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According to comScore in this 47 page overview: "- We're seeing clear signs that we‟ve hit the bottom of the decline in e-commerce spending, and comScore expects some modest growth in the holiday season compared to last year Consumers continue to be very cautious about their spending given concerns about: * The job market/unemployment/lack of job creation * Declines in housing prices/Underwater mortgages * Lack of credit and too much debt * Rising gas prices - E-commerce continues to attract more buyers, but they are spending less than a year ago by completing fewer transactions and spending less per shopping trip - Retailers are hiring fewer workers and carefully planning their inventory so as to avoid heavy discounting post-season - The holiday season will likely be characterized by heavy discounts/price wars, promotions/couponing, an earlier start to the season and an increased use of digital marketing" Source: comScore State of the U.S. Online Retail Economy in Q3 2009.
Citation preview
November 12, 2009
State of the U.S. Online Retail Economy in Q3 2009
Gian Fulgoni, Chairman, comScore, Inc.
Note: A copy of this presentation will be sent to all attendees within 24 hours of
today’s webinar
2© comScore, Inc. Proprietary and Confidential.
Data sourced from comScore‟s global panel of 2 million Internet
users
E-commerce data includes all worldwide buying on
U.S. sites
Unless explicitly stated otherwise, the term e-
commerce refers to online retail spending, which
excludes travel, autos and auction sites
Behavioral activity through September 2009
Survey issued in October 2009, n=1046
Consumer Measurements:
– Site Visitation
– Buying
– Mobile
– Payment Method
– Attitudes and Intentions
– Demographics
Retailer Views
– Multi-Channel vs. Pure Play
Media
Exposure
Online / Offline
Transactions
Search
Behavior
Demographics
Life Stages
Video
Web Visiting
and Viewing
360° View of Consumer Behavior Analysis Parameters
3© comScore, Inc. Proprietary and Confidential.
DEMOGRAPHICS• Self-reported and validated
• Appended Segments (e.g. Claritas, Acxiom)
• Individual & Household Level
WEB VISITING & VIEWING• All Website/Page Click Stream
• Content Viewed
• Search Engine Queries
• Keyword Used
SURVEYS• Email or Contextual “Pops”
• Behavior-activated Surveys
• Observation of All Surveys Taken Across All Suppliers
ONLINE TRANSACTIONS• All Secure Session Activity
• Purchases and Subscriptions
• Price Paid, Shipping & Handling, Promotions
• Applications/Configurations
MARKETING STIMULI• Online Ads
• Referral Links
TV VIEWING• Link to Digital Set Top TV Data
Using Name & Address
comScore Customer Knowledge Platform:
A 360° View of 2 Million Global Internet Users
Designed to be representative of the online population
Projectable to the total U.S. population
TRUSTe certified for information privacy & security
OFFLINE PURCHASING• Linked using Name and Address
• Client CRM Databases
• Retailer Loyalty Card Data
4© comScore, Inc. Proprietary and Confidential.
State of the Economy: A Review of Key
Macroeconomic Trends
5© comScore, Inc. Proprietary and Confidential.
Validation of comScore Sales Data:
Comparison of comScore data to U.S. Department of Commerce
Quarterly U.S. e-Commerce Sales ($ Billions)Source: comScore & U.S. Department of Commerce (DOC)
comScore Estimate = (Total Non-Travel – Event Tickets +
Estimated Auction Fees and Autos)
Excludes travel and event tickets, but includes auction fees and
autos
Bil
lio
ns
($
)
% Change in e-Commerce Sales vs. YA
Q2 ‟08 Q3 ‟08 Q4 ‟08 Q1 ‟09 Q2 ‟09
U.S. Dept. of
Commerce9% 5% -5% -6% -5%
comScore 12% 5% -4% -3% -4%
6© comScore, Inc. Proprietary and Confidential.
$72$93
$117$143
Non-
Travel
Travel
+29%
+26%
+22%
+20%
+26%
+33%
+26%
+26%
+20%
+24%+24%
+13%
$171
$200
+17%
+21%
+12%
+6%
+9%
+7%
Q1- Q3 retail e-commerce sales are down 1% versus year ago, while
travel sales are down 6%
$221
-1%
-6%
$153
-3%
e-Commerce Dollar Sales Growth ($ Billions)Source: comScore e-Commerce Measurement
7© comScore, Inc. Proprietary and Confidential.
