L2 BigBox 2014

DIGITAL IQ INDEX®

BIG BOX

November 24, 2014

in partnership with:

For sole use of [email protected]

The report has been licensed to [email protected]. © L2 Inc., 2014 Circulation of the report violates copyright, trademark and intellectual property laws.

2

DIGITAL IQ INDEX® BIG BOX

November 24, 2014

ReinventionIn January 2003, Sears, Roebuck and Company published the final issue of its “Big Book” catalog, signaling the close to the pre-Internet age of retail.1 Today, after nine consecutive quarters of losses2, Sears shows signs of a textbook “death spiral”—joining the ranks of Linens ‘n Things (May 2008 bankruptcy), Mervyns (July 2008), Circuit City (November 2008), Borders (February 2011), and Filene’s Basement (November 2011).3

In June, Walmart announced plans to roll out its Savings Catcher program nationwide featuring digital tools that compare receipts against competing local discounts.4 In September, Staples announced a series of omnichannel upgrades, including buy online and pick-up in-store (BOPS).5 Macy’s will pilot same-day delivery in eight U.S. markets to buttress existing BOPS capabilities.6 Driven by a burning platform of anemic retail sales, Big Box refuses to waste the crisis—attempting its great leap forward.

1. “The Mother of All Catalogs Ceases Publication, 10 Years Ago,” Barbara Maranzani, History, January 25, 2013.2. “The Evolution of Retailing: Reinventing the Customer Experience,” KMPG, December 2009.3. “Sears Vendor Said to Halt Shipments as Insurers Back Away,” Lauren Coleman-Lochner, Bloomberg Businessweek, October 8, 2014.4. “Walmart to Competitors: Catch Our Savings If You Can,” Press Release, Walmart, June 5, 2014.5. “Staples Launches Series of Omnichannel Updates to Help Businesses Make More Happen,” Press Release, Staples, September 3, 2014.6. “How Macy’s Gets The Hip Customers,” Walter Loeb, Forbes, September 22, 2014.

Middle Ground?As online retail sales top $300 billion in 2014, prognosticating the end of brick-and-mortar has become old passe.7 Online-only retailers face rising shipping costs that continue to erode scant margins. Last year, Amazon collected $3.1 billion in shipping fees, but shelled out $6.6 billion in transportation services.8 Conversely, traditional retailers must charge a 15 percent premium over Amazon to cover fixed operational costs.9 Facing formidable challenges at each end of the retail spectrum, the winning calculus may lie somewhere between the poles. In an attempt to escape “free shipping” costs, Amazon is moving distribution centers closer to population centers. Amazon now supports same-day delivery in 1,908 ZIP codes across 11 U.S. cities.10,11,12 Despite the proximity, Amazon still struggles with a “last mile” problem in urban centers, requiring expansion of its limited network of communal lockers or investment in the unthinkable—the physical store.13,14

7. “Total US Retail Sales Top $4.5 Trillion in 2013, Outpace GDP Growth,” eMarketer, April 2014.8. “E-tailing’s Trojan Horse,” Satish Jindel, The Journal of Commerce, June 20, 2014.9. “E-commerce and higher operational costs put pressure on retail chains to change,” Allison Enright, Internet Retailer, January 16, 2014.10. “Amazon brings same-day delivery to more US cities,” Chris Welch, The Verge, August 6, 2014.11. “Same-Day Delivery Coverage: West Coast & Southwest,” Amazon, October 2014.12. “Same-Day Delivery Coverage: East Coast & Midwest,” Amazon, October 2014.13. “Why Amazon’s Lockers Don’t Solve Package Delivery Problems,” Laurie Kulikowski, The Street, April 16, 2014.14. “Amazon to Open First Brick-and-Mortar Site,” Greg Bensigner & Keiko Morris, The Wall Street Journal, October 9, 2014.

Source: McKinsey & Co, October 2013.

Big Box: Annual Growth of Retail SalesUnited States, 1970-2020E

1970

s

9.3%

1980

s

7.6%

1990

s

5.3%

2000

-07

5.3%

2007

-12

2.4%

2012

-20

4.0%

AVERAGE: 6.2%

Watch the Video



http://www.history.com/news/the-mother-of-all-catalogs-ceases-publication-10-years-ago

https://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Documents/Evolution-retailing-o-200912.pdf

http://www.bloomberg.com/news/2014-10-08/sears-vendor-said-to-halt-shipments-as-insurers-back-away.html

http://news.walmart.com/news-archive/2014/06/05/walmart-to-competitors-catch-our-savings-if-you-can

http://staples.newshq.businesswire.com/press-release/corporate/staples-launches-series-omnichannel-updates-help-businesses-make-more-happen#axzz3CKY1JHQL

http://staples.newshq.businesswire.com/press-release/corporate/staples-launches-series-omnichannel-updates-help-businesses-make-more-happen#axzz3CKY1JHQL

http://www.forbes.com/sites/walterloeb/2014/09/22/how-macys-gets-the-hip-customers/

http://www.emarketer.com/Articles/Print.aspx?R=1010756

http://www.joc.com/international-logistics/e-tailing%E2%80%99s-trojan-horse_20140620.html

http://www.internetretailer.com/2014/01/16/e-commerce-and-operational-costs-put-pressure-retail-chains

http://www.internetretailer.com/2014/01/16/e-commerce-and-operational-costs-put-pressure-retail-chains

http://www.theverge.com/2014/8/6/5975391/amazon-launches-same-day-delivery-in-more-cities

http://www.amazon.com/b?ie=UTF8&node=9715549011

http://www.amazon.com/b?ie=UTF8&node=9680309011

http://www.thestreet.com/story/12670871/2/why-amazons-lockers-dont-solve-package-delivery-problems.html

http://online.wsj.com/articles/amazon-to-open-first-store-1412879124

http://www.mckinsey.com/insights/consumer_and_retail/how_retailers_can_keep_up_with_consumers

http://www.l2inc.com/research/big-box-2014

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November 24, 2014

Trojan HorseIronically, the digital age’s albatross (i.e., real estate) could be Big Box’s salvation and may be an arrow in Amazon’s heel. By shipping online orders to local stores, retailers benefit from lower freight costs, commercial shipping fees and faster delivery. After demonstrable proof that the “ROPO” effect (research online / purchase offline) lifts in-store sales for BOPS-enabled outposts, digital investment by “doomed” retailers is accelerating.15 Over 70 percent of Big Box retailers let customers buy items online and return them in store. Half allow customers to buy online and pick-up in store. And nearly a fifth let customers reserve items in-store without making immediate payment online. Growing channel agnosticism, combined with an established retail footprint, fits the U.S. consumer where 85 percent commutes to work via automobile.16

Bifurcation?Over 75 percent of Big Box stocks are trading near their 52-week highs with P/E ratios in-line with projected earnings growth rates over the next twelve months. However, retailers focused on revenue growth via technology enhancements to improve fulfillment and marketing capabilities should see higher valuations as they start to benefit from digital investments. If holiday demand does not materialize, the delta between valuations on retailers perceived as getting “it” (i.e., digital savvy) could create a two-class sector that relegates a new crop of retailers to an inexorable downward spiral.

Digital IQ = Shareholder ValueThis study attempts to quantify the digital competence of 64 Big Box brands in the U.S. market. Our aim is to provide a robust tool to diagnose digital strengths and weaknesses, helping managers achieve greater return on incremental investment. Like the medium we are assessing, our approach is dynamic. Please reach out with comments that improve our methodology and findings.

Regards, L2

15. “Shop Online, Pick Up in Store?” Santiago Gallino & Antonio Moreno-Garcia, Kellogg Insight, July 1, 2013.16. “Most Americans Still Driving, but New Census Data Reveals Shifts at the Metro Level,” Adie Tomer & Joseph Kane, Brookings Institute, September 29, 2014.

Big Box: Expected Sales Growth vs. Current Valuation Relative to SalesNovember 2014, n=45 public companies

Big Box: Current Stock ValuationsNovember 2014, n=45 public companies

PRIC

E-TO

-SAL

ES R

ATIO

(P/S

)

FISCAL YEAR 2015 SALES GROWTH FORECAST

1.6

1.2

1.0

0.0-10% 0% 10% 20%

0.4

Home Depot Ross Stores

TJ Maxx

Whole Foods

Dick’s Sporting

Macy’s

WalmartCostco

Kroger Best Buy

Average of Biggest Retailers

Walgreens

AVERAGE

Big Box Sales Growth: 6%

Big Box P/S: 0.8x

Big Box Historical P/S: 1.1x

S&P500 P/S: 1.8x



FISCAL YEAR 2015 EPS GROWTH FORECAST

% O

F 52

-WEE

K TR

ADIN

G HI

GH

FORW

ARD

PRIC

E-TO

-EAR

NING

S RA

TIO

(P/E

)

100% 30

25

20

15

100% 20% 40%

80%

60%

40%

0% 15% 35% 55%

AVERAGE

Big Box EPS Growth: 13%

Big Box Forward P/E: 16.0x

S&P500 Forward P/E: 16.9x

Source: Thomson One Banker, Yahoo Finance. Prices and estimates as of November 18, 2014.

Source: Thomson One Banker, Yahoo Finance. Prices and estimates as of November 18, 2014.



http://insight.kellogg.northwestern.edu/article/shop_online_pick_up_in_store/

http://www.brookings.edu/blogs/the-avenue/posts/2014/09/29-americans-driving-census-data-metro-tomer-kane


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DIGITAL MARKETING30 Digital Coupons32 Email Frequency & Triggers 34 Email Content & CTAs 36 Web Advertising & Programmatic Media

MOBILE39 Mobile Investments41 SPOTLIGHT: Mobile Payments42 SPOTLIGHT: Data Breaches

SOCIAL MEDIA43 Adoption is High, Site Support Varies44 Facebook46 Twitter47 SPOTLIGHT: E-Commerce48 YouTube51 SPOTLIGHT: Emerging Platforms

METHODOLOGY

DIGITAL IQ RANKING6 Company of Genius8 Gifted9 Average

10 Challenged12 Feeble

KEY FINDINGS 13 Digital IQ Distribution14 Darwin15 Enterprise Effects 16 SPOTLIGHT: Changing Landscape

SITE 17 Channel Agnostic?18 Leaders vs. Laggards19 Click & Collect20 SPOTLIGHT: Click & Collect Options22 Ship-from-Store24 Site Features & Functionality26 SPOTLIGHT: Online Grocery28 Free Shipping

FLASH OF GENIUS53 Best-in-Class Loyalty Programs55 Preparing for Holiday Shopping Season57 Holistic Commerce58 M&A Synergies Focus on Digital60 Optimizing Screen Real Estate61 Two Mobile Strategies62 0 to 100 / The Catch Up63 Exceptional Use of Social Commerce64 Inventory Interfaces65 Digital First Steps

L2 TEAM

ABOUT L2

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https://blog.kissmetrics.com/live-chat/

http://www.prnewsonline.com/featured/2013/01/23/infographic-analog-catalogs-had-big-influence-on-holiday-shoppers/

http://www.internetretailer.com/2014/07/25/webs-influence-us-retail-grows

http://marketingland.com/survey-customers-more-frustrated-by-how-long-it-takes-to-resolve-a-customer-service-issue-than-the-resolution-38756

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November 24, 2014

GENIUS 140+

Digital competence is a point of competitive differentiation for these brands. Creatively engineered messaging reaches consumers on a variety of devices and in many online environments.

