Holiday Retail Darling 2.0 - Mobile Commerce

"In 2008 and 2009 , mobile started out as a science project. It's accelerated so fast that it's becoming more mission-critical for retailers to deliver a mobile experience in a professional way."  

- Dave Sikora, Digby

In our 2009 post-holiday blog we declared online shopping as the holiday retail darling of the holiday season. But this year there' s a new darling in town - it's that handy portable device we call a mobile phone. Mobile commerce, or m-commerce, made a significant contribution as the new tech trend for the holiday season as more shoppers were going online than ever before.

People used their phone just like their computers at home for online shopping: comparing prices, purchasing items and finding the nearest store location as well as inventory in stock locally.


Retailers hopped on board as they invested in m-commerce to prepare for the holidays. That's a smart move considering how m-commerce promotions encourage impulse buys, and knowing the exact location of shoppers lets merchants deliver coupons and offers to users when they're most likely to spend. Mobile apps like Foursquare  encourages consumers to "check in" and retailers took advantage of the information. They offered the ability to scan barcodes or get discounts on their mobile device while out shopping. With moves like that, retailers presented a seamless shopping experience online and offline.


M-commerce expected to triple this year, and double again next year; but US lags behind others

• m-commerce is expected to triple to $3 billion in the U.S. this year and reach $6 billion next year
• However, U.S. consumers are still behind foreign consumers in terms of purchasing with a mobile phone
• 7.9% of U.S. consumers have bought something with a phone vs.
• 32% of consumers in Taiwan have bought something with a phone (This tops the list of major industrialized countries (per IE Market Research Corp)
• About 13% of consumers in Finland have bought something with a phone (#1 European country)

M-commerce played a significant role so far in the 2010 holiday online shopping experience

• Almost 60% of mobile consumers expect to use their phones to help with shopping plans and holiday celebrations this season
• Nearly 4% of all Cyber Monday shoppers used smartphones and other devices to make their purchases
• According to research data from Google/OTX:
• 52% of U.S. smartphone users plan to use their phone to compare prices during the holiday shopping season
• 40% plan to use their phones to read product reviews
• According to the 2010 eholiday pre-holiday survey from National Retail Federation
• Shoppers using smartphones will account for at least $127 billion, or 28%, of the $447 billion the NRF predicts consumers will spend this holiday season 
• Over one quarter of consumers said they definitely planned to use their smartphone to research or make holiday purchases

Are you planning to ride the m-commerce wave this holiday season? You won't be alone!

Image: Carlos Porto/freedigitalphotos.net 

Sources:

7.9% of U.S. consumers bought item on smart phone, SFgate.com, 12/3/10

It's a holly, jolly (mobile) Christmas, shop.org, 12/2/10
Best Buy, Amazon.com Try to Reach Shoppers Through Their Phones, businessweek.com, 12/2/10
U.S. Online Sales on Cyber Monday Climbed 16%, ComScore Says, bloomberg.com, 12/1/10
Cyber Monday sales hit record $1B, bizjournals.com 12/1/10

Retailers Seeing Green on Black Friday Weekend

Several predictions for the 2010 Black Friday weekend came true! 

1. There were more shoppers in stores and visiting websites over this Black Friday weekend 
2. More money was spent than a year ago  
3. Shoppers purchased more fun gifts (jewelry) instead of practical gifts (coffee makers)  

But hold on! Black Friday 2010 weekend looked good, but consumers are still concerned with the economy, so retailers are urged to continue their low pricing and can't-pass-up offers.

"As retailers look ahead to the first few weeks of December, it will be important for them to keep momentum going with savings and incentives that holiday shoppers simply can't pass up."

Matthew Shay, NRF President and CEO

By The Numbers...

• 212 million shoppers visited stores and websites over Black Friday weekend, up from 195 million last year
• The average shopper this weekend spent $365.34, up fro last year's $343.31
• Total spending reached an estimated $45 billion
• The number of people who shop on Thanksgiving day, both online and in stores, has doubled over the past five years, from 10.3 million in 2005 to 22.3 million in 2010

Consumers clad in PJs visited stores earlier than ever

• The number of people who began their Black Friday shopping at midnight tripled this year from 3.3% last year to 9.5% in 201
• By 4 a.m. 24% of Black Friday shoppers were already in stores

Some purchasing highlights

• The number of people who purchased jewelry over the weekend rose from 11.7% last year to 14.3% this year
• Gift cards rose from 21.2% last year to 24.7% 
• Toys came back from 32.2% to 33.6%
• Books and electronics rose from 40.3 last year to 42.1%

Department stores saw increase in traffic
Both department stores (52% this year vs. 49.4% last year) and clothing stores (24.4% vs. 22.9%) saw an increase in traffic while the percentage of people who shopped at discounters declined 7.2% from 43.2% last year to 40.3% this year

Retailers paid more attention to online deals, and shoppers responded
The percentage of people who shopped online this weekend rose 15.2% from 28.5% last year to 33.6% this year

Image: Simon Howden/freedigitalphotos.net 

Sources
NRF: Black Friday Weekend Sees Bigger Crowds, $45 Billion in Spending, nrf.com, 11/28/10

Fast Fashion's Appeal. It's "safe" fashion.

