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INDUSTRY FACTSHEET
Industry Overview
The retail industry is one with immense socio-economic influence. In North America alone, this industry commands annual revenue of over $4 trillion. Retail sectors include mass merchandisers (like Wal-Mart), auto dealers, and Internet or catalogue retailers. Similarly, retail formats can vary as well, from large superstores with massive selections, to kiosks, which allow companies to set up a scaled-down version of their retail operations. On the sales and marketing front of this industry, common vehicles include TV, print, radio, newspaper advertising, direct mail, the Internet, and events. Now, more than ever before, social media outlets like Facebook and Twitter are also used by companies to promote special deals or sales in a word-of-mouth nature. Subsequently, the Internet has significantly affected the retail operating model by allowing consumers to price compare more effectively, as well as radically diminishing overhead costs from a physical store.
Business Challenges
The highly competitive environment of this industry opens retailers up to a number of difference challenges, all of which affect small specialty retailers, as well as the larger market-dominating retailers. Evolving Trends Means Evolving Demand: Consumer preferences are, by nature, fickle and they change rapidly. Consequentially, this shapes the demand for retail items. The unpredictability of fads and product life cycles cause retailers to struggle in making future merchandising decisions, thereby creating many missed opportunities. Protecting Customer Information: Retailers often access and store confidential consumer information, such as credit card payment data. And in the rise of security breaches in which hackers have successfully stolen sensitive customer data, the retail sector is increasingly becoming the center of scrutiny. Unfortunately, adopting new systems can be slow and costly. Demand Depends on the Economy: Consumer spending in this industry is greatly shaped by economic factors, such as personal income, consumer confidence, job growth and interest rates. During recessionary periods, retail sales can slow drastically and even decline. Further, greater consumer spending leads to an increase in personal debt, and rising interest rates also affect consumer credit and their ability to finance large retail purchases.
Industry Opportunities
In an industry as competitive as this one, the race to stay ahead of the curve is inevitable. The growth and adoption of new strategies and technologies is immense and is only geared to explode even more in the future. Internet Sales: In light of the Internet boom, retailers have not been lefts behind and the Internet has developed to become a powerful sales and marketing channel for retailers. Much of it has been in response to the growing
Copyright 2011 by Research and Management. All rights reserved.
Retail
INDUSTRY FACTSHEET
number of consumers choosing to shop online in an effort to save time and travel costs. Brick-and-mortar retailers are working to mitigate declining in-store sales by enhancing their online presence and social networking efforts. Alternate Payment Systems: Enhanced payment technologies enable retailers to process transactions faster and reduce customer wait times. Implementation involves contactless payments via radio frequency identification (RFID) tags/ cards, and even mobile payment devices in lieu of checkout counters. Loyalty Programs: Leveraging discounts or free items as an incentive for frequent buyers or large purchases helps retailers retain customers. Customer information collected by loyalty programs provides valuable market research data concerning consumer habits. Social media platforms, like Facebook, are proving useful to retailers when rewarding customers and sharing notifications of special store events.
Retail
INDUSTRY FACTSHEET
Social Media Marketing Activities
When we look at the reasons that retailers worldwide use social media marketing, we see that the majority use social media to promote new or existing products (according to 56% of respondents). About 36% of retailers worldwide use social media to provide customer service, such as monitoring and addressing customer enquiries. Thirty-two percent of respondents said they offer coupons and other purchase incentives through social media, while another 32% said they use social media to engage in direct dialogue with their customers to understand sentiment. Meanwhile, collecting competitive information was another key social media marketing activity among retailers worldwide (according to 28% of respondents).
Retail
INDUSTRY FACTSHEET
Monetizing Social Media Investments
Approximately 6% of worldwide retailers said they are able to conclusively demonstrate monetization on their social media investment (as of June 2011). Thirty-two percent of retailers admitted they believe that monetization has occurred, but cannot demonstrate it definitively. In other words, they have seen evidence of social media monetization but havent been able to effectively track or report it. Meanwhile, almost a quarter of respondents (24%) said they dont know if they were able to monetize their investment in social media.
Retail
INDUSTRY FACTSHEET
Digital Marketing Opportunities
Immediate Areas of Focus for Social and Mobile
When we look at the latest digital marketing opportunities of social media and mobile for businesses in the retail sector, their main considerations and focus should be on how they can use these technologies to increase their brand awareness, increase customer engagement, and expand their customer base. On the social front, retail companies are leveraging social technologies like Facebook, Twitter, and YouTube to promote new/existing merchandise, provide customer service, offer coupons or other purchase incentives, engage in director dialogue to understand customer sentiment and collect competitive information. They are also looking at news feeds and social alerts to understand what is being said about their brand online. On the mobile front, companies in the retail sector are primarily focusing on how they can make it easier for their customers to research their products and pricing, read reviews, receive coupons and promotions based on their location and purchase via their mobile devices. When it comes to social technologies and mobile marketing, below is where we see the majority of retail companies making considerations from a strategy standpoint.
Social Technologies Blog Facebook Twitter LinkedIn YouTube News Feeds/ Social Alerts Social Bookmarking Forums Review Sites
Mobile Marketing Mobile Site Mobile Local Search Mobile Ads/ Text Mobile Apps
Retail
INDUSTRY FACTSHEET
Popular Pay-Per-Click Keywords
Keyword wholesale retail tesco jobs handbags wholesale clothing purses retail jobs cheap clothes wholesale jewelry fashion designer wholesale shoes wholesale handbags retail choice fashion design fashion designers cheap handbags costume jewellery inretail cheap jewelry handbags wholesale Advertiser Competition 0.87 0.09 0.21 0.97 0.94 0.87 0.7 0.96 0.91 0.33 0.91 0.82 0.1 0.41 0.5 0.71 0.84 0.23 0.84 0.94 Global Monthly Searches 165000 110000 201000 135000 74000 60500 60500 49500 40500 40500 40500 33100 27100 27100 27100 14800 14800 14800 12100 12100 Estimated Cost per Click $0.95 $0.66 $0.34 $1.06 $1.04 $0.99 $0.55 $0.87 $1.62 $3.17 $0.85 $0.96 $0.15 $3.15 $1.94 $1.15 $0.77 $0.21 $1.08 $1.15