GIFTED 110–139

Brands are experimenting and innovating across site, mobile, and social platforms. Digital presence is consistent with brand image and larger marketing efforts.

AVERAGE 90–109

Digital presence is functional yet predictable. Efforts are often siloed across platforms.

CHALLENGED 70–89

Limited or inconsistent adoption of mobile and multi-channel platforms. Sites lack inspiration and utility.

FEEBLE <70

Investment does not match opportunity.

Classification

Methodology

35% SITE & E-COMMERCE

EFFECTIVENESS OF BRAND SITE & E-COMMERCE INVESTMENTSTechnology & Web Advertising

Search & Navigation

Product Pages

Customer Service & Store Locator

E-Commerce & In-Store Integration

Ease of Checkout

Account Activation & Loyalty Programs

35% DIGITAL MARKETING

SEARCH, DISPLAY, AND EMAIL MARKETING EFFORTSSearch: Traffic, Web Authority, SEO & SEM, Search Visibility Across Non-Brand Keywords

Advertising and Innovation:Display, Retargeting, Impressions, Programmatic Media (data by Adomic)

Email: Ease of Signup, Frequency, Content, Personalization, Trigger Emails, Mobile Optimization

Blog & User-Generated Content: Mentions, Sentiment, Online Buzz

MOBILE

20% COMPATIBILITY, OPTIMIZATION, AND MARKETING ON SMARTPHONESMobile Site: Compatibility, Functionality, Localization, In-Store Integration

Tablet Experience:Compatibility, Responsiveness, UI/UX Optimization

Mobile Search: SEO & SEM, Drive-to-Store

Mobile Advertising:Impressions by Device Type(data by Adomic)

Mobile Innovation:iOS Apps, Android Apps, SMS Alerts, Mobile Payments, etc.

SOCIAL MEDIA

10% BRAND PRESENCE, COMMUNITY SIZE, CONTENT, AND ENGAGEMENTFacebook: Likes, Annual Growth, Custom Tabs & Apps, Engagement

YouTube: Search Visibility, Channel Experience, Video Views, Content Virality

Twitter: Followers, Annual Growth, Customer Service Aptitude

Instagram: Presence, Community Size, Engagement

Emerging Social Media: Pinterest, Google+



6


November 24, 2014

IN THE COMPANY OF GENIUS

RANK: 1

Home Depot, Inc.

DIGITAL IQ: 143

GENIUSThe Home Depot

Walmart

GIFTEDTarget

Macy’sToys “R” Us

Best Buy U.S.Staples

Sears DomesticKmart

JC PenneyKohl’s

WalgreensLowe’s

Office DepotCVS REI

AVERAGEBed Bath & Beyond

Dick’s Sporting GoodsPetsmart

Sam’s ClubAcademy Sports + Outdoors

Michaels StoresCabela’s

Sports AuthorityBelk

MeijerPetco Animal Supplies

RadioShackAce Hardware

CostcoJo-Ann Stores

Whole FoodsContainer Store

DSW StoresSafeway

Hobby LobbyKroger

OfficeMaxRite Aid

Cost Plus World Markethhgregg

CHALLENGEDDollar GeneralPier 1 Imports

Famous FootwearPublix

Dillard’sbuybuy BABY

Fry’s Electronics Dollar TreeTrue Value

Burlington Coat FactoryT.J.Maxx

BJ’s Wholesale ClubShopko

Stop & ShopH-E-B

MenardsBig Lots US

FEEBLEAlbertsons

HomeGoods Marshalls (US)

Family DollarRoss

Trader Joe’s

Three new direct fulfillment centers will stock 100,000 SKUs (versus 35,000 typically found in brick-and-mortar locations), enabling faster order preparation and shipment through HomeDepot.com.

The Home Depot blog weaves together frequently asked questions, project tutorials, and content from style bloggers—all featuring direct links to commerce.

Dual mobile site and app investments promote in-store shopping by identifying a user’s local store, providing a map of that location’s layout, scanning local discounts, and listing the schedule of upcoming workshops.



7


November 24, 2014

IN THE COMPANY OF GENIUS

RANK: 2

Wal-Mart Stores, Inc.

DIGITAL IQ: 140

In August, the Savings Catcher program launched nationwide—granting customers the ability to automatically scan prices offered by local competitors and receive rebates via Walmart eGiftcard.

While “Scan & Go” did not make it through the testing stage, Walmart’s mobile properties excel at providing access to weekly ads, shopping lists, inventory status, and customer ratings/reviews.

In September, Walmart began experimenting with a click-and-collect prototype store in its home state of Arkansas.

Walmart customers can unlock additional benefits by scanning store receipts. For example, customers that buy DVD and Blu-ray discs are automatically granted a license for the digital copy of qualifying movies (via a collaboration with streaming service Vudu).


Walmart

GIFTEDTarget



Sears DomesticKmart

JC PenneyKohl’s

WalgreensLowe’s

Office DepotCVS REI








CostcoJo-Ann Stores


DSW StoresSafeway

Hobby LobbyKroger

OfficeMaxRite Aid








Stop & ShopH-E-B

MenardsBig Lots US

FEEBLEAlbertsons


Family DollarRoss

Trader Joe’s



8


November 24, 2014

RANK BRAND DIGITAL IQ DESCRIPTION

3 139Experimenting with Like-to-Buy on Instagram to bridge to commerce; Cartwheel app provides redeemable, Passbook-integrated coupons

4 137Virtual inventory pool leveraged to maximize sales in all channels; actively placing ads across social media platforms; practicing “hyperlocalization” to combat competition

5 130Strong omni focus with in-store pickup, Weekly Circular app, and many fast-checkout options including PayPal, Bill Me Later, Google Checkout, ShopRunner

6 128Site offers robust suite of delivery options and product galleries across devices; includes cart preservation within the account

7 126Ramped up omnichannel efforts this past year with in-store pickup, an iPad app, Visa Checkout, and mobile-optimized weekly ads

8 125E-commerce is top priority, driving early adoption of ship-from stores and vendors; dedicated customer service on Twitter

9 124Leads Index for most YouTube channel views; shares the popular Shop Your Way loyalty app with Sears


10 121Strong social strategy with product-focused Facebook posts and customer-service oriented tweets; mobile-optimized site and app mimic desktop capabilities

11 120Piloting Buy-Online, Pickup-In Store in select locations; contests, votes and responsive customer service drive high social engagement

12 119Offering in-store inventory search and Apple Pay speak to an advanced omnichannel strategy relative to other drugstores

13 118Price matching undercuts competitors by 10 percent; DIY-focused Pinterest page dwarfs other Index brands and features numerous influencers on collaborative boards

13 118Service and fulfillment power digital efforts, including same-day shipping, live chat, and scheduled customer service calls

15 115Building loyalty through a personalized desktop homepage and an app that integrates account sign-in and coupon redemption

16 112Maintains the highest interaction rate on Instagram; social streams integrated into the main site as a complement to e-commerce

GIFTED

REI

Target Corporation J.C. Penney Company, Inc.

KKR, Bain Capital, Vornado(private equity) Walgreen Co.

Staples, Inc. Office Depot, Inc.

Macy’s, Inc. Kohl’s Corporation

Best Buy Co., Inc. Lowe’s Companies, Inc.

Sears Holdings Corporation CVS Health Corporation

Sears Holdings Corporation


Walmart

GIFTEDTarget



Sears DomesticKmart

JC PenneyKohl’s

WalgreensLowe’s

Office DepotCVS REI








CostcoJo-Ann Stores


DSW StoresSafeway

Hobby LobbyKroger

OfficeMaxRite Aid








Stop & ShopH-E-B

MenardsBig Lots US

FEEBLEAlbertsons


Family DollarRoss

Trader Joe’s



9


November 24, 2014


22 105Product page videos can be found both on desktop and mobile sites; shows status of product availability in both warehouse and store

25 103Click-to-apply mobile coupons and online-only sales make for an effective m-commerce experience

25 103E-commerce limited to gift card sales and online photo services; user-friendly loyalty program and weekly ads can be added to shopping list easily

25 103Provides high-quality customer service via automatic live chat and a comprehensive FAQ page; some items ship directly from vendor

28 102 Despite engaging social content, digital fundamentals lag with no mobile-optimized site

29 100Shopping the mobile site requires multiples clicks through sort links before seeing actual product pages

30 99 Store and online inventories are not integrated, missing the multichannel opportunity


17 109Shop For College tab provides unique feature of letting college students select their school to have their purchases shipped to a nearby store

17 109Advanced mobile experience includes collapsible, accordian-link navigation menu, functional animation, and intuitive sorting; interactive catalog features create a great shopping experience

19 108Loyalty program gives bonuses for in-store purchase and is supported by a dedicated site; pick-up in store feature distinguishes it from Petco

20 107Click-N-Pull saves shoppers time by enabling in-store pickup of online purchases, the only warehouse club to offer this capability

21 106

Offers extensive list of store-specific service availability, but broken items on mobile and desktop sites disrupt the online shopping experience; local stores are not equipped to service web orders

22 105Desktop and mobile sites direct visitors to in-store classes and other events; mobile experience inconsistent and reverts to desktop in sections such as "Classes" and "Gift Cards"

22 105 In-store maps and 3D layouts on website show Cabela's commitment to omnichannel efforts

AVERAGE

Costco Wholesale Corporation

Bed Bath & Beyond Inc. Leonard Green(private equity)

PetSmart, Inc. Meijer, Inc.

KKR (private equity) RadioShack Corporation

DICK’S Sporting Goods Belk, Inc.

Wal-Mart Stores, Inc. TPG Capital & Leonard Green(private equity)

The Michaels Companies, Inc. Ace Hardware Corporation

Cabela’s Incorporated


Walmart

GIFTEDTarget



Sears DomesticKmart

JC PenneyKohl’s

WalgreensLowe’s

Office DepotCVS REI








CostcoJo-Ann Stores


DSW StoresSafeway

Hobby LobbyKroger

OfficeMaxRite Aid








Stop & ShopH-E-B

MenardsBig Lots US

FEEBLEAlbertsons


Family DollarRoss

Trader Joe’s



10


November 24, 2014


37 93 Many items are available for next-business-day delivery; now defaults to Office Depot website

39 92Comprehensive customer service page features live chat and gift card balance; register automatically “rings” the digital coupon when qualifying item is scanned

40 91Site heavily integrated with social media; recipes and store locations shareable across numerous platforms

41 90Homepage buries important content such as deals and store locatorbelow the fold, but product pages prominently display key features and videos

42 89No cross-channel shopping ability; focused on digital coupons redeemable on mobile; AutoDeliver ships favorite items to shopper’s home automatically and yield savings of 10 percent

43 88 Aggressively investing in technology this year; focus on various pick-up options

44 87Strong m-commerce focus with digitized loyalty program and in-app promotions counter a lackluster desktop experience with no live chat or customer service in navigation


31 97Responsive design site drives visitors to specific promotional details; site prominently features in-store events and How-To videos

31 97Largest Twitter following in the Index and 38 collaborative Pinterest boards show command of social strategy; piloting 1-hour grocery delivery via Instacart

31 97Digital catalogs are optimized for different mobile devices and allows for embedded videos and audio, offering a richer customer experience

34 96

In process of launching Buy Online/Pickup In-Store following successful implementation of Ship-from Store and Vendor this year; new mobile app integrates with loyalty but reverts to mobile site to complete purchase

34 96Site prominently features same-day delivery options; partnering with Marcela Valladolid to create a line of recipes featured on site, in a dedicated Facebook tab, and on YouTube

36 95While quick-checkout via PayPal encourages purchase, weak in-store efforts and mobile UI hinder overall performance

37 93Testing Click & Collect service; meanwhile, can reserve for in-store pickup; mobile couponing linked to brand's Visa Card

AVERAGE

Brown Shoe Company

Leonard Green & Partners(private equity) Office Depot Inc.

