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Presented by: U.S. APPAREL RETAILING: DELIVERING A STRONG FINISH Jahnia Sandford Analyst Mary Brett Whitfield September 2013 Senior Vice President.

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Presentation on theme: "Presented by: U.S. APPAREL RETAILING: DELIVERING A STRONG FINISH Jahnia Sandford Analyst Mary Brett Whitfield September 2013 Senior Vice President."— Presentation transcript:

1 Presented by: U.S. APPAREL RETAILING: DELIVERING A STRONG FINISH Jahnia Sandford Analyst Mary Brett Whitfield September 2013 Senior Vice President

2 © Copyright 2013 Kantar Retail Copyright Notice and Disclaimer Copyright © 2013 Kantar Retail LLC All Rights Reserved. 501 Boylston Street, Boston, MA USA Tel Contact: No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photography, recording, or any information storage and retrieval system now known or to be invented, without the express written permission of Kantar Retail LLC. The printing of any copies for back up is also strictly prohibited. Disclaimers The analyses and conclusions presented here represent the opinions of Kantar Retail LLC. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion. This content is not endorsed, or otherwise supported, by the management of any of the companies covered during the course of the presentation or within the following slides. 2

3 © Copyright 2013 Kantar Retail Agenda –Update on Landscape –Best-in-Class Mobile Shopping Apps –Hot Growth Tactics Presenters Mary Brett Whitfield Senior Vice President Jahnia Sandford Analyst Todays Presenters and Agenda 3

4 © Copyright 2013 Kantar Retail Who? How? What? Coverage 4,000 primary household shoppers per month CORE SAMPLE: Representative sample of ~50,000 unique primary household U.S. shoppers annually ALSO: Oversample of men for representative sample of males HOH 18+ (n = 800/month) Fielded online the third week of every month Survey fielded through LSR access panel of more than 3 million individuals Monthly and quarterly tracking questions on retailers and venues shopped, products purchased, where spent, near-term spending outlook, and household financial health Questions on timely and topical issues (including key holiday periods) affecting shopping behavior 200+ retailers across all sectors of retail 75+ product categories (e.g., over-the-counter medications) 7 major merchandise groups (e.g., health and beauty care products) 4 Kantar Retail ShopperScape ® 4

5 © Copyright 2013 Kantar Retail Agenda –Update on the Landscape: Whats Required to Deliver a Strong Finish? Macro Financial Seasonal –Best-in-Class Mobile Shopping Apps –Hot Retailer Growth Tactics 5

6 © Copyright 2013 Kantar Retail Macro Trends Lend Favorability But not all apparel retailers have been able to capitalize 6 Consumer Confidence Spending Sentiment Material Costs Inflation Weather Strong Prior-Year Performance Competition Payroll Tax Increase Housing Market Rebound Diverts Discretionary Spending Source: Conference Board, Kantar Retail ShopperScape ®, research and analysis

7 © Copyright 2013 Kantar Retail A Few Retailers Capitalized and Grew at the Top and Bottom Source: Kantar Retail analysis and company reports 7 1.6% 1.5% 8% 5.6% 3.6% 8% 7.6% 2% | 5% 34% 13.0% 9% | 9% 30% 5.0% 3.6% 18% 4.8% 3.0% 3% 8.0% 3.0% 11%

8 © Copyright 2013 Kantar Retail Top Retailers Not Able to Capitalize Top and bottom line declines Source: Kantar Retail analysis and company reports % -14.0% -531% -4.7% -15% | -10% -198% -14.5% -17% | -12% -201% -2.9% -5% | -7% -19% 0.5% -0.5% -4%