We‟re seeing clear signs that we‟ve hit the bottom but still no positive
growth ….
Note: The U.S. Department of Commerce calculation includes total retail and
food service sales, which also includes motor vehicles and parts dealers
Quarterly e-Commerce Sales Growth vs. YASource: comScore e-Commerce Measurement
Quarterly Retail & Food Services Sales Growth vs. YASource: U.S. Department of Commerce (DOC)
17%
23%19%
11%13%
6%
-3%0% -1% -2%
4% 4% 5% 4%
2% 1%
-8%-10% -9%
8© comScore, Inc. Proprietary and Confidential.
Sales trends through the third quarter of „09 mirror last year and
show no growth B
illi
on
s (
$)
$28.0$27.2
$28.4
$39.1
$31.2$30.6
$30.3
$38.1
$30.2 $29.6
e-Commerce Dollar Sales ($ Billions)Source: comScore e-Commerce Measurement
Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09
$31.0$33.0
+43% -15% -3% +5% +38% -20% -2% -1% +26% -18% -3% -2%% Chg
vs. Prior
Quarter
“Retail sales showed further signs of stabilization in October, according to new data from Mastercard‟s
SpendingPulse unit, but they're not posting the kind of gains that would significantly boost the economy.”
--WSJ Blogs, November 12, 2009
9© comScore, Inc. Proprietary and Confidential.
Income SegmentOnline Retail
Online Retail
SpendingUnder $50,000
Total
-5%
-2%
21%
Income Segment Online Retail Spending Bracket Share of
Change vs. YA Online Retail
$50,000 - $99,999 -1% 45%
$100,000 or more -3% 34%
100%
Q3 2009 e-Commerce Sales vs. YA by Income SegmentSource: comScore e-Commerce Measurement
All income segments showing declines in e-commerce spending
10© comScore, Inc. Proprietary and Confidential.
As the older mid-to-upper income households save to re-create their lost
wealth, they are cutting spending. The 18-44 age group is purchasing more
versus year ago, particularly in the high income segment
Q3 „09 Ecom Sales
Age & Income Segment % Chg vs. YA
$50K - $99.9K
18-44 yrs of age…………………………….. +3%
45 yrs or older……………………………… -5%
$100K or more
18-44 yrs of age ………………………….. +10%
45 yrs or older……………………………… -12%
11© comScore, Inc. Proprietary and Confidential.
While no positive growth as of yet, the monthly trend in e-commerce
sales in Q3 is somewhat encouraging
Month Growth Rate vs. YA
January 2009 +2%
February 2009* +2%
March 2009 -1%
April 2009 0%
May 2009 -4%
June 2009 -1%
July 2009 -5%
August 2009 -1%
September 2009 0%
Monthly e-Commerce Sales Growth vs. YASource: comScore e-Commerce Measurement
*February 2009 growth rate is seasonally adjusted to account for the leap year (2008).
12© comScore, Inc. Proprietary and Confidential.
E-commerce continues to attract more buyers but they are spending
less than a year ago
% Chg in Q3 „09 vs. YA
E-commerce Sales Growth -2%
Buyer Change +19.6%
Dollars Per Buyer Change -18.4%
Dollars Per Transaction
Change-2.4%
Transactions per Buyer
Change-16.4%
Key e-Commerce Buyer & Transaction MeasuresSource: comScore E-commerce Measurement
There are
more people
buying online
vs. YA but
they are
spending
less via fewer
transactions
and fewer
dollars per
transaction
13© comScore, Inc. Proprietary and Confidential.
Consumer sentiment about the current state of the economy has
improved – albeit marginally – among those earning less than $100K
Consumer Fear Factor by Income Segment
Q. To what extent do you agree with the following statement:
“I am more afraid of the economic future than ever before.”Source: comScore Surveys – July & October 2009
77%73% 75%
-2% -2% 0% %age Pt. Change vs. Q2
14© comScore, Inc. Proprietary and Confidential.
