ahead, the good news is that customer data will not only increase in size and relevance thanks to The future of digital transformation in retail. Customers are also increasingly willing to share data with retailers. According to Accenture, 65% of respondents were shopping willing to share their gender, 53% their age, 52% their contact information, and 24% share contact begins today information on social media.

The future of retail starts today. And it belongs to Engaging hyper-connected customers with truly innovative, proactive companies willing to put the integrated marketing based on sending relevant customer at the center of meaningful, personalized messages to clearly segmented audiences and age shopping experiences. With a firm grasp on providing groups requires an integrated solution. And with a a consistent experience across online and offline growing number of successful retail implementations channels, these retailers are leveraging customer data under its belt, Selligent’s omnichannel customer to surprise, delight, and build long-term loyalty among engagement platform emerges as a powerful choice their customer base. for forward-thinking retailers.

10 About Selligent Marketing Cloud

Selligent Marketing Cloud is a marketing automation platform that enables B2C brands to engage consumers across all critical channels. Built for the relationship marketer, Selligent Marketing Cloud is the only marketing cloud built on a single code base, featuring artificial intelligence and a Customer Data Platform with a universal consumer profile at the core of every action.

More than 700 brands across retail, travel, automotive, publishing, and financial services rely on Selligent Marketing Cloud’s proven platform. With 10 offices across the United States and Europe and more than 50 agency partners, Selligent Marketing Cloud serves over 30 countries with local, personalized service.