Holiday digital priorities
E-commerce holiday sales are expected to increase 18% to 21% this holiday season, reaching $111 to $114 billion, according to the annual holiday sales forecast from Deloitte. With online growth eclipsing total holiday sales growth (expected to rise 4% to 4.5%), savvy retailers will be pulling out all the stops to step up their digital game.
Industry experts say retailers need to create an engagement strategy based on individual customer needs — along with the optimal solutions to support their efforts.
“Retailers that fail to ‘digitally disrupt’ themselves run the risk of getting left behind,” said Gordon White, general manager of The Social Client, a digital marketing provider. “At the same time, investing in digital tools for the sake of disruption will show minimal return. Technology should enable and enhance the user experience.”
Among the top digital strategies this holiday season are:
• Personalization. To attract shoppers, retailers need to tailor the shopping experience to individual needs. Personalizing marketing messages is the easiest way to jump into the game.
“There are different types of customers, and all have different needs,” said Brett Bair, principal strategist at Monetate.
Despite having access to a wealth of customer behavior and purchasing data, companies still don’t effectively use this information to meet consumer expectations. However, there is still time. The first step is to centralize all customer data, making information actionable. Experts also advise retailers to keep messaging simple.
“Don’t overdo initiatives just to be top of mind,” said Jason VandeBoom, founder of ActiveCampaign, a provider of integrated email marketing, marketing automation and CRM. “Begin analyzing customer actions from previous messages and how these turned into purchases. Also, identify how they interact with various channels.
For those retailers that are behind in their initiatives, it is not too late to start.
“Keep programs simple, and maintain processes going after the holiday season to learn how to master tailored messaging,” VandeBoom added.
• Mobility. Smart devices are the key for retailers to stay engaged with their customers before, during and after the shopping experience. Whether using the internet or an app, retailers need to leverage mobility as a means of keeping consumers and associates abreast of available inventory, the status of in-transit orders and even connect customers with service agents — via live chat or chatbots.
In its 2017 holiday outlook, research firm Forrester emphasized that retailers need to perfect the mobile checkout process ahead of the holiday rush, or they risk losing sales. To smooth mobile checkout, Forrester recommends streamlining the mobile checkout task flow.
“Easy fixes include reducing form fields, asking for only one address for both shipping and billing by default, and adding capabilities to proactively suggest addresses as the user starts to type,” the report stated. “Beware any instances where you ask the customer to enter information that they’ve already added earlier in the process.”
The study also recommends eliminating anything that impedes progress, such as content and text that are too small.
• Artificial intelligence. To best meet customer needs, retailers need to know what matters most to shoppers this holiday season. This is where AI, or software that imitates intelligent human behavior, comes into play. Retailers are tapping AI as a support for chatbots. GameStop, for example, used chatbots last holiday season to track its online orders — a service that had a 20% opt-in rate.
“AI will play an increasingly important role to identify which customer questions are better suited to digital tools, and which require live assistance,” White said. “This is especially critical during the holidays as your stores and contact centers begin receiving an influx of customer calls, orders and questions.”
• Cloud computing. Besides being more scalable than a licensed solution managed in-house, cloud-based solutions secure customer interactions, sustain load time and manage customer sessions.
Walmart, for example, is investing in high-level graphical processing units, or Nvidia chips. Accessible through a cloud network, this will be the foundation for Walmart to build out AI systems, from natural language processing and image recognition to machine learning.
“Whether ensuring pages load quickly, or push out new iterations of mobile apps or websites, retailers relying on the cloud will be able to scale and keep up momentum throughout the holiday season and beyond,” said Michael Levine, VP of marketing at digital solutions provider Photon.
Amazon blends online and offline
Eleven brick-and-mortar stores — and counting. That’s where Amazon Books stands after the opening of its new outpost in New York.
Located on 34th Street across from the Empire State Building in Midtown Manhattan, the 5,200-sq.-ft. store is part bookstore, part high-tech electronics shop, with a cafe for shoppers to linger in.
The space has a modern look, with accent lighting and wood flooring, fixtures and display tables. There is a spacious children’s area, set off with carpeting and cozy seating. Coffee (from hipster fave, Stumptown Coffee Roasters) and other beverages, along with pastries and snack items, are sold in the cafe, which has both table and counter seating.
More than a traditional bookstore, Amazon Books is a direct extension of the online giant’s digital book-buying experience. The integration of digital and physical retail is evident throughout the store, from customer reviews on product nameplates to integration of the Amazon app in the overall shopping experience.
The new location features about 3,700 titles. The selection is based on a combination of factors, including Amazon.com customer ratings, pre-orders, sales, popularity on Goodreads — the company’s review/recommendation site — and its own curators’ assessments.
In a departure from the traditional spine-out presentation, the books are placed on the shelves with their covers facing out. Under each book is a small card with a sampling of a customer review from Amazon.com, along with its star rating (most of the titles in the store are rated four stars or higher) and the number of reviews it has received.
The label also includes a bar code that customers can scan with their smartphone, via the Amazon app, to see the price, more details on the book’s ratings and additional reviews.
Curated: What sets Amazon Books apart from conventional bookstores is how it’s curated. Similar to Amazon’s online offerings, the books are displayed in a variety of categories, with titles appearing in multiple sections. The store features all the standard categories, such as New Nonfiction, Cooking, Travel, Science Fiction, Self Improvement, Young Adult, etc.