However, a slightly improved outlook means little when you consider
the impact of consumer debt on one‟s ability to spend on
discretionary items
Impact of Debt on Spending for Non-Essentials by Income Segment
Q. How has your current level of debt impacted your ability to spend on non-essentials?Source: comScore Survey October 2009
% Spending More on
Non-Essentials
% Spending Less on
Non-Essentials
65% 50% 46%
4% 4% 6%
15© comScore, Inc. Proprietary and Confidential.
Q. Based on your current situation, which one of the following economic conditions most
concerns you?Source: comScore Survey October 2009
Percent of Respondents Citing Their One Most Important Concern
Among All Consumers Among Consumers
Earning $100K or more
Unemployment/Job
Security
42% 34%
Rising Prices 32% 19%
Financial Markets 13% 27%
Real Estate/Home
Values
8% 15%
Other 5% 5%
Unemployment/job security continues to be a top concern among all
consumers
16© comScore, Inc. Proprietary and Confidential.
Consumers remain most concerned about unemployment, with little
overall change in consumers‟ most pressing issues over the past
several months
Rising
Prices
Unemployment/
Job Security
Financial
Markets
Real Estate/
Home Values
Jan
09
April
09
July
09
Oct
09
Jan
09
April
09
July
09
Oct
09
Jan
09
April
09
July
09
Oct
09
Jan
09
April
09
July
09
Oct
09
Total 29% 28% 32% 32% 46% 46% 40% 42% 14% 15% 13% 13% 7% 8% 8% 8%
Household Income
$100K or more 15% 7% 22% 19% 42% 44% 28% 34% 20% 34% 30% 27% 19% 11% 11% 15%
$50K-$99,999 21% 22% 27% 28% 50% 50% 44% 43% 18% 17% 15% 13% 9% 10% 10% 12%
Under $50K 36% 38% 40% 39% 44% 44% 39% 42% 10% 8% 6% 9% 3% 7% 6% 4%
Q. Based on your current situation, which one of the following economic conditions
most concerns you?Source: comScore Surveys - January, April, July & October 2009
Percent of Respondents Citing Their One Most Important Issue
“The U.S. jobless rate jumped up 0.4 percentage point to 10.2% in October, the highest level
since April 1983. The government‟s broader measure of unemployment shot up even more,
rising half a point to 17.5%.” –WSJ, Nov. „09
17© comScore, Inc. Proprietary and Confidential.
Just over half of consumers believe it will take more than a year for
the unemployment rate to show signs of improvement
Q. When do you think the unemployment rate will begin to improve?Source: comScore Surveys - July & October 2009
Unemployment Rate Predictions
+1% +2% +5% -6% 0% %age Pt. Change
vs. Q2
18© comScore, Inc. Proprietary and Confidential.
Inflation concerns are again beginning to surface. To no surprise, as
HH income decreases, rising prices become more worrisome
Consumer Concern Over Rising Prices by Income Segment
Q. Are you afraid that prices are going to rise in the next 3 months?
Source: comScore Survey – October 2009
Yes
85%
76%71%
15% 24% 29%
No
19© comScore, Inc. Proprietary and Confidential.
Some pundits are optimistic about the recession being “technically
over,” but there are still many factors that will impact the speed of
recovery
“The U.S. jobless rate jumped up 0.4 percentage point to
10.2% in October, the highest level since April 1983. The
government‟s broader measure of unemployment shot up
even more, rising half a point to 17.5%.”
November 9, 2009
“25% of U.S. mortgage holders are “underwater” on
their mortgages, with more than 10,000 additional
U.S. homeowners entering the foreclosure process
every day – and millions more homeowners only a
(missing) pay check away from joining that
category.”
October 23, 2009
“U.S. consumer credit fell in September for an eighth
straight month, the longest series of declines on
record, as thousands of Americans lost their jobs
and banks tightened access to loans… More than
100 banks have failed this year, and lenders are
requiring tougher conditions for the credit they
extend to consumers and businesses.”