Defining Fast Fashion

Do you know what Fast Fashion is? We asked a group of women who shop fast fashion concept stores (Uniqlo, H&M, Zara, Forever 21, etc.) and most were not familiar with the term. No biggie. The term is more industry jargon than a consumer-facing moniker.  Fast Fashion takes runway trends and quickly (and inexpensively) turns them into merchandise for trend-seeking consumers. 

The Appeal of Fast Fashion

Besides the obvious cost-savings and desire for trendy items, what is the appeal of these stores? Here's what women told us: 

• It's a safe way to try new trends. Let's say you're eying a one-shoulder, brilliant blue mini dress (a la Katy Perry) and you have quite a lovely badonk. Fast Fashion offers a cheap way to try out a trend and see if it actually "fits." Sometimes we women need to try an outfit out in the real world to decide if we like it, badonk or flat bottom. Better that "trial" item be something inexpensive according to Lori from California, a 30-something stay-at-home mom and budding fashion blogger. Lori tell us, "I enjoy toying with fashion. But I don't want to empty my wallet to do so." 

• Feel less guilty if it doesn't work out. If the brilliant blue mini dress gets positive feedback from the people who matter (namely, other women) then it's a go. If we hear crickets instead of compliments? The blue mess will get relegated to the Good Will pile. Who cares? It was only $20, and now it's a donation. As Lauren, a digital marketer in her 20s points out, "If I don't end up liking the outfit...I won't be upset because it didn't cost me as much money." 

• Less worry about ruining or losing items. Let's take our brilliant blue dress again. Say we get tagged by a lit cigarette. That's just the way it goes because "there is always a risk of it getting ruining while out," according to Emma, a 20-something creative. According to Emma and others, there's much less drama in ruining this dress than say, that JCrew number.

Quality/Risk Equation in Fast Fashion

Speaking of risk, women who shop fast fashion understand the potential quality discrepancy in these items. They realize that lesser quality fabrics, and stitching is probable when the costs are so low. However, many women like Samara a 20-something Media person, feel they can mitigate the risk by being selective. "I have had stuff from Forever 21 that falls apart in 1 washing. Then again, some stuff I've had for years. You have to be careful."

The Fast Fashion Controversy

It's not all just fun and cheap fashion with these retailers. The high-end fashion crowd (fashion designers, editors, industry vets) look down on these stores for their lack of quality merchandise and so-called knock-off designs. It doesn't stop with the bad opinion either: In the past few years Anthropologie, Diane Von Furstenburg, and Anna Sui have all taken retailer Forever 21 to court for copying their designs. 

In addition to the above allegations, some question how these inexpensive items can be made in a responsible manner (that is, fair pay, decent working conditions, non-hazardous materials, etc.). Fast Fashion retailers need to take notice on this specific issue because of the younger adults they target -- specifically the Millennial generation. Millennials tend to be more attuned to fair business practices than the generations before them. They might be lured in by cheap prices, but their conscience might keep them from buying. 

"This is always a sticky subject for me...the merchandise is mass-produced in low or no-pay sweatshops," posts kelseaalexis in response to an article in nymag.com. "However, since I am only 15, I don't exactly have the funds to buy the 'real' things all of the time, so I just resort to Forever21."

Fast Fashion's Cousin: Designer Collaborations

Designers Collaborations are exactly what they sound like: A known (or in some cases, an unknown) designer teams up with an established retailer like Target, H&M, and Kohl's and creates an exclusive collection for that retailer. Karl Lagerfeld tipped this trend back in 2004 with his H&M collection that had fashionistas flocking to the store for the limited edition designs. Other designers, like Vera Wang for Kohl's, have been lending their design cred for years. Even mainstream Macy's is getting in on the action with their latest announcement to bring these types of fashions into their stores. 

While Fast Fashion may have it's albatross, it seems that Designer Collaborations enjoy a much better reputation. Everyday women enjoy the access to these designers and consider these collaborations unique and original. They enjoy the ability to afford a designer label. Plus, the designers gain points for making their fashion more accessible. 


