Retail Executive

SEP-OCT 2017

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Omni-Channel In 2017: From Measurement To Action Digital influence, store-level insights, organization, and scale and automation drive offline/online success. M A T T H E W S E I T Z Head of Retail Insights and Analytics, Google plement its online strength. GOOGLE'S OMNI-CHANNEL SOLUTION Google has tremendous capability and scale to drive foot traffic and store sales. There are trillions of searches on Google every year, over half of which happen on mobile devices. Nearly one-third of these searches are loca- tion-related and are growing 50 percent faster than all mobile searches. Google's search and shopping products provide the right information at the moment customers need it. Best Buy is using these solutions as part of its overall omni-channel strategy. It has dramatically increased its investment in Google's local inventory shopping ads. These ads provide product in-stock availability at near- by stores based on the customer's location. Now, when a person is looking for Beats headphones, they know Best Buy sells them, the price, and where they are avail- able. In 2015, Best Buy announced these ads drove over 1 million visits to its stores. FROM DMA TO STORE-LEVEL IMPACT Historically, there has been a geographic disconnect in how retailers understand the effect of marketing on offline sales. Media evaluation through marketing mix modeling is almost always performed at the regional or designated marketing area (DMA) level. (Amazing- ly, some retailers' marketing mix modeling [MMM] is based only on national data.) This is often due to data limitations, and the deepest granularity for offline me- dia like TV and radio is DMA-level. Many digital analy- ses like brand vs. category development (BDI vs. CDI) are also typically performed at a market level. Market-level insights have significant limitations, however. While small and midsize DMA regions are homogeneous, America's top 20 DMAs contain signif- icant diversity within their boundaries. As an example, consider the differences between downtown Scha- umburg, Wauconda, and Gary in the Chicago DMA or Manhattan, Brooklyn, Long Island, and New Jersey in eonardo DaVinci said, "The noblest plea- sure is the joy of understanding." For years retailers have been measuring the internet's impact on customers. In this difficult year, they are putting this knowledge into action. Retail- ers are succeeding through (i) better measurement, (ii) store-level insights, and (iii) scale and automation. They are also making key organizational changes need- ed to succeed. TIMES ARE TOUGH 2017 has been a difficult year for brick-and-mortar re- tailers. Changing consumer buying preferences plus the rise of e-commerce have led retailers like Sears, JCPen- ney, and Macy's to shutter stores while other brands (e.g., Bebe, Limited) have fallen into bankruptcy. Analysts are forecasting U.S. store closings to outpace post-recession 2008 when retailers closed over 6,000 locations. DIGITAL'S INFLUENCE IS ACCELERATING These market shifts are a symptom of the continued in- tegration of online and store worlds. The trend is accel- erating: Internet sales are growing four times faster than brick-and-mortar, and 77 percent of in-store sales will be influenced by online in 2017. An additional $86 billion in non-grocery retail sales is expected to be digitally-influ- enced this year (that's the size of the entire furniture cat- egory). Retailers are seeing sales affected by customers' mul- tichannel shopping behavior. To understand this im- pact, Kohl's studied the results of 19 store closures in 2016. Kohl's retained only 34 percent of physical sales to nearby locations, and e-commerce sales in those lo- cations dropped by 10 percent. Some retailers are building their e-commerce pres- ence via acquisition — headlined by Walmart's acqui- sition of Jet.com, Modcloth, Moosejaw, and Bonobos. Amazon's purchase of Whole Foods is a much-feared move that gives it a brick-and-mortar presence to com- L OMNI-CHANNEL Technology By M. Seitz OMNI-CHANNEL IN 2017: FROM MEASUREMENT TO ACTION RETAILEXECUTIVE.COM SEPTEMBER/OCTOBER 2017 22

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