November 6, 2009
“A total of 690,000 new vehicles were sold under the Cash for
Clunkers program last summer, but only 125,000 of those
were vehicles that would not have been sold anyway,
[according to Edmunds.com]…[Because the] overwhelming
majority of sales would have taken place anyway at some
time in the last half of 2009…that means the government
ended up spending about $24,000 each for those 125,000
additional vehicle sales.”
October 29, 2009
Note: According to the blog, The Big Picture,
“nationally, 22% of all homes are underwater…Back
out the mortgage-free homes, and we get 33% of all
mortgaged homes are underwater.”
20© comScore, Inc. Proprietary and Confidential.
The promising Q3 „09 GDP report that showed 3.5% growth needs to
be considered in the context of several short term stimuli that
contributed to a temporary boost in the growth rate
“More than one percentage point of GDP growth in the third quarter came from car sales,
driven in a large part by the temporary "cash for clunkers" program. After surging in July
and August, retail car sales dropped 10.4% in September.”
--WSJ, Oct 30, 2009
“Q3 GDP was also propped up by home building, which rose for the first time since
2005…and contributed a half-percentage point to GDP growth. But much of the housing
revival reflects government efforts to push down mortgage rates, prevent or at least slow
foreclosures, and reward home buyers with tax credits.”
--WSJ, Oct 30, 2009
“Banks are buying U.S. government debt in an effort to shore up their balance sheets…Bank
lending is basically back to where it was two years ago, and shows no sign off
rebounding...Lending to small business, the real engine of job creation, is sadly decreasing
each month.”
--John Mauldin, President, Millennium Wave Advisors, LLC
21© comScore, Inc. Proprietary and Confidential.
Job losses as a percentage of peak employment have dropped lower
(and longer) than any other post WWII recession
% J
ob
Lo
sses R
ela
tiv
e t
o P
eak E
mp
loym
en
t M
on
th
Number of Months After Peak Employment
Percent Job Losses in Post WWII RecessionsSource: CalculatedRiskBlog.com
“The country has lost more jobs as a percentage of peak employment than any time since the Great Depression.
This includes the recessions of the early 1980s, even when they are combined.”
--The Business Insider, Oct. „09
22© comScore, Inc. Proprietary and Confidential.
Gas prices are increasing again, while food prices are now back to
year-ago levels
Percent Change in Price vs. YASource: U.S. Bureau of Labor Statistics
AAA‟s Daily Fuel Gauge Report
Regular Unleaded Gas
Avg. Price for Nov. 3, 2009: $2.89
% Chg vs. Month Ago Avg: +9%
% Chg vs. YA Avg: +11%
CPI for Gasoline (all types) by Month in 2009
-42% -40% -40%
6%
0
50
100
150
200
250
Source: U.S. Bureau of Labor Statistics
23© comScore, Inc. Proprietary and Confidential.
The Economy‟s Impact on Consumers‟ Online
Shopping Behavior
24© comScore, Inc. Proprietary and Confidential.
The Books & Magazines category was a top performer in Q3 ‟09, and
will be one to watch as we head into the holiday season, with a
heated price war already underway
Q3 2009 e-Commerce Sales Growth vs. YA by Retail Sub-CategorySource: comScore e-Commerce Measurement
“The holiday period represents anywhere between 25% and 40% of the industry's annual sales and is make-
or-break for some categories, according to NRF.”
– WSJ, Oct. „09
Category Growth vs. YA
Books & Magazines Up
Consumer Electronics (x PC Peripherals) Up
Sport & Fitness Marginally Up
Computers/Peripherals/PDAs Marginally Up
Video Games, Consoles & Acces. Flat
Event Tickets Marginally Down
Jewelry & Watches Marginally Down
Apparel & Accessories Down
Home & Garden Down
Furniture, Appliances & Equipment Significantly Down
Toys & Hobbies Significantly Down
Flowers, Greetings & Misc. Gifts Significantly Down
Music, Movies & Videos Significantly Down
25© comScore, Inc. Proprietary and Confidential.
e-Commerce Dollar Share by Retailer TypeSource: comScore e-Commerce Measurement
Pure play sites accounted for nearly six of every ten e-commerce
dollars spent in Q3 „09, their highest share on record
26© comScore, Inc. Proprietary and Confidential.