Fast Fashion makes sense with today's economic sensitivities
Fast Fashion has it's place in the retail world, especially as we are experiencing a renewed sense of frugality. There will always be a segment of people including Millennials and trend-seekers of all ages who will want up-to-the minute trends at a tremendous bargain prices. Low price drives the benefits we discussed earlier (safe way to try trends, less guilt, less worry). The additional benefit is that the low price of Fast Fashion also makes consumers feel like smart shoppers.    

It seems that Designer Collaborations will continue to have appeal as well and show no signs of slowing down. Designer Collaborations can provide Fast Fashion concepts more "legitimacy" as a fashion destination by providing a real designer behind the merchandise. 

[Image: Tom Clare / FreeDigitalPhotos.net]

"I'm Dreaming of a (cautious) Christmas"

While retailers experienced a decent back-to-school season this year, experts warn not to expect too much for the holiday season. Sales are predicted to be up, but experts say consumers will shop with caution and wait until the last minute to shop for the best deals.  They advise retailers to offer promotions, rewards and coupons to draw in consumers. Why? Consumers are expected to do even more comparison shopping and purchasing online than last year. Although the high unemployment rate (holding at 9.6%) continues to put a damper on retail sales, positive September sales for department stores and teen retailers (discount retailers struggled!) might give a glimmer of hope for the holiday retail season.

September sales soar...for some
September sales for many retailers show a light at the end of the recession tunnel, especially departments stores and teen retailers. Surprisingly, discount retailers did not fare as well.

Here are some highlights:
Teen retailers

• Abercrombie and Fitch posted an increase total comp store sales of 13% vs. an 18% decrease from last year
• American Eagle Outfitters, Inc. posted an increase in comp store sales of 4% compared to flat from the year before

Department stores

• Macy's same store sales increased 4.8% vs. a 2.3% drop from last year
• JC Penney Company, Inc. reported a 5.1% increase in comp store sales vs. a 1.4% decrease from last year
• Limited Brands comp store sales rose a whopping 12% vs. a 1.7% decrease from last year

Discount stores

• TJX Companies posted a 1% increase in consolidated comp store sales vs. a 7% increase from last year
• Kohl's reported only a 3% increase vs. a 5.5% increase for the same period last year
• Ross Stores, Inc. posted same store sales of 2% vs. an 8% increase from last year
• Although Walmart doesn't report monthly sales any more, they have posted five consecutive quarters of negative same store sales.

What does this shift foretell? Perhaps just having low prices isn't enough - retailers may need to show they have the right merchandise to bring consumers into their store.

Overall Holiday Sales Predictions from the Experts
Deloitte predicts that retailers can expect about a 2% rise in sales, beating last year's 1% increase, and most of the boost will come from non-store sales such as catalog, interactive television and online. In fact, Deloitte expects a 15% jump in non-store sales, nearly two-thirds of which will be online and the rest of which will come through catalogs and television.

"Online activity may also influence in-store shopping this holiday season, as social networks and mobile applications are playing a more prominent role in the shopping process."  

-Alison Paul, Deloitte Retails Sector Vice Chairman

Kantar Retail calls for fourth quarter retail sales to rise 2.5% better than the 0.5% gain from the same period a year ago. Although they predict the holidays will be a soft spot, Kantar says it's not an indication of a double-dip recession. The slow-rising economy, though, will keep consumers in a thrifty mode, which means consumers will be looking for discounts and deals, as well as shopping at dollar stores and small-format value retailers. Kantar found that one-third of consumers plan to comparison shop online before heading to the stores, and that one in every 20 customers will bypass stores completely.


National Retail Federation expects holiday sales to rise 2.3% over last year and that sales will reach $447.1 billion, the biggest increase in three years in part because of more aggressive pricing. This would be a vast improvement over lat year's 0.4% rise and the 3.9% holiday sales decline in 2008.

"Though the retail industry is on stronger footing than last year, companies are closely watching key economic indicators like employment and consumer confidence before getting too optimistic that the recession is behind them." -NRF President and CEO Matthew Shay

The International Council of Shopping Centers released its forecast Tuesday with the most optimistic predictions of an increase in holiday sales landing between 3% and 3.5%

What are consumers thinking?
Kantar Retail's September ShopperScape survey shows early spending plans by shoppers.

• 7% of shoppers are planning to spend more for the holidays vs. 9% from last year
• 19% of Gen Y shoppers plan to spend more - the strongest among all generations
• 38% of shoppers plan to spend less on holiday gifts vs. 40% from last year
• 42% of Baby Boomers plan to spend less - representing the greatest cutbacks between all generations
• 49% of shoppers plan to spend about the same compared with 46% from last year
• 55% of seniors are most likely to hold their holiday spending steady

Although the retail industry experienced a good back-to-school season and many stores saw positive September same store sales, with nearly 15 million people out of work, and until unemployment changes, retailers may not see a strong holiday season this year. Sales are certainly expected to be up, especially compared to the last two years, but the recession continues to have an effect on consumer spending. The holiday season shouldn't be completely dreary though, as long as retailers offer discounts and promotions, the consumers will shop.


