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Holiday 2013 was all about mobile, the gift that kept on giving

BY CSA STAFF

By Jay Henderson, Global Strategy Director, IBM Smarter Commerce

With the holiday shopping season behind us, retailers are celebrating the joyous bounty of this year’s shopping season. Consumers continued to show their digital prowess and appetite for online shopping as online sales soared across the Thanksgiving holiday weekend. According to the IBM Digital Analytics Benchmark, overall online sales from Thanksgiving weekend (Thanksgiving through Sunday, Dec. 1) were up 14.5% from the same period last year, with Cyber Monday online sales up 20.6% from 2012.

This year, several retailers embraced the broader omni-channel experience to bring the best of online shopping into the store to enhance, not detract, from overall online sales. Consumers installed 23% more retail applications over Thanksgiving and Black Friday as compared to the daily average over the last two months. Through these apps, retailers were able to push 37% more timely notifications to users that opted to receive alerts – these offers included nearby sales, special mobile coupons, even a price changes for watched items.

It was clear that mobile played a big (if not the biggest) role in helping retailers rake in record-breaking sales this year. On Cyber Monday alone, mobile traffic grew to nearly 32% of all online traffic, increasing by 45% from 2012. Mobile sales were also very strong, exceeding 17% of total online sales, an increase of more than 55% year-over-year. Here’s a look at how the big three shopping days stacked up in 2013:

Thanksgiving Day: Thanksgiving, which traditionally has been a slower day for retail sales, saw a nice bump as consumers took their smartphones and tablets to the dinner table, in an effort to get an early start on Black Friday shopping. Thanksgiving Day online sales grew nearly 20% from 2012, led by strong gains in department store online sales, which increased 60% year over year. Mobile sales increased 49% year over year as a component of all online sales, with tablets driving 16.5% of all online sales, almost twice that of smartphones, which accounted for 9%. Tablet users also averaged $126.49 per order, versus smartphone users who averaged $110 per order, indicating consumers buy on their tablets, but browse on their smartphones. And perhaps not all that surprising, New York drove the most online sales during Thanksgiving Day, rounding out the top five cities, which were Atlanta, Chicago, Los Angeles and Washington, D.C.

Black Friday: Despite consumers shopping earlier this year, Black Friday sales were unfazed, still packing a punch in helping to drive online sales. Black Friday online sales reached all-time highs, growing nearly 20%. Mobile sales remained strong, reaching more than 21% of all online sales. Smartphones drove 24.8% of all online traffic compared to tablets at 12.8%, making it the browsing device of choice. However more dollars are being spent by tablet users, which drove 14.4% of all online sales versus just 7.2% for smartphone users.

Cyber Monday: Cyber Monday 2013 was a banner day for online sales, which were up 20.6% over Cyber Monday 2012. As the biggest online shopping day in U.S. history, Cyber Monday was also the capstone for the highest five-day online sales period on record, from Thanksgiving Day through Cyber Monday, a period which saw 16.5% year-over-year online sales growth. Mobile traffic was bigger than ever, some 31.7% of all online traffic, up 45% year-over-year. Mobile also saw strong sales, exceeding 17% of total online sales, and an increase year-over-year of more than 55%.

This holiday season gave a nod to the growing power of the mobile shopper and online’s influence in driving big time sales for retailers. If this year is any indication of where e-commerce is heading in 2014, retailers have a lot to be excited about.


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Amazon promises HD TV on steroids

BY CSA STAFF

The CES show in Las Vegas is ground zero for big announcements and Amazon sought to make a splash of its own this week, announcing a commitment to 4K technology and arrangements with some of the biggest names in entertainment to enhance television picture quality.

In an announcement short on specifics, Amazon’s Instant Video unit said it was working with Samsung, Warner Bros., Lionsgate, 20th Century Fox, Discovery and others to offer customers a premium 4K Ultra HD experience. The company said its announcement was further evidence of a commitment to 4K technology that was evident last month when Amazon Studios announced plans to shoot all 2014 full original series, including comedies and dramas, in 4K Ultra HD.

4K in a nutshell is super high resolution for those who want to see every pore in Anderson Cooper’s face or blade of grass during the Super Bowl. Prior to 4K, which is capable of showing four times as many pixels as standard HD, the highest resolution on the market was full HD 1080p, which consisted of 1920 x 1080 pixels. 4K has 3840 x 2160 pixels.

“Customers are excited about the future of 4K and the next evolution of high resolution video. We’re working with consumer electronics leaders and Hollywood studios to make that a reality,” said Bill Carr, vp of digital video and music for Amazon. “There are a number of elements that need to work together to create a true 4K experience for customers. You need great content and compatible devices, but you also need a service that can deliver that content to your devices so that it plays beautifully. We’re excited about making that a reality.”

According to Kyungshik Lee, an SVP with Samsung’s display business, 2014 is going to be a break out year for ultra HD.