During the holiday season, buyers are more likely to make purchases
on more than 1 site, buying on an average of 3 sites during the period
56% 58% 59%52%
60% 62% 64%
44% 42% 41%48%
40% 38% 36%
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09
1 site 2+ sites
% Buyers Making a Purchase on 1 Site vs. 2+ Sites by QuarterSource: comScore e-Commerce Measurement
2.97 3.02 2.97 3.33 2.84 2.84 2.75
Average # of sites
buyers purchased
on, of those who
bought from more
than one site.
27© comScore, Inc. Proprietary and Confidential.
With more cross-shopping and less consumer loyalty toward a given
retailer during the holiday season, it‟s no wonder aggressive pricing
is taking center stage
“Borders Group Inc took the latest step in
the battle for book buyers this holiday
season, promising customers it will ship
items to their homes for free when they're
out of stock in the company's bookstores.”
– Reuters, Oct. „09
Amazon vs. Wal-Mart Buyer OverlapSource: comScore e-Commerce Measurement
20% 18% 23% 17% 19% 15%
77% 79% 70% 80% 78% 83%
3% 3% 8% 3% 4% 3%
Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09
Walmart Only Amazon Only Overlap
28© comScore, Inc. Proprietary and Confidential.
In Q3, a few retailers were able to increase buyer conversion while
experiencing heightened visitation compared to year ago
Q3 „09 UV‟s
(MM)4.7 37.0 10.8 14.8
Source: comScore e-Commerce Measurement & Media Metrix
Average change in
Buyer Conversion
vs. year ago among
top retailers:
-3%
29© comScore, Inc. Proprietary and Confidential.
While luxury department stores have taken a hit in this economy,
invitation-only e-luxury sites are flourishing – at least in visitation
0
50
100
150
200
250
300
350
400
450
500
Un
iqu
e V
isit
ors
(0
00
)
+199%
118%*
+222%
+40%
Unique Visitors and Growth vs. YA for
September 2009Source: comScore Media Metrix
*Note: comScore began tracking Hautelook in October „09 therefore its above
growth rate is calculated vs. Jan „09 instead of vs. YA
Total
InternetHauteLook
Gilt
GroupeIdeeli RueLaLa
Less than
$40K28% 25% 24% 21% 14%
$40K-$74.9K 35% 33% 31% 32% 23%
$75K-$99.9K 15% 17% 14% 20% 22%
$100K or
more22% 25% 31% 27% 41%
% Composition by HH Income for
September 2009Source: comScore Media Metrix
Groupon.com – a relatively new “deal-of-the-day” site with a slightly different model and
broader appeal – has grown 250% from July 2009 to September 2009.
30© comScore, Inc. Proprietary and Confidential.
PayPal B2C Market Share has grown steadily over the past four years to
almost 10% of B2C Transactions; 2008 Holiday-promotions drove an increase
in PayPal dollar share for retailers
2.3% 3.5% 4.1% 5.0%4.5%6.5% 7.5%
9.5%
2006 2007 2008 1H 2009
Dollars Transactions
Q3 08 Q4 08 Point
Change
Overstock.com 15.0% 18.6% 3.6
Dell.com 1.9% 7.0% 5.1
AE.com 3.0% 8.0% 5.0
In Q4 08, Overstock.com customers were
presented with 15% cash back on a $100
purchase when using PayPal
PayPal B2C e-Commerce Market ShareSource: comScore e-Commerce Measurement
PayPal Share of Dollars at Specific Online Retailer SiteSource: comScore e-Commerce Measurement
Dell.com gave PayPal preferential
treatment, positioning the payment option
right under Dell‟s payment plan and above
all other credit card options
31© comScore, Inc. Proprietary and Confidential.
Retailers have increased their discounting in response to sluggish
consumer demand
0
50
100
150
200
250
300
350
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Off
ers
pe
r R
eta
ile
r
2008 2009
-5%+15% +5%
+11%+10% +22%
+16%+7% +3%
+16%
% Change in Offers per Retailer in 2009 vs. YASource: ShopLocal
“Shoppers are „testing the waters a little more aggressively," said Ken Perkins, president of Retail
Metrics Inc., a retail research firm. "They've gone from dipping their toe into the discretionary pool
to stepping in a little further, maybe up to their ankles.” – WSJ, Nov. „09
32© comScore, Inc. Proprietary and Confidential.