Image: dream designs/freedigitalphotos.net


Sources:
September Retail Sales Lift Holiday Sales Expectations, 123jump.com, 10/9/10
Employment Situation Summary, bls.gov, 10/8/10
September Same-Store Sales Grow Slightly Slower, Kantar Retail Reports, retailforward.com, 10/7/10
September Retail Sales Rise; Holiday Looks Happy, multichannelmerchant.com, 10/7/10
Retailers' Holiday Hinges on Discounts, wsj.com, 10/6/10
Retailers Need 'Promo Mojo' to Survive Holiday 2010, cnbc.com, 9/30/10
Deloitte: Online will drive small uptick in holiday sales, bizreport.com, 9/26/10
Retailers Cautious As They Hire Holiday Temps, npr.org, 9/19/10
Analysis: As school starts, retail thoughts turn to holidays, reuters.com, 9/3/10

Frighteningly Empty Stores for Halloween, or a Bewitching Economic Rebound?

About 148 million Americans are expected to partake in some sort of Halloween celebration, and according to National Retail Federation's Halloween Consumer Intentions and Actions Survey, people will be spending considerably more than they did last year, perhaps even back up to the levels of 2008. That being said, 30% of consumers say that the condition of the U.S. economy will still influence their Halloween plans. Total spending for the holiday is expected to reach $5.8 billion.
For some people Halloween is not an "all-out" spending holiday, with people doing the same thing from year-to-year regardless of the economy, certain spending boundaries remaining of course. Costumes appear to be where the most money is spent, and is not necessarily affected by economic circumstances while  decorations don't really come in to play regarding the economy. The state of the economy seems mainly to affect those throwing a party, forcing people to pull back on certain provisions.


Costumes - clearly the crux of the holiday
Consumers are expected to spend $23.37 per person on costumes this year
Spending on costumes might be the least economically affected aspect of Halloween this year, which seems to demonstrate that costumes are the nucleus of the holiday. While parents probably don't want to spend a ton of money on a costume their child will most likely wear only for one night, parents might pay anywhere from $10 at Sam's Club to $50 or $60 at Target or a Halloween pop-up store.

Married couples without children might spend $40 or $50 on an outfit, but they may recycle one or two pieces for an outfit the following year. Younger folks just out of college will head to thrift stores such as Goodwill or even look for accent items in their closet. Overall, costumes seem to dominate people's wallets with minor thought to economic conditions.

In fact, of those from NRF's survey:

• 40.1% of consumers are planning to wear a costume, up from 33.4% last year
• 69.4% of 18-24 year olds say they will dress up, the highest of any other age group

Decorations - reuse and recycle
Consumers are expected to spend $18.66 on decorations this year and 50.1% of consumers will decorate their home or yard
Halloween decorations seem to be something people don't buy every year, unlike Christmas where maybe new ornaments or bulbs are purchased yearly for a tree; therefore decorations don't appear to be a factor when people consider what or if they are going to cut back on in terms of spending for Halloween.

Some might bargain shop for decorations or pick up one or two new inexpensive items if they happen to see it in a store (like Target or Big Lots), while others might use what they have accumulated over the years. Some people agree that decorations can get expensive and money is better spent on costumes or parties.


Halloween Parties - I wanna party like it's 2008
Halloween parties might be the most affected aspect, in terms of spending, regarding the state of the economy. Perhaps those who went big the previous year, particularly purchasing alcohol, might scale back and instead have a BYOB party. Economic conditions may not completely stall someone from throwing a party, but it might be a more prominent factor from year-to-year.

NRF's survey revealed:

• 33.3% of people will attend or throw a party
• 55.4% of young adults are more likely than any other age group to throw or attend a party

Still Cutting Back
Although some say their Halloween spending will not change, or perhaps they will cut back on one or two aspects, 86.8% of those surveyed said they will spend less overall.

In addition...

• 45.1% will be buying less candy
• 30.7% will be using last year's decorations and not buying new ones
• 18.5% will be using last year's costume
• 19.5% will be making a costume

While some of those in NRF's survey say they will be loosening their wallets, there are still those who will continue to watch their spending. Perhaps this holiday season will be filled with cautious optimism where some party-goers and throwers will pinch their pennies where they can.

Image: Simon Howden/freedigitalphotos.net

Sources:
After Spooky 2009, Halloween Spending Bounces Back to '08 Levels, According to NRF, nrf.com, 9/23/10