9 © Copyright 2013 Kantar Retail Apparels Leaders Sum up Biggest Challenges Have needed to be more promotional to drive sales Source: Kantar Retail analysis and company reports 9 On Womens Apparel challenges: Ronald L. Frasch, President and Chief Merchandising Officer, Saks: The customer … is very discriminating, and she is moving to where the fashion is and clearly letting us and the brands know that she's not going to buy something if it's not to her liking. So I would say we're probably in the middle stage into this, much more work to be done. On Teen Apparel challenges: Thomas P. Johnson, CEO, Aeropostale: Clearly, the teen sector is challenged, and I think it's a number of different things. One is the promotional activity is high, which you would think would induce more purchases. But what it basically does is lower everybody's AUR, so that's obviously challenging. Robert L. Hanson, CEO and Director,American Eagle Outfitters: AEO's women's business had the biggest miss to plan, comping down 9% in the quarter … we saw weakness primarily in core and core fashion styles We believe that fashion always trumps weather. Urban Outfitters President and CEO Richard Hayne We believe that fashion always trumps weather. Urban Outfitters President and CEO Richard Hayne

10 © Copyright 2013 Kantar Retail Seasonal Update Difficult spring leads to moderate/lackluster BTS Source: Kantar Retail ShopperScape ®, June 2013 and analysis 10 From a shopper perspective: –Shoppers narrowed their destination sets –Still choosing Walmart and Target as top destinations for supplies and apparel –Season starting earlier and earlier … and the season is really all summer Supplies61%36% Clothing39%33% Where Plan to Shop for BTS Category Will Shop for BTS Clothing in Summer … … as I see deals … as budget allows

11 © Copyright 2013 Kantar Retail Marshalls Turns BTS/C into a Gift Giving Occasion Source: Kantar Retail research and analysis 11

12 © Copyright 2013 Kantar Retail More Retailers Use Hashtags in BTS Campaigns Source: Kantar Retail research and analysis 12

13 © Copyright 2013 Kantar Retail Catalog Spree Modern catalog shopping puts retailers toe-to-toe 13 Source: Kantar Retail research and analysis Style and brand take prominence over price

14 © Copyright 2013 Kantar Retail Walmarts Cyber Monday in August Lowest prices on back-to-school for one day 14 Source: Kantar Retail research and analysis Early access for Facebook fans Also prominent on mobile app homepage in days leading up

15 © Copyright 2013 Kantar Retail New Competition to Consider Kroger Fashion Essentials and Meijer Style Source: Kantar Retail store visits, retailer web sites 15 Full-family assortment National Brands

16 © Copyright 2013 Kantar Retail Seasonal Recap and Looking Ahead –Spending sentiment favorable at macro level, but retailers of discretionary goods will need to earn share of wallet Those that do will be in a position to drive growth at top and bottom line –Competition not slowing requiring retailers to be more proactive and innovative Expect similar environment headed into the holidays Source: Kantar Retail analysis 16

17 © Copyright 2013 Kantar Retail Agenda –Update on the Landscape: Whats Required to Deliver a Strong Finish? –Best-in-Class Mobile Shopping Applications Whos playing? Whos winning among users Best-in-class features –Hot Retailer Growth Tactics 17

18 © Copyright 2013 Kantar Retail Why Discuss Mobile Shopping Apps? 142 million shoppers own a smartphone: 59% share of mobile market Kantar Retail ShopperScape ®, March 2013, comScore MobiLens, and analysis 18

19 © Copyright 2013 Kantar Retail Use of Retailer Apps on Mobile Growing : 7% 2013: 11% Source: Kantar Retail ShopperScape ®, January 2012 and January 2013

20 © Copyright 2013 Kantar Retail Mobile by the Numbers! Retailers setting huge benchmarks Source: Kantar Retail research, analysis and company reports Y-O-Y mobile sales growthNumber of fashion items sold per minute on eBay thru mobile Portion of 2012 eCommerce sales from mobile Position of fashion items among other categories based on mobile sales in U.S., U.K. Australia, and France Portion of 2012 total sales from mobile Expect 2013 results to eclipse these

21 © Copyright 2013 Kantar Retail What do each of these retailers have in common??? Source: Kantar Retail research and analysis 21 [On the DSW mobile apps impending launch] That's one of the most requested thing from our customers … people don't shop on [native iPhone mobile browser] Safari, they shop on an app. They're conditioned to do that because it's more secure and it's easier. – Kelly Cook, SVP of Marketing, DSW Inc.