Coupon sites continue to grow in importance during these tough
economic times, and as we saw in Q4 „08 we‟ll likely see visits and
UVs spike in Q4 „09
Growth in Unique Visitors & Total Visits to
Coupon Sites vs. YASource: comScore Media Metrix
% Composition of Coupon Users on Selected
Retail Sites in September 2009Source: comScore Segment Metrix
33© comScore, Inc. Proprietary and Confidential.
Savvy Smartphone Users are Shopping Using Mobile:
Is the smartphone to mobile advertising what broadband is to the PC?
Category % Reach Among Mobile Phone Users
Accessed Via Mobile DeviceSource: comScore MobiLens, US, 3-month average ending August „09
Source: TechCrunch, October 2009
34© comScore, Inc. Proprietary and Confidential.
2009 Holiday Season Preview
“Holiday shopping in 2008 was defined by the huge discounts
that were available - and available very early in the holiday
season.” – Reuters, October 2009
What will this year bring?
35© comScore, Inc. Proprietary and Confidential.
Burning questions we‟re answering for retailers this holiday season:
In-store sales is still the primary metric we focus on. How do I prove that my holiday
marketing spend drove incremental sales in my physical retail locations?
I‟m advertising heavily across multiple channels this holiday season. What mix of
marketing channels (digital and traditional) have the most significant impact on my
brand?
Have retailers‟ market shares shifted during the holidays within the Consumer
Electronics category? – Same question for Apparel
I know which digital marketing tactics (search, display, email, etc.) are driving traffic
to my site. Which are most successful in driving online sales? How does this
compare to my competitors?
What do my category buyers do before ultimately purchasing? What sites do they
visit? What do they search for?
We‟ve ramped up our search spend this holiday season. How do I validate that this
spend drove incremental sales that we wouldn‟t have gotten if we didn‟t spend?
I know where to find my demographic target online, and I know where to find heavy
visitors to my category. How do I determine where my category buyers are online so
I can design my media plan accordingly?
36© comScore, Inc. Proprietary and Confidential.
Plans for Holiday Spending This Season
A net 46% of consumers earning under $50K anticipate spending less this
holiday season; meanwhile a net 38% and 32% of those earning $50K to
$100K and more than $100K respectively anticipate spending less
Q. Do you anticipate your spending for the holiday season to be...?Source: comScore Survey October 2009
Less than I Typically Spend
More than I Typically Spend7%
39%46%55%
8%9%
Overall, 50% of consumers anticipate their spending to be less this holiday season
About the same
55%45%
37%
Share of Online
Retail Spend: (21%) (45%) (34%)
37© comScore, Inc. Proprietary and Confidential.
Reasons Consumers are Planning to Spend Less This Holiday Season
Of those who intend on spending less this holiday season, more than
half say it‟s because they have less money
Q. Why are you planning to spend less this holiday season? (check all that apply)Source: comScore Survey October 2009
38© comScore, Inc. Proprietary and Confidential.
One-fourth of consumers typically travel during the holidays, with
half planning to stay with family and friends and 15 percent saying
they‟ve cancelled their plans completely
Holiday TravelSource: comScore Survey October 2009
Q. Which of the following
describes your travel plans this
holiday season?
(check all that apply)
Q. Do you typically travel during the holidays?
Yes
No
39© comScore, Inc. Proprietary and Confidential.
Walmart plans to reduce prices as the season advances in areas including
home, food and gifts. (Bloomberg, Oct ‘09)
Discount retailer Target is offering up to half off of popular toys like Barbie
and Fisher Price to lure bargain hunters this holiday season.
(CNNMoney.com, Oct. ‘09)
Layaway plans making a comeback for holiday shopping season: Driven by
the credit crunch and sagging economy, Toys-R-Us has joined a growing list of
retailers reviving the once-popular payment plan in an effort to boost sales.