Container Store Group, Inc. Bed Bath & Beyond Inc.

Safeway, Inc. Dollar General Corporation

Whole Foods Market Inc Rite Aid Corporation

DSW, Inc. hhgregg, Inc.

Hobby Lobby Stores, Inc. Pier 1 Imports, Inc.

The Kroger Company


Walmart

GIFTEDTarget



Sears DomesticKmart

JC PenneyKohl’s

WalgreensLowe’s

Office DepotCVS REI








CostcoJo-Ann Stores


DSW StoresSafeway

Hobby LobbyKroger

OfficeMaxRite Aid








Stop & ShopH-E-B

MenardsBig Lots US

FEEBLEAlbertsons


Family DollarRoss

Trader Joe’s

CHALLENGED



11


November 24, 2014


51 79In-store strategy built on rapid-turnaround and off-the-cuff purchases does not translate to digital, as brand site lacks features for expedited checkout

51 79Encourages membership with 5 percent surcharge applied to non-member purchases; dedicated content around back-to-school on Facebook

54 78Checkout process consolidates entry fields into one page for guests on both mobile and desktop; emails generally do not promote discounts

55 77Outside of Peapod’s delivery infrastructure advantage, site lacks key features such as getting store directions without leaving the page; mobile defaults to desktop

55 77Digital coupons are available one hour after selection – so can’t shop-and-add as you go; paper coupons take precedent over digital coupons, can’t stack them

55 77Site integrates a wide library of sortable how-to videos from the brand YouTube channel; mobile app does not support loyalty program

58 71Weak customer service options with no ability to buy online; confusing product gallery has "in-store only" listed for every product


44 87Digital coupons are redeemable at checkout with a phone number; Weekly ad is extremely user-friendly with descriptive pop-outs for each featured product

46 85Shop-Now button creates an unnecessary step between home and product pages on mobile; no real-time inventory ability; using Instagram to highlight specific sales and offers

46 85Launched Instagram in August; very little email personalization and few reminders of offer expirations

48 84 Same-day shipping and in-store pickup show promise, but mobile checkout reverts to desktop

49 82A clunky store locator and broken weekly ad Facebook tab typify overall neglect of the digital strategy

49 82True Value Projects minisite distinctive and helpful, but desktop and mobile functionalities lag with lack of inventory visibility across channels

51 79Distinct mobile, desktop, and tablet UI/UX along with robust gallery sorting options make for strong browsing, however delivery options remain weak

CHALLENGED

Big Lots, Inc.

Publix Super Markets, Inc. TJX Companies, Inc.

Bed Bath & Beyond Inc.Sun Capital Partners(private equity)

Dollar Tree, Inc. HEB Grocery Company, LP

Dillard’s, Inc. Leonard Green & CVC Capital(private equity)

Fry’s Electronics, Inc. Ahold USA(subsidiary of Royal Ahold NV)

Dollar Tree, Inc. Family-run

Burlington Coat FactoryWarehouse Corp.


Walmart

GIFTEDTarget



Sears DomesticKmart

JC PenneyKohl’s

WalgreensLowe’s

Office DepotCVS REI








CostcoJo-Ann Stores


DSW StoresSafeway

Hobby LobbyKroger

OfficeMaxRite Aid








Stop & ShopH-E-B

MenardsBig Lots US

FEEBLEAlbertsons


Family DollarRoss

Trader Joe’s



12


November 24, 2014


59 69No ability to buy online outside of party-sized cakes and deli trays; site is more informational featuring menu ideas and videos

60 67UGC-driven website posts customer "finds" from individual stores; The Goods™ app has daily photos of inventory from individual locations; no e-commerce ability

61 59Takes a social-first approach to its website, featuring catalog of shareable items contributed via UGC in lieu of e-commerce

61 59Poorly-allocated homepage real estate with horizontal and vertical menus; applying coupons in-store requires reciting code to cashier; no e-commerce ability

63 57A primitive digital presence speaks to the brand’s refusal to develop e-commerce; no loyalty program; site does not promote in-store services or events

63 57 Does not engage in e-commerce or social media; however site does offer a digital catalog

Cerberus Capital(private equity)

TJX Companies, Inc.

Ross Stores, Inc.

TJX Companies, Inc.

Family Dollar Stores, Inc.

Aldi Nord

FEEBLE


Walmart

GIFTEDTarget



Sears DomesticKmart

JC PenneyKohl’s

WalgreensLowe’s

Office DepotCVS REI








CostcoJo-Ann Stores


DSW StoresSafeway

Hobby LobbyKroger

OfficeMaxRite Aid








Stop & ShopH-E-B

MenardsBig Lots US

FEEBLEAlbertsons


Family DollarRoss

Trader Joe’s




November 24, 2014 13

GENIUS >140The Home DepotWalmart U.S.

GIFTED 110–139TargetMacy’sToys “R” UsBest Buy U.S.StaplesSears DomesticKmartJCPenneyKohl’sWalgreensLowe’sOffice DepotCVSREI

AVERAGE 90–109Bed Bath & BeyondDICK’S Sporting GoodsPetSmartSam’s ClubAcademy Sports + OutdoorsMichaelsCabela’sSports AuthorityBelkMeijerPetco Animal SuppliesRadioShackAce HardwareCostcoJo-Ann StoresWhole FoodsContainer Store

DSWSafewayHobby LobbyKrogerOfficeMaxRite AidCost Plus World Markethhgregg

CHALLENGED 70–89Dollar GeneralPier 1 ImportsFamous FootwearPublixDillard’sbuybuy BABYFry’s ElectronicsDollar TreeTrue Value

Burlington Coat FactoryT.J.MaxxBJ’s Wholesale ClubShopkoStop & ShopH-E-BMenardsBig Lots U.S.

FEEBLE <70AlbertsonsHomeGoodsMarshalls U.S.Family DollarRossTrader Joe’s

Digital IQ DistributionWhile many retailers claim to be building omnichannel infrastructure as quickly as possible, slow movers risk getting caught in a perpetual mode of “catch up.” The inaugural Digital IQ Index® for Big Box retailers reveals a wide spectrum of digital competence, with only 25 percent of brands categorized as Gifted or above. Genius brands—Home Depot and Walmart—began investing in digital over a decade ago17,18 engaging in a continuous cycle of innovation that keeps moving the goalposts forward, and further out of reach for laggards. Outside of Office Supplies (Gifted) and Grocery (Challenged), category-wide performance does not deviate far from Average, demonstrating gross conformity across a variety of brands and distinct business models. Surprisingly, an eighth of brands have not invested in e-commerce and the majority of retailers fail to offer responsive design.

17. “Home Depot to Expand E-Commerce Efforts,” CNET News, August 17, 1999.18. “Sam’s Club Unveils Redesigned Online Membership Warehouse Club; Offers Unique Merchandise, Services, Benefits,” PR Newswire, July 25, 2000.

Big Box: Digital IQ Distribution by ClassPercent of Brands per IQ ClassNovember 2014, n=64

Genius Gifted Average Challenged Feeble

3%22%

39% 27%9%

2014

Big Box: Average Digital IQ by CategoryNovember 2014, n=64

Drugstore 109

Office Supplies 112

Apparel & Footwear 92

Pet Supplies 106

Warehouse Clubs 95

Sporting Goods 107

Grocery 84

Hardware 104

Electronics 101

Arts & Crafts 99

Housewares 90

General Merchandise 104

n=3

n=3

n=5

n=2

n=10

n=5

n=4

n=3

n=3

n=12

n=5

n=9



http://news.cnet.com/Home-Depot-to-expand-e-commerce-efforts/2100-1017_3-229964.html

http://www.prnewswire.com/news-releases/sams-club-unveils-redesigned-online-membership-warehouse-club-offers-unique-merchandise-services-benefits-72501522.html



DarwinThe Internet was supposed to level the playing field. It hasn’t. CapEx and digitally- deft human capital are expensive and demanding, respectively. Without access to substantial capital(s), many retailers’ digital aptitude remains arrested. Without corrective, and aggressive, investment, underperforming brands will fall further

Big Box: Operating Margin ExpansionYear-over-Year Change in Basis Points2010–2014, n=45 public companies

behind peers. Little improvement in operating margins for most Big Box brands over the last five years suggest most are still investing in omni infrastructure or simply do not have the resources to invest. Consequently, only a few are enjoying real growth.

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Enterprise EffectsAt the enterprise level, Walmart Stores and Sears Holdings lead the pack in performance of affiliated brand properties. Respectively, Walmart and Sam’s Club stores enjoy 3x and 2x the average return on assets (ROA) of the wider Big Box sample. This higher level of profitability provides the means to invest in priority areas, including increased inventory visibility and always-on customer service (both prerequisites to establish and optimize web-influenced sales). Sears’ and Kmart’s near-zero disparity demonstrates consistency across each platform, including the Shop Your Way membership program. Office Depot’s superior positioning relative to OfficeMax (acquired in February 2013) is attributable to delayed integration of the brands, starting with combined weekly ads in May 2014, shared site infrastructure in October 2014, and integrated loyalty program expected in January 2015. TJX Companies brought up the rear, with each of its three brands falling below Average. After a failed attempt to launch e-commerce back in 2004,19 TJX quietly tried again in 2013. Thus far, e-commerce has not spread from T.J.Maxx to either HomeGoods or Marshalls.

19. “TJX Launches New E-commerce Site,” Zacks Equity Research, September 23, 2013.