22 © Copyright 2013 Kantar Retail Steady Demand for Tablets Supports Belk Anthropologie on Tablet Play … Smartphone Play Soon Source: Kantar Retail ShopperScape,®, January 2012 and Upcoming iPhone app launch, after success of the Free People app launch in June 13, which in in 3 short months achieved more than 80K downloads and a higher sales conversion rate than the brands online site Digital currently the fastest growing business at Belk… ramping up investment in all areas

23 © Copyright 2013 Kantar Retail Whos Playing? Source: Kantar Retail research, analysis, and iPhone iTunes app store 23 Last update as of 9/12/13 *User ranking based on all iPhone versions to date

24 © Copyright 2013 Kantar Retail ModCloths Attention to Detail Aids in the Purchasing Decision Source: Kantar Retail research, analysis, and retailer iPhone app 24

25 © Copyright 2013 Kantar Retail Gilt and Rue La La Sync Sales to Shoppers Schedules Source: Kantar Retail research, analysis, and retailer iPhone app 25 Add sales reminders one- day out Add sales reminders multiple days out

26 © Copyright 2013 Kantar Retail And these?? Giving shoppers other ways to connect in lieu of full mobile store app launch Source: Kantar Retail research and analysis 26

27 © Copyright 2013 Kantar Retail American Apparels Shopping Assistant Syncs all Channels Source: Kantar Retail research, analysis, and retailer iPhone app 27 Augmented Reality Experience Check-out from device using scanner and PIN Must create an account or sign- in to use full app

28 © Copyright 2013 Kantar Retail International Retailers Apart of U.S. Shoppers Routines Source: Kantar Retail research, analysis, and retailer iPhone app 28 Interactive weekly fashion/lifestyle magazine Singing alarm clock and weather reporter

29 © Copyright 2013 Kantar Retail Kate Spade Saturday Uses pending mobile launch to direct traffic online Source: Kantar Retail research, analysis, and retailer iPhone app 29

30 © Copyright 2013 Kantar Retail Ann Wants to Be Your BFF Uses corporate culture to connect with users Source: Kantar Retail research, analysis, and retailer iPhone app 30 If you love the brand so much why not work there… Allows users to save favorite mantras, dates, trends from the community and career opportunities

31 © Copyright 2013 Kantar Retail lululemons Lifestyle Approach Targeting yogi community Source: Kantar Retail research, analysis, and retailer iPhone app 31 Upcoming classes automatically load when app is opened

32 © Copyright 2013 Kantar Retail Neiman Marcus Unique Approach Sells gifts and shoes only (SWAS concept on Mobile) Source: Kantar Retail research, analysis, and retailer iPhone app 32 NM Gifts Today's Shoe Free expedited delivery Free gift wrapping

33 © Copyright 2013 Kantar Retail Other Standout Features Source: Kantar Retail research, analysis, and retailer iPhone app 33 One Click Ordering Personalization is even more important on mobile because of the more limited screen real estate. –Steve Jacobs, CIO, Gilt.com Personalization Timing and Overall use of Notifications Convenience/ Omni-shopping

34 © Copyright 2013 Kantar Retail Apps Eliminate Need to Carry Around Physical Card, Ups Convenience Factor Source: Kantar Retail research, analysis, and retailer iPhone app 34

35 © Copyright 2013 Kantar Retail Retailers Driving Cross-Channel Shopping Pac Sun gives online shoppers 5 reasons to go mobile Source: Kantar Retail research and analysis 35 PacSun sells its mobile phone apps uses and benefits to online shoppers Shopper wont have to click thru to app stores to find out

36 © Copyright 2013 Kantar Retail Others Enhance the Store Locator Feature Source: Kantar Retail research, analysis, and retailer iPhone app 36

37 © Copyright 2013 Kantar Retail And Some Retailers Highlight other Brands Source: Kantar Retail research, analysis, and retailer iPhone app 37 Though 4-separate apps available, Gap allows users to shop all banners from any of the apps, eliminating the need to download each one Introduces shoppers to newest banner and growth brand with brief back story Shows sneak preview of merchandise and app layout

38 © Copyright 2013 Kantar Retail In Targeting Gen Y, Games and Interactivity Take Prominence Over Shopping Source: Kantar Retail research, analysis, and retailer iPhone app different gaming options