(Chicago Tribune, Oct. ‘09)
Retailers are reaching into their marketing toolboxes this season to
find ways to provide value to consumers and incentivize spending…
Smart merchants will look at consumer behavior and apply free shipping and
other promotional offers to specific customer segments during specific time
periods. (Internet Retailer, Oct. ‘09)Promotions
Layaway
Price Discounts
With an understanding that many of today’s shoppers use Facebook and
Twitter regularly, and because these tools are more cost-effective than
traditional advertising, 47.1 percent of retailers surveyed will be increasing their
use of social media this holiday season. (Shop.org, Oct. ‘09)
Social Media
40© comScore, Inc. Proprietary and Confidential.
…And, on the cost side of things, they‟re also doing more to try to
boost profit margins and finish the year strong
Nearly half the nation's 25 biggest retail chains expect to hire fewer holiday
workers this season than they did last year, another sign that retailers aren't
counting on recession-strained shoppers to relax the tight grip on their
pocketbooks this year. (Wall Street Journal, Oct. ‘09)
Inventory
Management
Personnel/
Staffing
Because of the economic downturn this year, many retailers are under-
ordering products – Baird notes that retailers’ inbound container shipments
are down 16% from a year ago. (Bloomberg, Oct. ‘09)
Shoppers willing to pry open their wallets may find a surprise on the shelves
this season: not as many brands, a diminished palette of colors, and fewer
deep discounts. (Boston Globe, Oct. ‘09)
Tweaking
Marketing Mix
The web will influence one in three holiday purchases this year, and retailers
are using the Internet not only as a sales channel but also as a marketing
vehicle. (Shop.org, Oct.‘09)
The proliferation of mobile applications and social networks may yield new
opportunities to pursue targeted advertising, build brand loyalty and measure
campaign effectiveness. (Retail Trading, Sept. ‘09)
41© comScore, Inc. Proprietary and Confidential.
Timing of Holiday Shopping
Two thirds of consumers have not yet started their holiday shopping
Q. Have you started shopping for the holidays?Source: comScore Survey October 2009
No 68%
Yes 32%
42© comScore, Inc. Proprietary and Confidential.
Free shipping has become increasingly more prevalent; the
percentage of transactions with free shipping increased 11 points
since Q1 „08 to account for 42% of all e-commerce transactions
Average Order Value (AOV)
Free Versus Paid Shipping
Time
Period
Free
Shipping
AOV
Paid
Shipping
AOV
Q1 08 $113 $86
Q2 08 $120 $88
Q3 08 $115 $91
Q4 08 $116 $96
Q1 09 $114 $87
Q2 09 $104 $88
Q3 09 $106 $90
Percentage of e-Commerce Transactions with Free ShippingSource: comScore e-Commerce Measurement
43© comScore, Inc. Proprietary and Confidential.
Current Predictions for the 2009 Holiday Season…
Retail Predictions
The International Council of Shopping Centers: +1%
Deloitte Research: flat
Retail Forward: flat
Archstone Consulting: - 1%
National Retail Federation: -1%
E-commerce Predictions
Forrester: +8%
comScore forecast will be issued w/o November 23
Historical Comparison Dept of Commerce Forrester
Q1 2009 -5.8% +11%
Q2 2009 -4.5% +12%
44© comScore, Inc. Proprietary and Confidential.
Key Takeaways
45© comScore, Inc. Proprietary and Confidential.
Key Takeaways
We‟re seeing clear signs that we‟ve hit the bottom of the decline in e-commerce
spending, and comScore expects some modest growth in the holiday season
compared to last year
Consumers continue to be very cautious about their spending given concerns about:
– The job market/unemployment/lack of job creation
– Declines in housing prices/Underwater mortgages
– Lack of credit and too much debt
– Rising gas prices
E-commerce continues to attract more buyers, but they are spending less than a
year ago by completing fewer transactions and spending less per shopping trip
Retailers are hiring fewer workers and carefully planning their inventory so as to
avoid heavy discounting post-season
The holiday season will likely be characterized by heavy discounts/price wars,
promotions/couponing, an earlier start to the season and an increased use of digital
marketing
46© comScore, Inc. Proprietary and Confidential.
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