Big Box: Digital IQ Dispersion by Parent CompanyNovember 2014, n=5 (two or more brands)

GIFT

EDAV

ERAG

EFE

EBLE

CHAL

LENG

ED

140

160

180

120

100

80

60

40

GENI

US

Wal-Mart Stores Incn=2Range 33

AVG IQ 124

Sears HoldingsCorporationn=2Range 1

Office Depot Inc.n=2Range 25

Bed Bath & Beyondn=3Range 24

TJX Companiesn=3Range 20

AVG IQ 125AVG IQ 106

AVG IQ 95

AVG IQ 68



http://finance.yahoo.com/news/tjx-launches-e-commerce-205430887.html



“As Big Box retailers continue to address macro trends, they also face emerging trends—each presenting real opportunities that shape the face of retail tomorrow. How Big Box retailers approach these opportunities will be informed by the industry’s tolerance for risk, pace of technology investment, and ability to deliver additional value in the eyes of consumers.” STEVEN MOY Chief Commerce Officer, Isobar

THEN NOW NEXT

MACRO THEME E-Commerce Experiment Omnichannel Moment Commerce Anywhere?

TREND LINERetailers establish online storefronts, frequently fulfilling orders from existing stores vs. centralized fulfillment centers.

Amidst the rise of Amazon and decline of the “Supercenter” model, retailers realign digital investment and organization.

Select retailers become test-beds for new technology and truly channel-agnostic commerce.

KEY DEVELOPMENTS

1996: Tests Online Shopping Service 2000: Spins out Walmart.com2001: Reabsorbs E-Commerce Business2006: Extensive Site Redesign

Incorporates Buying Guides

2007: Adds Site-to-Store Service2011: Acquires Kosmix

(now @WalmartLabs)2012: Launches “In-Store Mode”

via Mobile App2013: Tests Online Grocery Beta

2014: Acquires Adchemy2014: Launches Price-Comparison Tool (Savings Catcher)2014: Tests Amazon Price-Matching

SUPPORTING TECHNOLOGIES

• E-Commerce Platforms

• Email Marketing & Digital Circulars

• SEO & SEM

• Expedited Fulfillment

• Mobile-Optimization

• Hyperlocal Targeting & Digital Coupons

• RFID, Bluetooth LE, Store Beacons

• Contactless Payment

• Adaptive Personalization: learn shopper preferences and evolve user profile over time

• Contextual Support: time both virtual and physical offers/incentives accordingly

• Frictionless Verification: improve ability to identify and authorize via biometric to reduce fraud and store congestion

• Personalized Merchandising: Mirrors, POS collateral, and display windowsbecome new digital touchpoints

• 3D Printing: Self-fabrication augments traditional supply chain

• Printable Electronics: Enrich embedded product information to enhance bothwarehousing logistics and browsing behavior

SPOTLIGHT: Changing Landscape



17


November 24, 2014

Channel Agnostic? Sales used to be relatively simple: customers walked into a store, made a purchase, and came back for service or returns. Today, consumers expect (and loyalty demands) a free flowing “buy-anywhere, fulfill-anywhere, return-anywhere” marketplace in which purchases originate in one channel, are completed in another, and customer service handled in a third.20 Meeting these expectations has been challenging, with most Big Box brands slow to blend channels despite 59 percent now offering real-time inventory visibility. The rapid growth of Amazon Prime (estimated at 40 million members in the U.S.21) and the online giant’s relentless push into untapped spaces (Amazon Fashion, Amazon Pantry, Amazon Fresh) is forcing retailers to enhance delivery options and improve inventory management. While 88 percent of Big Box brands are e-commerce enabled, only half facilitate in-store pickup and less than a third offer same-day delivery. By segregating online from offline operations, retailers undermine any compelling drive-to-store opportunity, eroding key differentiation from online-only retailers—an accessible retail footprint.

20. “Buy Anywhere, Fulfill Anywhere, Return Anywhere,” Manhattan Associates, September 26, 2014.21. “The Power and Growth of Amazon Prime May be Much Greater Than Believed,” Seeking Alpha, September 22, 2014.

Big Box: Consumer Expectations of Retailer Capabilities2014, n=1,503 multichannel shoppers

Source: Forrester, Accenture, & hybris, January 2014.

Big Box: Sophistication of Omnichannel CapabilitiesNovember 2014, n=64

BASIC

Offer Free Return19%

Same-Day Shipping28%

Direct-from-Vendor33%

Ship-from-Store38%

Buy Online,Pickup In-Store

50%

Real-TimeStore Inventory

59%

Offer In-StoreOnly Promo

63%

Buy Online,Return In-Store

73%

SOPHISTICATED

A clear indication of when items will arrive

View the in-store inventory of products

Store locator

Buy online and have order shipped to a store for pickup

View recommendations based on past purchases and interests/profile

Buy online and pick up in store (available for me to collect same day)

Reserve online, pick up, and pay in a store

Buy online and pick up at a point of convenience (e.g., a locker or UPS store)

83%

54%

64%

71%

51%

50%

49%

41%



http://www.manh.com/resources/thought-leadership/buy-anywhere-fulfill-anywhere-return-anywhere

http://seekingalpha.com/article/2512195-the-power-and-growth-of-amazon-prime-may-be-much-greater-than-believed

http://seekingalpha.com/article/2512195-the-power-and-growth-of-amazon-prime-may-be-much-greater-than-believed

http://www.accenture.com/us-en/landing-pages/Documents/Seamless/Accenture-hybris-Forrester-new_2014.pdf

18


November 24, 2014

Leaders vs. LaggardsIn terms of omnichannel investments, the most sophisticated Big Box retailers specialize in Office Supplies and Electronics, with 76 percent adoption of in-store pickup and return, real-time inventory, and ship-from-store capability. Hardware and General Merchandise follow, with 60 percent adoption of the aforementioned features. The least digitally-savvy brands are isolated in Grocery and Arts & Crafts, with 25 percent adoption rates. As a whole, less than a third of Big Box brands have invested in comprehensive fulfillment capabilities. As online sales grow by double digits, the wider influence of the web is overshadowed. Consumers who browse brand sites before buying in-store drive four times the sales of an online-only shopper and 50 percent more visits than in-store-only shoppers.22 With the proliferation of smartphones and the rise of cross-shopping behavior, sales that start on a digital channel and conclude offline (web-influenced sales) will account for 59 percent of U.S. retail sales by 2018—four times the sales attributed to direct e-commerce. 23

22. “In-Store Sales Get Boost from Retail Marketing on Mobile Channels,” Content Standard by Skyword, August 15, 2014.23. “The web’s influence on U.S. retail grows,” Internet Retailer, July 25, 2014.

Big Box: Brand Investments in E-Commerce vs. Brick & Mortar IncentivesNovember 2014, n=64

Big Box: Inventory Status vs. Buy Online/Pick Up In-StoreNovember 2014, n=64 ■ Real-time In-Store Availability ■ Buy Online/Pick Up In-Store

Electronicsn=4

OfficeSupplies

n=3

GeneralMerchandise

n=10

Hardwaren=5

SportingGoodsn=5

Apparel &Footwear

n=12

Housewaresn=5

PetSupplies

n=2

Arts &Craftsn=3

Drugstoren=3

WarehouseClubsn=3

Groceryn=9

100%

10

0%

80%

80%

80%

70%

40%

67%

25%

60%

40% 50

%

50%

33%

33

%

33%

33

%

0%

33%

100%

10

0%

100%

80%

33%

33%

0%

0.0

2.0

4.0

6.0

8.0

10.0

0.0 2.0 4.0 6.0 8.0 10.0

World Market

Sears

AcademySports

Whole Foods

Dollar General

Home Depot

Target

WalmartToys-R-Us

Best Buy

Macy’s

Costco

Lowes

Sam’s Club

AlbertsonsTJ Maxx

Marshalls

Big Box Average

Ross

E-COMMERCE INCENTIVES

E-COMMERCEFOCUSED

OMNICHANNELROLE MODELS

IN-STOREFOCUSED

OMNICHANNELLAGGARDS

BRICK & MORTAR INCENTIVES



http://www.skyword.com/contentstandard/news/report-in-store-sales-get-boost-from-retail-marketing-on-mobile-channels/

http://www.internetretailer.com/2014/07/25/webs-influence-us-retail-grows

19


November 24, 2014

Click & CollectThe U.S. has been slow to adopt “Click & Collect” services, however demand is growing—19 percent of shoppers now collect online purchases from local stores (compared with 35 percent in the UK).24 Nearly half of these shoppers want to avoid shipping costs, 25 percent want to skip waiting for delivery, and 10 percent find collection more convenient than shipping to home.25

For retailers, C&C provides an opportunity to cross-sell complementary goods and promote in-store exclusives. Despite these benefits, many stores are not prepared for this shift. Only 61 percent of brands offer Click & Collect, either through a purchase (50 percent) or reservation (19 percent)—with 8 percent offering both options. Though a fairly recent innovation, Click & Collect drives over half26 of Walmart’s online orders, over 40 percent27 of Macy’s online sales, and 33 percent28 of Home Depot’s online sales. It is already 15 percent of Target’s sales (since last year’s launch), driving about 30 percent of visits to the store. Most of these visits result in incremental shopping, driving transaction size much higher than the average trip.29

Beyond direct collection, alternative delivery options are also in high demand. 52 percent of consumers would use home delivery if they could specify an exact timeslot and 40 percent would elect to pickup at a nearby post office.30

24. “More U.S. Shoppers Plan to Buy from Stores but Want the In-Store Shopping Experience to Match Convenience of Online,” Accenture Study, February 3, 2014.25. “Customer Desires Vs. Retailer Capabilities: Minding the Omni-Channel Commerce Gap,” Forrester Research Paper commissioned by Accenture, January 2014.26. “Luring Online Shoppers Offline,” The New York Times, July 4, 2012.27. “The physical store is not dead, just changing,” FierceRetail, October 1, 2014.28. “Internet Retailing in the US,” Euromonitor, May 2014.29. “Store fulfillment advances,” Internet Retailer, April 2, 2014.30. “Customer Desires Vs. Retailer Capabilities: Minding the Omni-Channel Commerce Gap,” Forrester Research Paper commissioned by Accenture, January 2014.

Big Box: Click & Collect ServicesUnited States, November 2014, n=64

8%Both Options

11%Reserve Online/

Pay & Pick Up in Store

42%Buy Online/

Pick Up in Store

“As purchase paths become multifaceted, segmentation must include shopper behavior—rather than demographics or psychographics alone. Understanding behaviors such as visit triggers, visit frequency, basket size, and online vs. in-store spend will become the norm.” STEVEN MOY Chief Commerce Officer, Isobar



http://newsroom.accenture.com/news/more-us-shoppers-plan-to-buy-from-stores-but-want-the-in-store-shopping-experience-to-match-convenience-of-online-accenture-study-finds.htm

http://newsroom.accenture.com/news/more-us-shoppers-plan-to-buy-from-stores-but-want-the-in-store-shopping-experience-to-match-convenience-of-online-accenture-study-finds.htm



http://www.nytimes.com/2012/07/05/business/retailers-lure-online-shoppers-offline.html?_r=0

http://www.fierceretail.com/story/physical-store-not-dead-just-changing/2014-10-01?utm_medium=nl&utm_source=internal

http://www.internetretailer.com/2014/04/02/store-fulfillment-advances




20


November 24, 2014

SPOTLIGHT: Click & Collect Options

Macy’s now offers in-store pickup and ship-to-home, which rolled out in July 2014. Shipping can be fulfilled from both the warehouse and direct-from-vendor (thereby speeding up the delivery process).