“Samsung is launching its biggest line of Ultra HD TVs and is excited to work with content services like Amazon Instant Video to bring the clarity and lifelike quality of 4K to our customers,” Lee said.

Content providers also weighed in on the merits of 4K and their commitment to it.

“Warner Bros. is looking forward to working with Amazon as they offer their customers a fantastic 4K home entertainment experience,” said Ron Sanders president of Warner Bros. Worldwide Home Entertainment Distribution. “The new 4K Ultra HD displays provide viewers with a superior picture, bringing new life to movies and TV shows, and for content that is not available in 4K, the Ultra HD displays will make every detail of your Blu-ray collection more vivid and crisp compared to standard 1080p screens.”

“We’re delighted to explore the 4K arena as part of our multifaceted relationship with Amazon,” said Lionsgate President of Worldwide Television & Digital Distribution, Jim Packer. “Ultra-high definition is the tip of the iceberg in underscoring the potential for new technologies to enrich our library of great franchises and other premium content in the years to come.”

"Amazon has a strong history of consumer-empowering innovations, and their commitment to advancing the consumer digital experience is a testament to their innovative culture," said Mike Dunn, president, Twentieth Century Fox Home Entertainment. "Our strategy of fostering easy, affordable and accessible ways for consumers to enjoy Fox movies and TV shows across all of their devices is very much in line with that."

“Discovery has been pleased to offer Amazon customers an array of our popular content,” said JB Perrette, chief digital officer, Discovery Communications. “In Discovery’s nearly 30-year history, the company has led the way in providing closer-to-reality content experiences, from digital to HD to 3D and now, with 4K. We applaud Amazon for developing a true 4K viewing experience for its customers and we look forward to working with them to create ever-better viewing opportunities for our audiences.”

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Digital holdout Michaels plans 2014 IPO

BY CSA STAFF

The nation’s largest arts and crafts retailer plans to go public this year and the launch of a new ecommerce platform that gives Michaels Stores long overdue online sales capabilities is a key element of its growth strategy.

Michaels Stores has a strong online, mobile and social presence where it regularly engages with millions of customers, but its rudimentary Web site only allows for the sale of gift cards and a few books. That situation is expected to change this year as the operator of 1,259 stores launches a new e-commerce platform that will allow it to drive even strong engagement and the potential to sell stuff to the millions of customers with whom it has a digital relationship. For example, Michaels had more than 180 million visitors to its Web site during the past 12 months, 1.5 million Facebook fans, 300,000 Pinterest followers and 100,000 Twitter followers, according to the company’s registration statement filed with the Securities and Exchange Commission.

“We expect our new e-commerce platform will allow us to sell much of our current assortment while also expanding into e-commerce-only products,” the company said in the filing. “Although we expect this channel will produce a more limited sales penetration than more commoditized retail categories, we believe it will augment our multi-channel strategy to broaden our customer base and improve the shopping experience.”

Beyond announcing the intended launch of the ecommerce platform, Michaels offered few details about its online plans, focusing instead on the market potential for physical stores which average about 19,000 square feet and offer 36,000 products. Michaels contends the U.S. and Canada can support 1,500 of its stores, or roughly 250 more than its current total. This year, it expects to open between 40 and 50 stores which is slightly fewer than the 54 stores the company said it opened during the nine month period ended November 2.

In addition to new stores and the launch of an ecommerce platform, other components of Michael’s growth strategy outlined in its filing include:

•Broadening the appeal of stores to those new to do-it-yourself projects as well as more experienced crafters.
•Enhancing the store experience with improved signage and open sightlines to make stores more shoppable while developing flexible store formats to address unique market opportunities.
•Reaching new and existing customers with expanded marketing efforts that include print, digital, direct mail, broadcast and community events.
•Strengthening merchandising and sourcing capabilities to better identify and source new trends, merchandise and categories that enhance our exclusive brands.

Overseeing the retailer’s growth strategy is Carl Rubin, an executive with considerable prior public company experience. He joined Michael’s as CEO in March 2013 after spending three years as president and CEO of Ulta Salon, Cosmetics & Fragrance since 2010. Prior to that, Rubin spent five years with Office Depot, last serving as president of the company’s North American Retail division and prior to that spent six year with Accenture where he was a partner.

The initial public stock offering will mark a return to public ownership for a company that was taken private in late 2006 by Bain Capital Partners and Blackstone Group. The offering will be led by J.P. Morgan and Goldman, Sachs & Co. Upon completion, the private equity concerns will retain control of the company and Michaels will receive none of the proceeds from the stock sales. Instead, the $4.4 billion retailer will remain saddled with debt of roughly $3.7 billion, but it does have some sales momentum and a host of favorable financial metrics on its side.

Sales for the nine month period ended November 2 increased 4.5% to a little more than $3 million thanks to a 2.1% same store sales increase and the addition of new selling space. Meanwhile, operating profits of $334 million during the period were essentially flat with the prior year total of $337 while net income increased to $110 million from $95 million. The company boasted an 11.1% operating margin and a 3.6% net margin during the period.

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