But Amazon’s vast storehouse of data also allows for more unusual selections. Customers will also find such categories as Highly Rated (4.8 stars and above), Page Turners (books Kindle readers finished in three days or less), 100 Books to Read in a Lifetime, and Goodreads’ Most-Read Classics. In another adaptation of an online feature, one display is devoted to recommendations based on books the customer has already read — If You Like, You’ll Love This. Data also allows Amazon to add a local element to each location.
Gadgets: However, books are only part of the merchandise mix. The store also serves as a showcase for all of Amazon’s tech products, from Fire television and the Alexa Smart Home system to Echo and the Kindle e-reader, and related accessories.
The items are displayed on tables and stands, making it easy for customers to test drive — and hopefully buy — the products. Several displays are devoted to accessories. And plenty of associates are hovering around to answer questions.
Amazon Prime members have the advantage when it comes to pricing, paying the same price for items while in Amazon Books as they would on Amazon.com. For non-Prime customers, Amazon devices are the same price as on Amazon.com, but books and other items are sold at list price.
Customers can look up prices on the pricing scanners located throughout the store or by using the app. Goods can be paid for with a credit card or charged to the customer’s Prime account. The store doesn’t accept cash.
Amazon Books will open two more locations in 2017, at Westfield Century City in Los Angeles, and at Broadway Plaza in Walnut Creek, Calif., giving it a total of 13 by the end of the year. Amazon would not comment on how many bookstores it plans to open in 2018.
At Home in Growth Mode
Someone forgot to tell At Home that big-box stores are passé. Or that a retailer needs to sell online to be successful.
Since Lee Bird took the reins as chief executive at the beginning of 2013, the Plano, Texas-based home decor superstore retailer has been on a steep upward trajectory — and it shows no signs of losing momentum anytime soon.
At Home has delivered revenue growth at a 20% compounded annual rate over the past four years. For its most recent quarter, the chain, which went public in August 2016, posted its 14th consecutive quarter of positive same-store sales growth and 13th consecutive quarter of more than 20% net sales growth.
Also, at a time when many retailers are downsizing their formats and/or closing stores, At Home is doing neither. The company has opened 80 new stores in just over four years. It plans to open 25 net new stores this year.
Chain Store Age editor Marianne Wilson recently spoke with Bird, who took on the role of chairman in April.
What are you most proud of in At Home’s first year as a public company?
That we continue to grow at the rate we were hoping we would as a public company, and that our business continues to grow across new and existing markets.
For our second quarter — which ended July 27 — we reported 23% net sales growth and a 7.8% increase in comparable-store sales.
How do you explain At Home’s success?
The home furnishings market is a $180 billion market in annual revenue, with a growth rate of about 3% a year. And it’s highly fragmented, which all bodes well for us.
We are winning as a result of the breadth and depth of our offering — we carry all the styles that people want at the lowest prices and that’s resonating with consumers.
How do you do all this?
We have a very low-cost structure and an efficient business model that allows us to offer low prices. And our secret sauce is our people.
What do you mean?
We firmly believe if your employees are happy, customers will feel it so taking care of our team members is an important focus for us. And to that end, all of our store associates have bonuses and paths for career growth.
I believe in the golden rule: Treat people the way you want to be treated. My job is no more important than the folks who unload our trucks.
We try to make sure that all our employees feel rewarded and recognized. For example, everyone who works in a store can make a bonus if the store makes its plan. So they are incentivized.
I really believe retail is a place for great career growth. And with At Home’s growth, our employees have great career opportunities with us.
At Home does not have an e-commerce site. Is that something you are thinking about?
It all comes back to the customers. We keep asking her — I say her because 85% of our customers are female — “What’s important (in terms of shopping)?” Our research shows that the most important thing she looks for when shopping for home decor is the lowest price, largest assortment, and to be able to see, touch and feel the merchandise — and to buy immediately. And we can do all that in our stores.
Customers vote with their wallets. We’ve had 13 consecutive quarters of same-store sales growth, and our new stores make money the first year out. That tells us the market is fine with our being a store retailer.
How much revenue are your new stores generating?
Our new stores in the first year used to do about $4 million in sales. But now they do about $6 million as we have gotten better at opening new stores.
What is At Home’s real estate strategy?
We really do well anywhere. We look for nice retail locations where customers are used to shopping. We can do stand-alone stores, and we also love being in power centers. We have also taken anchor positions, which we are now testing in
We have stores in small and big markets and they do equally well.
Are you entering new markets?
Yes. Rhode Island, Massachusetts and Las Vegas are among the new markets we’ve entered. And we are also opening stores in existing markets, such
At Home currently has 136 stores. What’s the potential for expansion?
We estimate the market can support at least 600 stores — and we know where they should be. We have mapped out every retail trade area we want to be in. We use an analytical model from Buxton — we are on the third version. When a location becomes available we are able to make a decision quickly on whether that location would work for us or not.
We really feel that real estate is one of our core competencies. Our real estate team has opened more than 80 stores in the past four years. They’ve done a great job.
What about international expansion?
We are focused on the U.S. for now.
Tell us about At Home stores.
Our stores average from 80,000 to 150,000 sq. ft. All offer the same assortment of 50,000 items, although the depth of inventory might vary depending on the store size. We bring in at least 20,000 new items every year, or about 400 new items every single week.
Have you entered any new merchandise categories?
This past year, we expanded our patio furniture assortment and that’s been a great growth category for us. Decorative garden is another growth category.
And our seasonal business is strong and continues to grow. We carry more than 100 artificial Christmas trees in multiple colors and styles, and have 12 different themes of Christmas ornaments. We really do win on assortment.
What about New York — is At Home thinking of entering the city?
Yes, we are looking at how to make it work. The rents are higher. But we expect that in the next two years, we will be in the New York metro area.