DSW identifies all of the nearest locations that carry the product and advises the customer to call the store in advance of going to pick it up. Looking to improve its capabilities, DSW plans to launch buy online, pickup in-store in the near future.

Toys“R”Us is one of the few Big Box brands that offer “Reserve Online, Pay In-Store” in addition to Buy Online, Pickup In-Store and Ship-to-Home. Customers can also see real-time inventory updates.

Sam’s Club launched Click’n’Pull in early 2000 to provide members the opportunity to order online for pickup within 24 hours at their local store. This feature marries Walmart’s information systems with the existing network of Sam’s Club stores.



21


November 24, 2014

Container Store and Sears provide in-car pickup as an alternative delivery option for goods purchased online.

Amazon began offering lockers for shoppers to pick up online items in 2012; Walmart followed suit in early 2013.

SPOTLIGHT: Click & Collect Options (Cont’d)

Peapod, following in the footsteps of Tesco in the United Kingdom, launched subway shopping billboards for home delivery in 2012.



22


November 24, 2014

Ship-from-StoreAs Amazon continues to move distribution centers closer to urban areas, employing local stores as fulfillment platforms grants brick-and-mortar players a unique advantage. There is little question that leveraging existing infrastructure drives improved operating results—93 percent of retailers credit it with driving a

10 to 30 percent lift in online sales; 77 percent have materially reduced fulfillment costs; and 88 percent have seen improved customer satisfaction metrics.31

31. “Customer Desires Vs. Retailer Capabilities: Minding the Omni-Channel Commerce Gap,” Forrester Research Paper commissioned by Accenture, January 2014.

Big Box: Ship-from-Store by CategoryNovember 2014, n=64

75%

60%

44%

40%

40%

29%

33%33%

0%

0%

0%

Electronics, n=4

Sporting Goods, n=5

General Merchandise, n=9

Hardware, n=5

Housewares, n=5

Apparel & Footwear, n=7

Drugstore, n=3

Office Supplies, n=3

Arts & Crafts, n=3

Pet Supplies, n=2

Warehouse Clubs, n=3




23


November 24, 2014

Big Box: Impact of Ship-from-Store ImplementationAverage Delivery Time: Best Buy vs. AmazonMay 2012-April 2014 ■ Amazon ■ Best Buy

Source: StellaService, May 2014.

Ship-from-Store (Cont’d)Despite the potential return on investment, only 38 percent of Big Box brands offer the option to “ship-from-store”—stymied by the difficulty of implementation. Categories with broad adoption include: Electronics, Sporting Goods, and General Merchandise. With a few exceptions (e.g., Macy’s, Office Depot), the remaining brands surveyed demonstrate little to no capability to implement decentralized shipping operations. Since launching ship-from-store in 2010, industry experts suggest the program accounts for 10 to 20 percent32 of Macy’s online sales. Since introduction in 2011, Lowe’s has opened up more than $1 billion of new inventory to online shoppers, reduced delivery time to two days and increased online sales by 70 percent33 in the first year. The program let Best Buy unlock 80 percent of out-of-stock items from local stores and reduce shipping time to three days34—besting Amazon’s average delivery time during the last holiday season. Similarly, Target was able to shave three days from its delivery time to 1.8 days.35 This program enabled Walmart to fill 10 percent36 of online orders out of stores in year one, and 20 percent37 in year two.32. “Ship from Store: What Retailers Can Learn from the Early Adopters,” RetailNet Group, September 24, 2012.33. “Flexible Fulfillment is a Big Hit With Lowes.com Shoppers” Internet Retailer, April 20, 2012.34. “With Ship-from-Store, Best Buy Is Delivering Faster than Amazon,” Stella Service, January 22, 2014.35. “Target tops big retailers when it comes to fast delivery in August,” Internet Retailer, September 25, 2014.36. “Retail stores become shipping hubs to battle Amazon,” USA Today, October 6, 2013.37. “20 percent of products bought from Walmart.com are shipped from Walmart Stores,” VentureBeat, July 8, 2014.

0

2

4

6

8

AVER

AGE

DAYS

TO

DELI

VERY

3.0 Days 5.3 Days 3.6 Days 3.3 Days

MAY 2012–SEPTEMBER 2013 AVERAGE OCTOBER 2013–APRIL 2014 AVERAGE

May 2012 April 2013 April 2014



http://blogs.marketwatch.com/behindthestorefront/2014/05/22/best-buy-has-an-edge-over-amazon-as-stores-serve-as-shipping-hubs/

http://connected.retailnetgroup.com/index.php/2012/09/24/ship-from-store-what-retailers-can-learn-from-the-early-adopters/

http://www.internetretailer.com/2012/04/20/flexible-fulfillment-big-hit-lowescom-shoppers

http://happycustomer.stellaservice.com/2014/01/22/with-ship-from-store-best-buy-is-delivering-faster-than-amazon/

http://www.internetretailer.com/2014/09/25/target-tops-big-retailers-fast-delivery-august

http://www.usatoday.com/story/tech/2013/09/28/retailers-ship-from-store/2862405/

http://venturebeat.com/2014/07/08/20-percent-of-walmart-stores-are-now-online-fulfillment-centers/

http://venturebeat.com/2014/07/08/20-percent-of-walmart-stores-are-now-online-fulfillment-centers/

24


November 24, 2014

Site Features & FunctionalityBig Box brands do a good job of offering conversion-boosting site features to drive the incremental sale, with higher adoption rates than Specialty Retail and Department Stores. Seventy-five percent of the Index offers user reviews, which represent the second most influential factor impacting purchase decisions (after shipping costs).38 Ninety percent of consumers are swayed by positive online reviews, while 86 percent abort a purchase due to negative reviews.39 Grocery and the discount component of General Merchandise (Big Lots, Dollar General, Family Dollar) are the only categories that do not have high adoption rates. Seventy-three percent of Big Box brands provide a shoppable catalog on their site, 63 percent have product page videos, and 84 percent offer users cross-selling suggestions. Despite the rise of social platforms, catalogs continue to influence twice40 as many consumers as Facebook, Twitter, and Pinterest during back-to-school and holiday shopping.

38. “15 Digital Facts Every Marketer Should Know,” Direct Marketing News, July 7, 2014.39. “Survey: 90% of Customers Say Buying Decisions Are Influenced By Online Reviews,” Marketing Land, April 9, 2013.40. “Infographic: Analog Catalogs Had Big Influence on Holiday Shoppers,” PRNews, January 23, 2013.

Big Box: Site Feature AdoptionNovember 2014, n=64

“A cohesive digital experience in store requires digitalizing stock management and logistics. This allows retailers to compete with new digital norms: real-time stock inventory, instant price comparisons, and personalized recommendations.”STEVEN MOY Chief Commerce Officer, Isobar

Cross Sell Prior to Checkout

84%

User Reviews

75%

Shoppable OnlineCatalog/Circular

73%

ProductVideos

63%

Recommend/Likeon Social Media

53%

Live Chat

41%



http://www.dmnews.com/15-digital-facts-every-marketer-should-know/article/359081/

http://marketingland.com/survey-customers-more-frustrated-by-how-long-it-takes-to-resolve-a-customer-service-issue-than-the-resolution-38756

http://www.prnewsonline.com/featured/2013/01/23/infographic-analog-catalogs-had-big-influence-on-holiday-shoppers/

25


November 24, 2014

Site Features & Functionality (Cont’d)Live Chat has failed to attract widespread support by Big Box retailers. Only 41 percent of brands offer this service, and only three categories boast majority adoption—Sporting Goods (80 percent), Electronics (75 percent), and Drugstores (67 percent). This represents a missed opportunity for product categories that feature high abandonment rates. Forty-four percent of consumers suggest live

chat is the most important feature a brand site can offer, with 38 percent completing purchases due to a chat exchange with customer service representatives.41 Select brands are signaling awareness of this feature deficit, noting that such functionality is “coming soon” (OfficeMax, PetSmart).

41. “5 Reasons Why Live Chat is the Untapped Potential for Your Business,” KISS metrics.

Toys “R” Us maintains a comprehensive visual layout of Customer Service, with the Live Chat feature on every key page – Homepage, Product page, and Customer Service page.

Prior to its merger with Office Depot, OfficeMax recognized the importance of offering Live Chat services.



https://blog.kissmetrics.com/live-chat/

26


November 24, 2014

SPOTLIGHT: Online GroceryWhile a number of players have entered the online grocery space in the U.S., their reach remains limited. Amazon Fresh took six years42 to expand beyond its initial test market (Seattle) to current service areas (Los Angeles, San Francisco, San Diego, and New York City).43 Meanwhile, Fresh Direct is limited to the coastal

42. “Amazon Expands Grocery Business,” The Wall Street Journal, June 2013.43. “Amazon’s Is Reportedly Prepping Grocery Delivery for New York,” Adweek, September 2014.

Northeast, Peapod occupies the Northeast and Midwest, and Walmart Grocery can only be found in the Bay Area and Denver. Instacart (whose business model focuses on delivering groceries from existing grocers) is the only player operating in the South (so far).

Big Box: Delivery Areas Supported by Major Online GrocersNovember 2014

New York City

Austin

San Diego

Los Angeles

Seattle

Milwaukee

Chicago

IndianapolisDenver

Philadelphia

Washington D.C.

Atlanta

Bay Area

Amazon Fresh Fresh Direct Walmart Instacart Peapod Google Express

Boston



http://online.wsj.com/news/articles/SB10001424127887324798904578526820771744676

http://www.businessinsider.com/amazon-fresh-grocery-delivery-new-york-2013-8

27


November 24, 2014

SPOTLIGHT: Online Grocery (Cont’d)To gain increased access to an online grocery market projected to reach $27 billion in 2014,44 brands are partnering with or acquiring services that can quickly expand online-ordering capabilities. Kroger completed its acquisition of Harris Teeter in January 2014, a much smaller company that has been offering online ordering with in-store pickup since 2001.45,46 Following this acquisition, and that of online vitamin retailer Vitacost,47 Kroger began to experiment with Click & Collect in Cincinnati last September.48 During the same month, Whole Foods teamed up with Instacart to bring one-hour delivery and in-store pickup to all of its 15 markets.49 Same-day delivery offerings from Target, Whole Foods, and Stop & Shop through Google Express are expected to expand rapidly as Google enters new cities in an aggressive response to Amazon Fresh and Prime Pantry.50

An entity that could markedly impact the online grocery industry is the U.S. Postal Service (USPS). After teaming up with Amazon to test the financial feasibility of delivering groceries in San Francisco, the agency seeks approval to scale the program to additional metropolitan areas nationwide.51 If successful, such efforts could benefit smaller grocers that lack the ability to build out delivery infrastructure.

