Retail Industry Global Report — 2010 - Ascendant Capital Advisors

uy across all channels. Retailers have started implementing
multi-channel strategies — such as alternative delivery
options, integrated customer service, and aligned marketing
efforts — that facilitate both researching and buying across
channels. In May 2010, Marks & Spencer announced the
launch of a new version of its Web site, designed to be easily
accessible from mobile devices. This allows customers to
conveniently browse and buy items by using their mobile
devices. Similarly, Kroger, Safeway and ShopRite are sending
"smart electronic shopping coupons" to their customers
through wireless devices, televisions and computers. This
option lets customers use these coupons to get discounts on
their product purchases without going through the trouble of
clipping and collecting paper coupons while helping retailers
increase their distribution. Tesco, whose online retail sales
during the year ending February 2010 grew 7.3 percent annually,
set up a consultancy named Task Retail, which will advise Tesco
on its online clothing strategy.
The Web will influence more than half of
total retail sales by 2014 in the US
Online product research is not only driving online sales but
also land-store sales. In 2009, store sales influenced by
online research totaled $917 billion USD in the US 1 while retail
e-commerce sales were $155 billion USD. It means for every
one US dollar in online sales, the internet influenced $5.91
USD of store sales. A majority of consumers are using online
channels — comparing sites to find bargains. Post recession,
consumers have become quite cautious spenders. They do
extensive research online before closing the deal. Apart from
US, European consumers are also mixing online and offline
channels during their multi-channel purchasing decision.
Going forward, online and Web-influenced offline retail sales
will grow at a 9 percent CAGR over the next five years 2 , as
consumers increasingly use the Internet to research products
before purchasing.
In brief, any retailer who is not using the online channel to
promote offline sales — as well as online sales — is missing
out on opportunities in today’s multi-channel scenario.
Financial analytics — becoming integral
part of operational strategy 3
The e-commerce industry has matured quite rapidly — in the
time span of a decade. In the developed world, almost every
company has an online retail store, hence, merely establishing
Web presence does not lead to success in the business. With
the maturity of the e-commerce market, customers are
now demanding a more comprehensive look at online retail
offerings with cost benefit vis-à-vis the competitors.
Traditional marketing methods are no longer viable for a
variety of reasons, including the fact that regulated
1 eMarketer
2 Forrester Research
3 http://www.ecommercetimes.com
monopolies are now few and far between. The Internet has
eliminated many of the traditional geographical barriers
companies have employed to fend off competitors. Now firms
can market their goods and services worldwide. In addition,
in developed countries such as the US and UK, the number
of potential new customers is shrinking because most large
companies have deeply penetrated into their prospect bases.
IMAP’s Retail Industry Global Report — 2010: Page 6
Today, companies have to search for innovative ways to
determine how each e-commerce business process impacts
the bottom line. Financial analytics tools offer retailers
the opportunity to more closely examine their assets and
liabilities. These analytic tools that help in performing robust
analysis of retail business, covering various areas from product
design to marketing to customer care services, have become
more important. Unlike the traditional practice of focusing on
quality and quantity of goods and services, retailers now are
required to do a better job of analyzing their business in order
to beat the competition.
This will give rise to new customer-driven metrics and new
metrics designed to improve the shopper journey and point-ofpurchase
experience.
Cross-border online purchases are booming
In today’s cutting-edge scenario, consumers are buying crossborder
for various reasons, such as price, quality and unique
product selection through international sites. Apart from these
key reasons, localization of Web sites also favors cross border
purchases.
Most cross-border consumers claim they get deals on
products from overseas retailers even when shipping costs
are considered. Manufacturers selling directly to consumers
tend to be conscious of price differences on products in the
countries in which they operate. As per one of the surveys
conducted in early 2010 4 , nearly one-third of European online
buyers made Web purchases outside of their home country.
On a similar note, in the US, more than one-quarter bought
items from online retailers based outside of the US and among
consumers aged 18–24, up to one-third of consumers bought
from non-US sites 5 .
Also, from the online retailers’ point of view, these crossborder
buyers are desirable consumers because they show
high online buying tenure, have high levels of disposable
income, and outspend other online buyers.
Going forward, retailers will continue to add international or
cross-border options in their offerings for consumers, such
as adding translated content to sites to attract international
buyers. Fruugo, a shopping Web site, has started using machine
translation to enable cross-border commerce. Additionally,
Urban Outfitters from UK has added separate French- and
German-language pages that explain how to order from its site.
4 Forrester Research Survey
5 Forrester Research