Teens losing interest in Facebook
Retail marketers take heed: Facebook's appeal is fading among teens even as two other platforms continue to pick up momentum.
Facebook’s community of monthly users in the U.S. will grow 2.4% this year to 172.9 million people, thanks to increased adoption by older internet users, according to a report by eMarketer. But the social network’s monthly user base among the marketer-coveted 12 to 17 age group will fall 3.4% over 2016 to 14.5 million people, marking the second consecutive year of expected usage declines by teens and up from the 1.2% slip recorded in 2016.
Monthly Facebook usage among those under 12 and ages 18 to 24 will grow more slowly than previously forecast, too, the report said.
“We see teens and tweens migrating to Snapchat and Instagram," said eMarketer senior forecasting analyst Oscar Orozco. "Both platforms have found success with this demographic since they are more aligned with how they communicate — that is, using visual content."
Indeed, eMarketer’s latest forecast has Snapchat overtaking both Instagram and Facebook in terms of total users ages 12 to 17 and 18 to 24 for the first time in 2017. As a result, Snapchat’s share of U.S. social network users will grow to 40.8%.
Those teens and tweens who still remain on Facebook seem to be less engaged, Orozco said, logging in less frequently and spending less time on the platform.
“At the same time, we now have ‘Facebook-nevers’ — children aging into the tween demographic who appear to be overlooking Facebook altogether, yet still engaging with Facebook-owned Instagram," he added.
eMarketer has increased its projections for Snapchat usage. The social network’s U.S. user base is now expected to grow 25.8% to 79.2 million monthly, with the biggest upward revision made to the 18-to-24 group where usage will escalate 19.2% this year.
Similarly, monthly Instagram usage in the U.S. will grow 23.8% in 2017, a rate higher than previously forecast, to 85.5 million. Within that figure, Instagram will expand its user base among those under 12 years old by 19.0% and those ages 12 to 17 by 8.8%.
“Facebook is fortunate that it owns Instagram, which remains a strong platform for teens,” said eMarketer principal analyst Debra Aho Williamson. “Although usage of the main Facebook app is declining among teens, marketers will still be able to reach them on Instagram.”
Target names new strategy and innovation chief
Target Corp. has tapped a McKinsey & Company veteran to head up its innovation efforts.
The retailer appointed Minsok Pak as executive VP, chief strategy and innovation officer. He replaces Casey Carl, who left the company in May.
Pak, who will join the retailer on Sept. 11, will be responsible for Target’s enterprise strategy development and retail innovation with the goal of enhancing the shopper experience and accelerating growth. He will also oversee business development, including mergers, acquisitions, partnerships and joint venture initiatives.
Pak most recently served as senior VP, Lego Retail at The Lego Group. He was responsible for leading Lego's branded retail channel, including more than 250 stores and e-commerce sites across 24 markets.
Prior to Lego, Pak spent two decades with McKinsey & Company, where he held various leadership roles and worked with leading global retail and consumer companies. Additionally, Pak led McKinsey’s digital transformation group. Pak also served (on temporary transfer from McKinsey) as the global executive VP and chief strategy officer at LG Electronics.
"Minsok brings deep business acumen and proven leadership capabilities to Target," stated Target CEO Brian Cornell. "Throughout his career, he has counseled numerous companies and led through significant times of change. He brings strategic vision, an innovative spirit and an ability to address complex business challenges by capturing near-term opportunities and charting a course for the future,” said Cornell. “As we build an even better Target for tomorrow, we must plan purposefully to drive growth and continue instilling innovation in every part of our business. I am confident Minsok is the right leader to fill this critical role.”
Pak will report to Cornell, and serve as a member of Target’s Leadership Team.
Forget bricks vs. clicks, it’s all about distribution
Everything you know about the battle between online and physical retail is probably wrong, according to a report issued this week by CBRE.
As business analysts and retail pundits focus on store closings, they miss the fact that 58% of retail warehouse space was leased by brick-and-mortar retailers in 2015 and 2016. Only a third of such space was leased by pure-play Internet sellers.
“As the brick-and-mortar brands continue to do more online business, they can’t rely on the single distribution center anymore. They’re realizing that they need more, smaller warehouses that are closer to their consumers,” said Melina Cordero, CBRE’s head of retail research for the Americas.
In the report, “Is the e-pocalypse here?” CBRE points out that 90% of retail sales still take place in stores and that traditional brick-and-mortar retailers account for more than half of e-commerce receipts. When it comes to the so-called GAFO categories (general merchandise, apparel, furniture, and other), three-quarters of purchases took place in stores during first quarter 2017, according to U.S. Census Bureau statistics.
At the same time, the report points out, several brick-and-mortar mainstays are implementing successful omnichannel strategies. In Q1, Williams Sonoma did 51.8% of its business online, Restoration Hardware 44.8%, and J. Crew 37.7%.
“The number one thing that surprises people when they see this list is the fact that less than 10% of retail sales take place online, but the fact is that the apparel category is still very fragmented and big brands like this are still a small percentage of the whole,” Cordero said.
The bottom line, according to Cordero, is that retailers are shifting to the most efficient supply chains in order to survive. That, in some cases, even means stores serving as local fulfillment centers.
“One retailer told me that they’ve started having store associates receive local online orders and then package them and send them,” she said.