44. “Online Grocery Sales Expected to Quadruple,” The Food Institute, October 2014.45. “Food-related business on the Internet,” USDA, October 2001.46. “Harris Teeter Expands Online Shopping Service,” Harris Teeter, May 2002.47. “Kroger Completes Merger with eCommerce Retailer Vitacost.com,” MarketWatch, August 2014.48. “Kroger Testing Grocery Pick-up Service in Cincinnati,” Cincinati.com, September 2014.49. “Whole Foods Market and Instacart Partner to Offer One-Hour Delivery Across 15 Major US Cities,” Whole Foods Market, September 2014.50. “Google Shopping Express Expands to More Cities, Rebrands as Google Express,” TechCrunch, October 2014.51. “Postal Service Seeks to Extend Grocery Deliveries,” The Wall Street Journal, September 2014.

Amazon: Profile of Grocery PlatformsNovember 2014

FEESTRUCTURE

GOODS DELIVERED

SERVICE

REACH

FULFILLMENT 2 days

Per Month

Per Order $5.99 per 4 feet3 box

$24.91 ($16.67 incremental cost over prime membership)

Fresh groceries, electronics, household items, local shops and restaurants

Los Angeles, San Francisco,Seattle, San Diego, New York City forthcoming

Contiguous 48 states

$8.25 ($0 incremental cost over prime membership)

Packaged goods, including heavy and bulky items, food, homecare and personal care

Free (orders over $35)

Same day

BRANDS AFFECTEDKroger, Safeway,Peapod by Stop Shop,Whole Foods,Walmart

Groceries WarehouseClubs

Costco, BJ’s, Wholesale Club,Sam’s Club




http://www.aphis.usda.gov/animal_health/emergingissues/downloads/internetfood.pdf

http://www.harristeeter.com/about_us/press_room/press_releases.aspx?article=229

http://www.marketwatch.com/story/kroger-completes-merger-with-ecommerce-retailer-vitacostcom-2014-08-18

http://www.cincinnati.com/story/money/2014/09/17/kroger-plans-to-launch-grocery-pick-up-service-in-cincinnati/15765627/

http://media.wholefoodsmarket.com/news/whole-foods-market-and-instacart-partner-to-offer-one-hour-delivery-across

http://media.wholefoodsmarket.com/news/whole-foods-market-and-instacart-partner-to-offer-one-hour-delivery-across

http://techcrunch.com/2014/10/14/google-shopping-express-expands-to-more-cities-rebrands-as-google-express/

http://online.wsj.com/articles/postal-service-seeks-to-extend-grocery-deliveries-1411581993

28


November 24, 2014

Big Box: Standard Shipping Speed Average Number of Days Quoted to Receive ShipmentNovember 2014, n=64

6%3%

5%

16%22% 20%

8%6%

3%

1 DAY 2 DAYS 3 DAYS 4 DAYS 5 DAYS 6 DAYS 7 DAYS 8 DAYS 9 DAYS

Free ShippingWhile free shipping may have started out as a temporary enticement in the early days of e-commerce, customers now demand it. Half of online shoppers in the U.S. abandon orders if they do not qualify for free shipping, and 93 percent take extra action to qualify.52 Seventy-two percent of Big Box brands offer free shipping, but 59 percent require a minimum purchase threshold ($60, on average). In response to the increasingly competitive environment, retailers are starting to play offense. In September, Staples added more convenient shipping options,

including free ship-from-store fulfillment.53 In October, Target announced it would offer free shipping on all online purchases from now through December 20th.54 However, retailers are not immune from rising shipping costs—and are adjusting their offers accordingly. Last year, Walmart switched to 6-9 day free shipping on orders above $50, a downgrade from its 3-5 day free shipping for orders above $45. And in May 2014, Best Buy increased its free shipping minimum from $25 to $35, matching Amazon’s similar adjustment in late 2013.

52. “Free Shipping Is Going to Cost You More,” The Wall Street Journal, October 22, 2014.53. “Staples adds buy online, pick up in-store,” Internet Retailer, September 3, 2014.54. “Target to offer free shipping for the holidays to entice more online shoppers,” The Washington Post, October 22, 2014.



http://online.wsj.com/articles/free-shipping-is-going-to-cost-you-more-1414003507

http://www.internetretailer.com/2014/09/03/staples-adds-buy-online-pick-store

http://www.washingtonpost.com/news/business/wp/2014/10/22/target-to-offer-free-shipping-for-the-holidays-to-entice-more-online-shoppers/

29


November 24, 2014

Free Shipping (Cont’d)While 72 percent of Big Box brands offer some form of free shipping, only 19 percent offer free returns. This represents another missed opportunity, given that free returns represent the third most influential factor in purchase decisions. Most retailers shy away from free returns, with Drugstores, Grocery, Office Supplies, and Warehouse Clubs each registering category adoption rates of 33 percent. Return percentages are higher in categories where sizing and color are big drivers of the purchase decision (versus non-differentiated staple goods).

Big Box: Shipping Cost StrategyNovember 2014, n=64

Offer FreeShipping

MinimumRequired

Flat-RateShipping

Limited TimeOffer

Offer FreeReturn

72% 59%

45%

20% 19%

Big Box: Minimum Threshold RequiredNovember 2014, n=64

5%$20-29

6%$30-39

17%$40-49

16%$50-59

0%$60-69

0%$100-149

6%$70-79

2%$80-89

5%$90-99

3%$150+



30


November 24, 2014

Digital Coupons The rise of smartphones and social media have significantly expanded customer touch points, providing retailers with more opportunities to trigger a site and/or store visit. The ability to pair the right customer with the right incentive and reward brand loyalty proves critical, as repeat visits result in more “lifetime” revenue per customer.55 Receiving a deal via digital coupon can be the tipping point required for a consumer to “press buy”, swaying 59 percent of consumers to make a purchase.56 While 91 percent of Big Box brands offer site links to their current sales catalog, only half go the extra step by offering clipable coupons and price matching tools, and only 9 percent offer subscribe-and-save utilities. Similarly, while 70 percent of brands provide a link to share coupons, only 16 percent let you text that offer directly to a mobile device. Moreover, 25 percent of Big Box brands require account logins to access advertised discounts—with only token support of loyalty programs in shared utilities such as Apple Passbook (Home Depot, Kroger, Macy’s, Office Depot, Target, Walgreens).

55. “Will 2013 Be The Year of Loyalty Programs?,” Forbes, December 15, 2012.56. “Digital Coupons Significant in Shopping and Purchasing,” Forrester Consulting, August 2014.

Note: While 80 percent of Big Box brands offer a loyalty program, only 45 percent have a supporting mobile app.

Big Box: Loyalty Program Support on Mobile Apps by CategoryNovember 2014, n=64

100%

100%

Sporting Goods, n=5Academy Sports, Cabela’s,DICK’S Sporting Goods, REI

Grocery, n=9Kroger, Meijer, Safeway,Stop & Shop, Whole Foods

General Merchandise, n=10Dollar General, Kmart, Sears,Target, Walmart

Hardware, n=5Ace Hardware, Lowe’s

Apparel & Footwear, n=12Belk, JCPenney, Macy’s,Famous Foorwear

Arts & Crafts, n=3Hobby Lobby

Warehouse Clubs, n=3Sam’s Club

Electronics, n=4Best Buy

80%

56%

50%

40%

33%

33%

33%

25%

Office Supplies, n=3Office Depot, OfficeMax, Staples

Drugstore, n=3CVS, Rite Aid, Walgreens

“Knowing your customer allows select Big Box retailers to anticipate where opportunities lie—and prioritize service experiences that enhance loyalty across digital platforms.”STEVEN MOY Chief Commerce Officer, Isobar



http://www.forbes.com/sites/kellyclay/2012/12/15/will-2013-be-the-year-of-loyalty-programs/

http://www.mediapost.com/publications/article/232276/digital-coupons-significant-in-shopping-and-purcha.html

31


November 24, 2014

Digital Coupons (Cont’d) Eighty percent of Big Box brands use limited-time offers to create an urgency to buy. This proves effective, with the majority of consumers redeeming a digital coupon code within three days of receiving it, and nearly one-third redeeming it immediately. Alongside loyalty programs, Big Box brands use coupons to push in-store activity, with 63 percent specifying use for store-only versus 31 percent for online-only. Seasonal sales are top of mind, with 70 percent of brands providing direct links for Back-to-School and Holiday product on the main landing pages.

The highly personalized homepage portal myCVS provides details on deals around purchase and shipping, highlights the user’s nearest store, and provides a prominent call to action around integrating with the brand’s loyalty program.

Big Box: Digital Coupon Features by CategoryNovember 2014, n=64

Office Suppliesn=3

Arts & Craftsn=3

Drugstoren=3

General Merchandise

n=10Pet Supplies

n=2Grocery

n=9Sporting Goods

n=5Warehouse

Clubsn=3

Electronicsn=4

Hardwaren=5

Housewaresn=5

Apparel& Footwear

n=12

Clippable Coupons

Price Match

Subscribe & Save

Text Offer to Mobile



32


November 24, 2014

Email Frequency & TriggersOf the 90 percent of U.S. consumers who opt in to email marketing, 66 percent make a purchase as a result of receiving an email.57 While the optimal frequency of sending email to maximize sales varies by audience, retailers should strive to keep content carefully curated and highly targeted. Big Box retailers send an average of 3.1 emails per week, on par with the industry.58 While 34 percent of brands email their general database less than twice a week, three brands send a much higher volume (Home Depot, Walmart, Academy Sports). Categories that are most aggressive in messaging volume include Housewares (4.3 emails per week) and Office Supplies (4.2 emails per week).

57. “Saturday Stat Series: The Influence of Email Marketing Messages,” DMA, August 3, 2013. 58. “How much email do people really get? The hidden potential in the tranquil box,” Email Marketing Reports, 2013.

Big Box: Average Weekly Email Frequency by Category November 2014, n=64

Housewares (n=5)

Warehouse Clubs (n=3)

Hardware (n=5)

Pet Supplies (n=2)

Sporting Goods (n=5)

General Merchandise (n=10)

Drugstore (n=3)

Apparel & Footwear (n=12)

Arts & Crafts (n=3)

Electronics (n=4)

Grocery (n=9)

Office Supplies (n=3)

4.3

4.2

4.0

3.7

3.5

3.1

3.0

2.9

2.8

2.7

1.8

3.3

Index Average 3.1



http://thedma.org/advance/data-driven-marketing-ideas/saturday-stat-series/

http://www.email-marketing-reports.com/iland/2011/10/how-much-email-do-people-get.html

http://www.email-marketing-reports.com/iland/2011/10/how-much-email-do-people-get.html

33


November 24, 2014

Email Frequency & Triggers (Cont’d)Though retargeting is known to boost conversion rates, many Big Box brands are not optimizing trigger emails. While 56 percent of brands send abandoned cart reminders, only 38 percent feature abandoned product images, and just 17 percent offer a discount to help seal the deal. Of the 36 brands that sent reminders, 58 percent did it within the first five days after abandonment. The most diligent brands that sent follow-ups were OfficeMax (10 reminders), Walmart (8), and Academy Sports (5).

While 48 percent of brands personalize email content based on shopping behavior, just 25 percent send a congratulatory email for opening a registry and 11 percent offer a discount for birthdays (Belk, JCPenney, Macy’s, buybuy BABY, Toys “R” Us, Lowe’s).

