Moody’s: Physical stores key to retailers’ online growth strategy
New York — A physical store presence is key to most retailers for their online growth strategy, according to a new report by Moody’s Investor Services. Based on existing data, Moody’s estimate online sales as a percent of total retail sales are just 6% today, and will increase to 7.1% by 2016, and potentially reach a double-digit (mid-teens) share of the total retail sales pie in about five years.
Even though most groups in the retail industry have made significant strides in building an e-commerce presence in recent years, the report found, most of the 13 sub-sectors in the report still derive a surprisingly small percent of their overall sales from online channels.
“Despite the apparent popularity of the Internet to the U.S. consumer, most retail sectors are still far from fully leveraging this potential,” the report states.
Here are some highlights of the Moody’s report, which was written by Moody’s VP, senior analyst Charles O’Shea:
• Online Presence is a longer-term credit-positive for U.S. retail. A viable online channel is becoming more critical for brick-and-mortar retailers to maintain and strengthen their competitive positions.
“In our view, online sales is a cost-effective way to maximize existing physical locations and to leverage distribution capability,” O’Shea states. “We believe the successful development of this channel will ultimately be a credit positive for retailers.”
• Mass store closings are unlikely as companies increase online presence. Moody’s sees little evidence online growth is causing more retailers to close large numbers of physical store locations to save on unnecessary costs.
Extensive store networks give shoppers the option to see and touch the product that they may have researched online, which is one of the reasons store networks will remain a crucial link in the online logistics chain, the report finds. Points of distribution for ship-from-store capability will also remain important.
Online growth among retail sectors will vary widely. Some sectors have made tremendous strides in building a viable online presence, in particular the music, video and digital content group, which we expect will double its online sales penetration to 70% by 2016. At the other end of the spectrum, the food, beer and wine group has barely moved the online needle and will likely not grow beyond 1% penetration by 2016.
• Growth may be greater than public data suggests. Moody’s findings are drawn primarily from the U.S. Census Bureau and U.S. Department of Commerce, which uses historical data-based surveys rather than direct reporting from companies, which means findings are far from comprehensive.
“Many companies do not report their online business and there is little consistency with respect to individual disclosures of what actually constitutes an online sale,” O’Shea states. “We think these constraints suggest that the volume of online sales are actually larger than what available data sources suggest.”
Ikea and Feeding America team up to fight child hunger
Ikea has partnered with Feeding America, the nation’s largest domestic hunger-relief organization, to sponsor an in-store program that supports national children’s hunger programs.
These programs include giving free meals and snacks to low income children, as well as giving out nutritious easy-to-prepare food for children to take home on weekends, in addition to other programs to meet the needs of hungry children.
Running from July 1 to July 31, the Feeding the Future Ikea U.S. program will donate $1 to Feeding America for every healthy kids meal purchased in any Ikea U.S. restaurant. Additionally, Ikea customers can add donations of any amount to food purchases in the Ikea restaurant, Swedish Food Market and Bistro. All added donations also will go to Feeding America. The two healthy kids meals in the Feeding the Future program include moose shaped pasta in tomato sauce, yogurt and a lingonberry drink, or grilled chicken with carrot sticks, strawberries and string cheese. Each meal costs $1.99.
"Feeding America is committed to providing the most nutritious products possible to those we serve," said Leah Ray, VP of corporate partnerships. "With Ikea’s partnership and Feeding the Future program donations, we are able to support a healthier lifestyle for all children and will be able to continue that message by adding to the over 800 million pounds of produce we already provide to our local network of food banks."
"Our Feeding the Future Program, in partnership with Feeding America, is a great way for Ikea US to reach out to our communities and support Feeding America’s child hunger programs. Ikea is committed to healthy eating and working along with Feeding America helps to support those in need, as well as give our customers the opportunity to make a difference," added Gerd Diewald, Ikea U.S. food manager.
Swirl and Motorola to power beacon marketing for retailers
Swirl Networks, provider of a leading enterprise-class beacon marketing platform, has entered into a strategic relationship with Motorola Solutions. The two companies will work together in the areas of product, sales and services to support iBeacon technology rollouts in large-scale retail environments.
The news follows the recent unveiling of Motorola’s MPact Platform for Mobile Marketing, which leverages Swirl to power the beacon marketing capabilities for its indoor locationing platform.
Together, Swirl and Motorola Solutions will offer retailers what they call “the most scalable enterprise-class beacon marketing solution that is currently available in the market.”
Swirl and Motorola will jointly sell Swirl’s beacon-based in-store mobile marketing platform as a standalone product as well as in conjunction with Motorola MPact, a unified indoor locationing platform that leverages both Wi-Fi and Bluetooth Smart technology. Swirl’s platform will be fully integrated with Motorola’s Bluetooth Smart Beacons, providing retailers with the option of purchasing beacons from an established retail partner, while taking advantage of Swirl’s industry-leading cloud platform for creating, managing and analyzing in-store mobile marketing campaigns.
Motorola will offer the MPact platform and beacon installation and servicing to Swirl customers. This service option will allow retailers to leverage Motorola’s nationwide Services team for rapid deployment of large-scale beacon networks spanning thousands of retail locations. Swirl’s beacon-powered mobile marketing platform gives retailers the ability to engage shoppers with personalized digital content and offers while they shop in stores. Alex and Ani, Kenneth Cole and Timberland have deployed Swirl’s beacon technology in stores nationwide.
"We are excited to work with Swirl to bring enterprise-class beacon marketing capabilities to large-scale retailers," said Imran Akbar,VP and GM, Enterprise Networks & Communications, Motorola Solutions. "As Motorola Solutions continues to enhance the in-store experience for shoppers, Swirl’s robust software for creating, managing and optimizing in-store mobile marketing campaigns makes for an ideal relationship."
"This collaboration with Motorola Solutions reinforces our commitment to bring the most scalable and comprehensive beacon marketing solution to leading retailers and brands," said Hilmi Ozguc, Swirl CEO. "Through this relationship, Swirl customers now have access to beacons and support services from one of the most respected names in the retail industry. Together with Motorola Solutions, we can help retailers effectively roll out beacon marketing capabilities at even the largest scale."