39 © Copyright 2013 Kantar Retail Mobile App Recap: –Have a mobile presence and showcase product whether selling or not! Shoppers are looking –Mirror shopping at other channels but keep in mind space and time constraints Showcase most relevant targeted messages upfront on app to engage immediately Mobile app should be easiest shopping platform of all channels, strive for fewest clicks –Applying CRM insights just as important here as with other channels and mediums –Focus on practical but wow details such as store locator features and virtual wallet –Market mobile app and its features across other channels, use as competitive differentiator –Incorporate key store/ online strategies, i.e., exclusives (styles and deals), early access, shops Fast growing, highly relevant selling channel attractive for retailers and shoppers Source: Kantar Retail analysis 39

40 © Copyright 2013 Kantar Retail Agenda –Update on the Landscape: Whats Required to Deliver a Strong Finish? –Best-in-Class Mobile Shopping Applications –Hot Retailer Growth Tactics Partnerships and collaborations eCommerce In-store 40

41 © Copyright 2013 Kantar Retail Recent and Upcoming Collaborations Popularity not slowing Source: Kantar Retail research and analysis Feb

42 © Copyright 2013 Kantar Retail Three Signs that Partnerships Are Here to Stay Source: Kantar Retail research and analysis 42 Extensions and Expansions Acceleration/ Turn Around Surprise Opportunities Revealed

43 © Copyright 2013 Kantar Retail eCommerce Newbies –TJX –Saks Off-fifth The last of the top value players get in the game Source: Kantar Retail research and analysis 43 H&M debuted U.S. eCommerce Aug. 1, 2013, simultaneously with mobile phone shopping application TJX relaunched TJMaxx.com on Sept. 18, 2013

44 © Copyright 2013 Kantar Retail Driving Traffic to Store Old Navy creates an event around one product Source: Kantar Retail research and analysis 44 Using the model on other products with higher price points

45 © Copyright 2013 Kantar Retail Retailers Carve Out Space on the Selling Floor Influences and accommodates a longer stay in store Source: Kantar Retail store visits, research and analysis 45 Nordstrom Juniors Sitting area Urban Outfitters Media Bar Nordstrom Habitant Bar/Café

46 © Copyright 2013 Kantar Retail More Space also Dedicated to Interactivity Fun and enjoyable elements targeted toward Gen Y Source: Kantar Retail research and analysis 46 Urban Outfitters Nordstrom

47 © Copyright 2013 Kantar Retail Rack Does Mobile Checkout Right Arming the store for an efficient digital checkout process 47 Source: Kantar Retail store visits, research and analysis

48 © Copyright 2013 Kantar Retail Cross-Merchandising Evolving, Blurring Department Lines 48 Source: Kantar Retail store visits, research and analysis Making every category relevant to the shopper Urban Outfitters Macys Gap

49 © Copyright 2013 Kantar Retail Macys Making Impulse a destination Apparel, beauty and shoes today … mens, kids, home/ kitchen next? 49 Source: Kantar Retail research and analysis

50 © Copyright 2013 Kantar Retail Delivering in the Back Half: Shoppers are more confident and willing to spend than they were a year ago. Each shopping touch point will be important in driving traffic, conversion and return trips. Consistent and thoughtful execution is essential. Extending value beyond price by communicating and delivering on shopping experience, exclusivity, brands, and convenience will bode well with shoppers when they make destination decisions. Mobile is an important and profitable touch point, especially during holiday where routine browsing and pre-trip planning takes place. Environment no less challenging but full of opportunities Source: Kantar Retail analysis 50

51 © Copyright 2013 Kantar Retail –Delivering a Strong Finish – Best-in-Class Mobile Shopping Apps –Hot Retailer Growth Tactics 51 QUESTIONS? Submit questions on Q&A panel on right side of screen

52 © Copyright 2013 Kantar Retail 585 S. Front St. Suite 50 Columbus, OH S. Front Street Suite 50 Columbus, OH Jahnia Sandford Analyst T Mary Brett Whitfield Senior Vice President T


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