Big Box: Extent of Email PersonalizationNovember 2014, n=64

Big Box: Sophistication of Trigger EmailsNovember 2014, n=64

Big Box: Abandoned Cart Trigger Emails Days Elapsed Between Add to Cart and First NotificationsNovember 2014, n=36 Brands sent email reminders

56% 50%

38%

17%

Abandoned Cart/List Reminder

Customer Service

Link

DisplaysProduct

Deal/OfferIncentive

48% 45%

25%

11%

Content Suggested

for You

PersonalizedSubject

Line

Congratulationson Registry

Birthday/AnniversaryPromotion

0

2

4

6

8

10

12

1 5 9 13 17 21 25 29 33 37

58% of the brandssent Reminder Emails within the first five days after cart abandonment

# BR

ANDS

SEN

DING

INIT

IAL

REM

INDE

R

DAYS ELAPSED



34


November 24, 2014

Email Content & CTAsOutside of generic discounts, most Big Box brands are not directing consumers to shop a specific channel. Of the 1,700+ emails collected, less than a quarter focused on driving shoppers to the store (22 percent) or pushing an online sale (22 percent). There was also little effort made to cultivate a sense of urgency: abandoned cart notifications make up just 20 percent of total emails sent out and flash sales make up only 10 percent. Steady-state seasonal promotions, such as emails featuring “back-to-school’ or ‘holiday” offers, make up 19 percent of total emails sent. Select brands do make the effort to push to a specific channel. Bed Bath & Beyond does an excellent job of curating its messages, frequently telling consumers to complete their purchase online with a 20 percent-off coupon code. In general, more emails pushed for online sales—with free shipping promoted twice as much as store-only and online-only offers. Grocery, Drugstore, and Arts & Craft retailers are more likely to push shoppers to brick-and-mortar rather than purchase online.

Big Box: Brand Investments in E-Commerce vs. Brick & Mortar IncentivesNovember 2014, n=64 ■ Within Top-10: % Emails Pushing Online Sale ■ Within Top-10: % Emails Pushing to Store

Note: Grocery is over-indexed to the store (4.6x); Drugstores over-index to the store by 1.6x; Arts & Crafts over-index to the store by 1.5x.

VOLUME OF PUSH-TO-STORE

VS. ONLINE SALE EMAILS

GROCERY DRUGSTORES ARTS & CRAFTS

4.6x 1.5x1.6x

Safeway

Office Depot

Dollar General

Radio Shack Home Goods

Bed Bath & BeyondTrue Value

Home DepotMacy’s

Meijer

Kroger CVS

H-E-B

Staples

0.0

2.0

4.0

6.0

8.0

10.0

0.0 2.0 4.0 6.0 8.0 10.0

E-COMMERCE INCENTIVES

Jo-Ann Stores

Rite Aid

Costco

Big Box Average

Dick’s Sporting Goods

Marshalls

BRICK & MORTAR INCENTIVES

GENERIC IN-STORE FOCUSED

OMNICHANNEL ROLE MODELSONLINE FOCUSED



35


November 24, 2014

Email Content & CTAs (Cont’d)

Big Box: Propensity of Distinct Calls-to-Actions (CTAs) in Email Marketing

September–October 2014, n=1,712 Emails

Big Box: Promotional Focus of Email Free Shipping vs. Push to Store

September–October 2014, n=1,712 Emails

Bed Bath & Beyond is a prolific sender of emails that push the consumer to shop online; 93 percent of its outbound emails promote exclusive online offers while 85 percent offer free shipping.

Pet S

uppl

ies,

n=

2

Spor

ting

Good

s, n

=5

Appa

rel &

Foo

twea

r, n=

12

War

ehou

se C

lubs

, n=

3

Gene

ral M

erch

andi

se, n

=10

Elec

troni

cs, n

=4

Offic

e Su

pplie

s, n

=3

Hous

ewar

es, n

=5

Arts

& C

rafts

, n=

3

Hard

ware

, n=

5

Drug

stor

e, n

=3

Groc

ery,

n=

9

79%

63%

39% 36% 35%32%

20%

14%

-8%-9%

-11%

-27%

FREE SHIPPING PUSH TO STORE

0.5% Reminder That Offer/Cart Will Expire Soon

We Miss You: Discount To Buy Now20%

TRIGGER

Back-to-School/Holiday Specific

2% Promote Meals/Recipes

19%

INFORMATIONAL

In-Store Focused Promo

Online Focused Promo

22%

10% Flash Sale/Today Only

22%

61%Discount Anywhere

Within Email

46%Promote Free

Shipping/Delivery

PROMOTIONAL



36


November 24, 2014

Big Box: Search Visibility of Amazon in Non-Brand Keyword Searches by Category Percentage of Queries Returning Links to Amazon on First-Page Results November 2014, n=3,416 Total Terms

*Lowe’s appears 100% of the time; JC Penney appears 71% of the time; Ebay appears 23% of the time.

Web Advertising & Programmatic MediaOn average, display advertisements are credited with driving less than 1 percent of traffic to Big Box brand sites.59 Despite the dominance of search and referrals from “daily deal” portals, Big Box retailers continue to invest significantly in web advertising to maintain visibility and conversion. U.S. consumers conduct research for 6 out of 11 key categories on Google.60 Brand sites are the most- visited resource for clothing and subscription services,

while in-store displays remain the top source for groceries, home improvement, and pet supplies. While Amazon falls behind Google as a search engine, Amazon has the greatest ownership of first-page search results for 11 out of 14 Big Box-related category keywords.

59.SimilarWeb, Traffic Sources, October 2014.60. Parago, Need for Speed: Disrupting the Omni-Channel, March 2014.

100%100%

82%

79%

75%

71%

66%

62%

62%

59%

58%

47%

21%

8%

Electronics, n=325

Amazon e.g.- Bluetooth

Sporting Goods, n=249

Amazon e.g. - World Cup

General Merchandise, n=251

Amazon e.g. - Television

Hardware, n=258

Lowe’s* e.g. - Windows

Back-to-School, n=249

Amazon e.g. - Backpacks

Housewares, n=250

Amazon e.g. - Kitchen Design

Apparel & Footwear, n=307

JCPenney* e.g. - Boots

Holiday, n=247

Amazon e.g. - Christmas Tree

Drugstore, n=251

Amazon e.g. - Vitamin D

Grocery, n=249

Amazon e.g. -Recipes

Office Supplies, n=245

Amazon e.g. - Desk

Arts & Crafts, n=214

Amazon e.g. - Paint

Pet Supplies, n=246

Amazon e.g. - Aquarium

Warehouse Clubs, n=75

Ebay * e.g. - Wholesale



37


November 24, 2014

Web Advertising & Programmatic Media (Cont’d)Investment in creating content for digital advertising varies widely, with the average Big Box brand producing 96 unique ads. This figure is skewed by five brands (Walmart, Target, Best Buy, Macy’s and Home Depot), as 70 percent of retailers maintain 100 or fewer unique ads. Overall, investment in more ad variants does not correlate with payoff measured in unique impressions (“views”). Stop & Shop for example, drives as many views from its six unique ads as Dollar General does from 56. Thus, brands that are securing more views are likely doing so through broader ad buys and refined ad placement techniques – matching content to context.

As a group, Big Box brands are placing ads on over 3,000 sites and getting varying degrees of return on their investments. Though sites like pch.com, legacy.com, and likes.com have the greatest number of brands in the Index (at 50 apiece), it is the major Internet portals (Yahoo, Ebay, YouTube, AOL, Refinery 29) that yield the greatest number of views for their brands. Notably, of all the sites generating the most views for Big Box brands, only one is a Big Box brand itself – Sears – illustrating the underutilization of monetizing their own sites as advertising platforms.

Big Box: Unique Ads vs. Relative Impressions By Brand Q1–Q3 2014, n=64

Big Box: Top Publisher Sites Where Brand Ads Appear

Q1–Q3 2014, n=64, Sites hosting ads from 5+ brands“Ad inventory on a retailer’s site is an incremental monetization opportunity as visitors have demonstrated clear and targetable intent.”GABE GOTTLIEBCEO, Adomic

0

4

8

12

16

20 30 5040

20

24

28

aol.comyahoo.com

refinery29.comebay.com

youtube.com

msn.com

RELA

TIVE

AD

FREQ

UENC

Y

DISTINCT BRANDS DETECTED

sears.com

100

Walmart Stores, Inc.

Best Buy Co., Inc.

Home Depot (Homer TLC)

Lowes’s Home Centers, Inc.

Macy’s

Sears

Toys R Us

0

.2

.4

.6

.8

1001 2 5 20 5010 200 1,000500

1.0RE

LATI

VE IM

PRES

SION

S (”

VIEW

S”)

NUMBER OF CREATIVES (”UNIQUE ADS”)

Target

Source: ADOMIC. Source: ADOMIC.



www.adomic.com

www.adomic.com

38


November 24, 2014

Web Advertising & Programmatic Media (Cont’d)In total, only 16 brands were found to be using their sites in this manner. Of these, only eight are actually providing space for 100+ buyers. Furthermore, only five brands have a significant ad business, selling over half of their total ad space – versus using it themselves. Considering the high number of visits many of these brands get (given the consumable nature of their business) and the number of brands that could take advantage of advertising so close to the end of the purchase funnel, the industry has a lot of room to grow third-party advertising into an additional revenue stream.

Whether using a third-party site or its own, the ultimate goal for any brand should be about delivering an effective consumer experience. Programmatic advertising offers just this – with more targeted messaging, more efficient ad placements, and greater insight on shopper behavior. The use of programmatic is expected to grow at a CAGR of 36 percent to $27.7 billion by 2018,61 more than double that of non-programmatic. While Big Box brands have increased use of programmatic over the last few years, it still lags other industries. Across 960 of the most active advertisers, programmatic drives an average of 40 percent of impressions versus only 30 percent among the Big Box cohort. 61. “The Programmatic Advertising Report” Business Insider Intelligence, September 2014.

Source: ADOMIC, limited to top and bottom categories, and related industries.

