E-Commerce is On for Off-Price Retailers
Off-price retailers have traditionally stayed offline when it comes to conducting actual retail transactions. While most off-price retailers have long operated informational sites where customers can perform tasks such as locating nearby stores and checking prices, it has been very rare for retailers in this space to allow customers to buy goods via the Internet. Until now.
This month, leading off-price chains Belk and T.J. Maxx both introduced true e-commerce sites. Belk launched its e-commerce site with a great deal of fanfare (including mentioning it in a recent Chain Store Age article), while T.J. Maxx went with an unpublicized “soft launch.” Of course off-price e-commerce sites are not completely unknown. T.J. Maxx actually tried its hand at e-commerce about eight years ago and decided to abandon the effort, while Tuesday Morning shut down its e-commerce site this past summer.
However, when T.J. Maxx and Belk both go live with e-commerce in the same month, it’s a clear sign that an off-price e-commerce trend may be developing. These two off-price mainstays are not both heading into the world of virtual retail by pure coincidence. Let’s look at a few larger developments that could fuel much more widespread e-commerce activity in the off-price vertical.
Simply put, today’s customers expect to be able to purchase the same goods online that they can in physical stores. The fact that certain aspects of the off-price vertical make this trickier to pull off behind the scenes than in other verticals (more on that in a moment) does not resonate with consumers, nor should it. As Stein Mart executives explain in the current August/September issue of Chain Store Age, the key drivers for becoming one of the first off-price retailers to have a fully functional e-commerce site were expanding the customer base and responding to requests from existing customers for 24-hour shopping access.
Improved Supply Chains
Off-price retailers often provide an extremely wide and somewhat unpredictable assortment of goods. As products span numerous categories and frequently become available on short notice due to closeouts, manufacturer errors, etc., it is especially difficult for off-price retailers to accurately make current inventory available for purchase online.
However, in recent years supply chains have become “leaner and meaner” thanks to the implementation of standards such as those provided by VICS and Six Sigma, as well as of technologies that provide near- and real-time visibility into supply chain activities. The price of implementing these standards and solutions has come down as they have matured, making them more accessible to off-price retailers that generally operate on slim margins.
In addition to an evolution occurring in supply chain technology, an evolution is also occurring in e-commerce technology. E-commerce is by and large no longer a siloed activity, but merely one more channel in an “omni-channel” retailing strategy that also includes stores as well as mobile devices and social media platforms. As with supply chain solutions, the cost and complexity of implementing and integrating omni-channel technology is coming down over time, making it more accessible to off-price chains.
It will probably be a while before the majority of large off-price retailers are fully engaged in e-commerce, but the precedent is being set. Customers clearly have affection for brand names at discount prices, so they will probably show a little patience as the vertical catches up.
ICSC brings glad tidings to retailers
The International Council of Shopping Centers (ICSC) is forecasting a 3.4% sales increase for the traditional November-December holiday period from last year — which spells good news for retailers.
ICSC also anticipates that the other two measures of U.S. industry holiday sales — shopping-center inclined sales +3.4%, and chain-store sales +2.0 — will both increase over last year.
While the industry and the U.S. economy have gone through a mini-cycle slowdown the last three quarters, there are indicators of positive growth this season, despite retailers’ mixed outlook. Although consumers have faced some political and economic uncertainty — higher payroll taxes, concern about a federal government shutdown and questionable costs of the Affordable Care Act — this year’s sales are looking to be better than last year’s.
“We’re going to see a more subdued spending mood from consumers, but what counts is that we’re on track to have a better holiday sales season that last year,” said Michael P. Niemira, VP of research and chief economist for ICSC. “With leaner inventories, retailers can expect their prices and margins to remain stable, which is another good indicator of stronger sales.”
Additionally, holiday hiring is highly correlated with holiday spending, and can also forecast a stronger sales performance. It appears that holiday hiring will be up 0.5% from last year.
Founded in 1957, ICSC is a global trade association of the shopping center industry. Its more than 60,000 members in more than 100 countries include shopping center owners, developers, managers, marketing specialists, investors, retailers and brokers, as well as academics and public officials. As the global industry trade association, ICSC links with more than 25 national and regional shopping center councils throughout the world.
The No. 1 Gift for Retailers this Holiday Season? #GivingTuesday
By Chase Cornett, [email protected]
The holiday shopping season is just around the corner and soon consumers will be bombarded with buying guides, floods of emails, deep discounts and, of course, that Black Friday competitive spirit. With all the chaos brought on by the holidays, retailers are finding it harder and harder to stand out. The result — strategies that focus on discounts, deliver low profit margins and drive transactions instead of engaged brand experiences.
Now, retailers have an opportunity to stand out this holiday season by joining the movement of businesses embedding social impact into their holiday marketing strategy. Studies continue to show an increase in a consumer’s brand preference for businesses that support causes they care about. Research like Edelman’s 2012 goodpurpose® study show 72% of consumers are willing to recommend a brand if it supports a good cause. This represents a 39% growth since 2008. That’s where movements like #GivingTuesday represent a perfect opportunity for retailers to join in.
#GivingTuesday is the day after Cyber Monday. In its second year, this movement creates a real opportunity for retailers to differentiate, make a positive impact in the world and grow their bottom line by extending holiday sales opportunities.
Here are three strategies to consider as you look for ways to participate:
1. Use cause marketing as marketing
Brands make major investments to tag and track consumer data, better understand consumer needs, provide relevant and timely offers and deliver brand experiences in an omni-channel ecosystem. However, for a variety of reasons, these core engagement strategies are not carried through in traditional cause marketing efforts.
As businesses plan their giving strategy it’s important to remember it’s still about the consumer, not just the cause. Delivering choice among nonprofits allows consumers to give to the cause they care about, creates strong emotional connections, and sets a foundation of shared values with the brand.
2. Holidays are a season, giving can be too
It’s easy and impactful for retailers to incorporate giving in a variety of ways across their marketing efforts. Instead of focusing on a one-time promotion, there’s an opportunity for brands to partner with philanthropy for the entire holiday season and utilize the #GivingTuesday movement as a kick-off to highlight efforts to gain social buzz and PR.
Retailers can take a look at their business priorities for the holiday season and find creative ways to add philanthropic incentives as a part of their marketing mix. Whether aiming to increase gift card sales, acquire loyalty program members, influence category purchases or drive holiday frequency — rewarding consumers with dollars to donate to their favorite nonprofit can extend the brand relationship beyond the transaction through the entire giving season.
By creating multiple ways to celebrate giving, retailers can create a philanthropic campaign that extends the giving season into long-lasting impressions with their brand’s authentic values.
3. Innovate to differentiate
It’s no secret that innovation is a major driver of brand differentiation. Creating a giving campaign this holiday season can set a retailer apart from the status quo. Cause marketing is a business strategy that’s overdue for innovation. Advancements in technology amongst cause marketing and other giving platforms provide an opportunity for brands to innovate without heavy technology investment.
Engagement is a leading indicator of long-term brand loyalty. Relevant and creative cause marketing strategies can provide the emotional fuel to translate engagement into brand loyalty. Leading brands will seize this opportunity to reach and create emotional connections with their customers, emphasize the importance of making a social impact and drive ROI.
As the holiday season quickly approaches, the No. 1 gift for retailers is the opportunity to give back. Join the #GivingTuesday movement and do something different that makes a positive financial and social impact.
Chase Cornett is director of marketing and brand at PlanG, a company pioneering a new way to create brand loyalty through philanthropy. The company helps businesses build meaningful relationships with consumers by incentivizing them with dollars to give to the charities of their choice. Chase can be reached at [email protected]