Big Box: Diversity and Monetization of Ads on Brand.comNovember 2014, n=16 Brand sites serving ads

Big Box: Number of Brands Buying Programmatic AdsPercent of Brands by CategoryQ3 2014

AVERAGE: 40%

Datingn=10

Home &Gardenn=32

Computers &ConsumerElectronics

n=21

Style,Fashion &

Beautyn=30

Retailn=70

Pharma &Healthcare

n=46

ConsumerPackaged

Goodsn=16

Big Boxn=64

Food &Drinkn=55

Arts &Entertainment

n=52

56% 49%

45% 45% 44%

32% 31% 30% 28%

19%

radioshack.com

kmart.com

walmart.com

target.com

cvs.com

bestbuy.com

meijer.comdollargeneral.com

biglots.com,familydollar.com

kroger.com officemax.com

kohls.com

samsclub.com

toysrus.com

sears.com

NUMBER OF ADVERTISERS DETECTED

SHAR

E OF

NON

-BRA

ND A

D IM

PRES

SION

S

0%

1 10 100 1,000 10,000

20%

40%

60%

80%

100%

Source: ADOMIC.



http://www.businessinsider.com/the-programmatic-and-rtb-ad-report-2014-8

www.adomic.com

www.adomic.com

39


November 24, 2014

Mobile InvestmentsSlowly but surely, omnichannel imperatives are beginning to impact mobile investments among Big Box retailers. Today, 78 percent of searches conducted on smartphones result in a purchase made offline, compared to 61 percent on desktop and 64 percent on tablets.62 This underscores the criticality of integrating brick-and-mortar functionality across both mobile-optimized sites and mobile apps. Although Big Box brands recognize the importance of maintaining mobile-optimized sites (97 percent), 84 percent implement unique mobile architecture

62. “Study: 78 Percent of Local-Mobile Searches Result in Offline Purchases,” comScore, Neustar Localeze, April 9, 2014.

versus only 11 percent that parse common desktop content via responsive design. The fragmentation of digital properties inherent in building parallel sites inevitably leads to lost features and functionality found on desktop, but not mobile. For instance, real-time inventory status is available from 59 percent of desktop sites versus only 22 percent of mobile sites. If anything, those ratios should be reversed to service the local intent signaled by mobile customers.

Big Box: Mobile Site Features & Functionality Compared to Desktop

November 2014, n=64 Brands ■ Desktop ■ Mobile

86% 80%

23%

52%

48%

36%

23%

Click-to-Call Geolocation Swipe Support User Ratings & Reviews Arrange In-Store Pickup Fast Checkout Check Local Inventory

86%

23%N/A

N/A

75%

50%

47%

59%

80%

52%

48%

36%

23%

22%



http://searchengineland.com/study-78-percent-local-mobile-searches-result-offline-purchases-188660

40


November 24, 2014

Mobile Investments (Cont’d)Some brands have invested wisely to develop sound mobile sites. Home Depot allows consumers to find inventory and its location in the store as well as buy-online and ship it home. Belk and Toys “R” Us boast click-to-apply coupons for m-commerce checkout. Dollar General’s mobile site impresses with clean navigation in addition to slick omnichannel innovation, showcasing browse-able coupons that can be easily redeemed in-store directly from the phone.

Mobile app support among Big Box brands reaches over 70 percent. 89 percent of these brands include user accounts, indicating the importance of loyalty and reward programs to the industry’s app strategy. Yet features and functionality remain primitive. Of the 44 brands with iOS apps, less than 60 percent feature e-commerce and less than 5 percent provide aisle maps of affiliated retail locations.

While Dollar General has neat coupons easily scanned for in-store discounts, Academy Sports + Outdoors has a barely legible circular.

Big Box: Mobile Site Features & Functionality Compared to iOS App November 2014, n=64 Brands ■ iOS App ■ Mobile Site

Store Locator Geolocation Account Access M-Commerce Email Signup

93%

92%

91%

80%

89%

84%

59%

73%

45%

86%

Note: In general, m-commerce has not been integral to the Big Box mobile strategy.



41


November 24, 2014

SPOTLIGHT: Mobile PaymentsApple Pay’s late October launch put mobile payments back in the media spotlight, gaining plaudits for simplicity and ease of use.63 Apple Pay lets iPhone 6 users link credit and debit cards to the system, and checkout by tapping the NFC-enable device at compatible registers. At launch, 34 partners announced support for Apple Pay, including 12 Big Box retailers profiled in this report. Meanwhile, the lack of Apple Pay at several major retailers (Best Buy, CVS, Walmart) has raised the visibility of CurrentC—a competing mobile payment standard in development by the Merchant Customer Exchange (MCX).64

With mobile in-store payment expected to account for nearly $200 billion by 2018,65 early enthusiasm for Apple Pay may provide a kick start for Big Box retailers as they seek to eliminate sources of friction in the established checkout process. This will be challenging for an industry that has historically proved resistant to change. Today, less than half of brands provide PayPal as a mode of payment upon checkout. MasterCard and Visa are offering competing expedited checkout systems, but have gained no traction in this industry. Google Wallet payments are accepted on only two mobile sites (Toys “R” Us and PetSmart). Given these figures, it seems likely that there is an opening for technology providers to disrupt the status quo in an area where retailers offer few alternatives that can compete in terms of visibility, convenience, and trust.

63. “We Tried Apple Pay at a Bunch of Major Retailers in One of New York’s Busiest Shopping Areas – Here’s What We Found,” Business Insider, October 23, 2014.64. “Why So Many American Retailers Are Fight to Freeze Out Apple Pay,” Davey Alba, Wired, October 29, 2014.65. “The Future of Payments: 2014,” John Heggestuen, BI Intelligence, November 3, 2014.

DEPARTMENTSTORES

SPECIALTY RETAIL BIG BOX

ANNOUNCEDSUPPORT FOR

6 BANKS

34 RETAILERS

1M+CARDS ACTIVATED IN

FIRST 72 HOURS

200,000 POS

ANNOUNCEDSUPPORT FOR

EMAIL LISTALREADY HACKED!

0 BANKS

59 PARTNERS NON-NFC

ETA 2015...



http://www.businessinsider.com/bi-intelligence-tests-out-apple-pay-2014-10

http://www.businessinsider.com/bi-intelligence-tests-out-apple-pay-2014-10

http://www.wired.com/2014/10/many-american-retailers-fighting-freeze-apple-pay/

http://www.businessinsider.com/the-future-of-the-payments-industry-2014-slide-deck-2014-7?op=1

42


November 24, 2014

SPOTLIGHT: Data BreachesIn October, President Obama signed an executive order requiring that Federally-issued credit and debit cards adopt “chip-and-pin” technology to institute an extra layer of account security—accelerating longstanding migration plans for IC credit card technology in the United States.66 In the executive order, Obama urged large companies to make their systems compatible with the new standard. The White House cited The Home Depot, Target, Walgreens, and Wal-Mart as committing to upgrading their points of sale—isolating a critical point of failure. It is no coincidence that Big Box brands are eager to make new commitment to enhanced account security—as these brands suffered some of the largest and most highly-publicized data breaches over the past year: Target in December 2013,67 Home Depot in September 2014,68 and both Kmart and Staples in October 2014.69 In this environment, a brand’s digital strategy and success extends to its ability to foster consumer trust. Target estimates that its data breach cost shareholders $148 million,70 while Q4 2013 profits dropped 46 percent.71 And Home Depot has warned it will likely have a material adverse effect in FQ4 and beyond.72

With 45 percent of debit and credit card holders claiming that they would probably avoid stores hit by data breaches, the costs to any brand are clear-cut. Consequently, brands that have long eschewed expensive upgrades to point-of-sale terminals are facing pressure from all sides—liability shifts, government scrutiny, and heightened consumer awareness.73

66. “Obama signs order to tighten security for federal credit cards,” Reuters, October 2014.67. “Target Hit by Credit-Card Breach,” The Wall Street Journal, December 2013.68. “Home Depot Confirms Data Breach, Investigating Transactions From April Onward,” Forbes, September 2014.69. “Staples says probing possible payment card data breach,” Reuters, October 2014.70. “Cost of Target Data Breach: $148 Million Plus Loss of Trust,” CIO Today, August 2014.71. “Target Earning Slide 46% After Data Breach,” Paul Ziobro, The Wall Street Journal, February 26, 2014.72. “Home Depot warns on data breach costs,” Seeking Alpha, November 7, 2014.73. “Preparing for the Migration to EMV in the US,” Mercator Advisory Group, December 2013.

BRAND DATE OF BREACH CONFIRMATION

NUMBER OF CARDS AFFECTED

December 2013 40 Million

April 2014 3 Million

August and September 2014 Undisclosed

September 2014 56 Million

October 2014 Undisclosed

October 2014 Undisclosed

Big Box: Major Data Breaches Disclosed in 2014



http://www.reuters.com/article/2014/10/17/us-obama-credit-security-idUSKCN0I61OP20141017

http://online.wsj.com/articles/SB10001424052702304773104579266743230242538

http://www.forbes.com/sites/maggiemcgrath/2014/09/08/home-depot-confirms-data-breach-investigating-transactions-from-april-onward/

http://www.reuters.com/article/2014/10/21/us-staples-cybersecurity-idUSKCN0IA0AA20141021

http://www.cio-today.com/article/index.php?story_id=111001SF8BY6


http://seekingalpha.com/news/2108205-home-depot-warns-on-data-breach-costs?uprof=48&dr=1#email_link

http://merchantwarehouse.com/sites/merchantwarehouse.com/files/EMVPrimerMerchantWarehouseMercator.pdf

43


November 24, 2014

Adoption is High, Site Support VariesBig Box brands are making a blanket investment in social, with more than 90 percent supporting a brand presence on Facebook, YouTube, and Twitter—echoing benchmarks set by peers in Specialty Retail and Department Stores. Disparities, however, emerge in the promotion of competing social channels. While Facebook and YouTube enjoy equal adoption rates, only 66 percent of brand sites link to official YouTube channels, compared to 92 percent for official Facebook pages. While social media underperforms both email and affiliate advertising in terms of aggregate conversion,74 a recent analysis has found that marketers who allocate ad spend to social channels see 25 percent higher conversion compared to purely organic use of social media.75 While this impact varies by platform, social advertising drives a large portion of new customer acquisition, frequently appearing as first and only touch points. As utilization of pay-to-play increases, the opportunity provided by advertising will supersede that of organic content in reaching consumers. Despite strong evidence that advertising can bridge social media and commerce, an overwhelming majority of Big Box retailers are not investing. Only 3 percent of brands are placing ads on YouTube for their own search terms, leaving them open to competitive purchasing by direct competitors and other industries. Just 6 percent of brands are placing promoted tweets on their own terms. And on Pinterest, where promoted pins are a natural intermediary to bridge to commerce before the widespread access of Pinterest advertising,76 only 26 percent are utilizing this feature.

74. “E-Commerce Customer Acquisition Snapshot,” Custora, June 2013.75. “Myth-Busting Social Media Advertising,” AOL Platforms Research & Convertro, September 2014.76. “Pinterest to Launch New Ad Targeting and Conversion Tracking Features,” TechCrunch, September 2014.

Big Box: Social Media Platform Adoption vs. Promotion on Site Direct Link from Brand Site to Social ChannelsNovember 2014, n=64 ■ Platform Presence ■ Site Links

97% 97%

97%

92%

97%

66%

95%

89%

91%

34%

89%

67%

84%

41%

16%

2%

Facebook YouTube Twitter Google+ Pinterest Instagram Tumblr

Marshalls maintains a dedicated “Project Fab” Tumblr, profiling a network of fashion and lifestyle bloggers.

In lieu of direct e-commerce, Marshall channels its organic #fabfound content into a live site feed, encouraging curation of SKUs that lack sophisticated product information.



http://blog.custora.com/2013/06/e-commerce-customer-acquisition-snapshot/

http://www.aolplatforms.com/myth-busting-social-media-advertising

http://techcrunch.com/2014/09/26/pinterest-to-launch-new-ad-targeting-and-conversion-tracking-features/

44


November 24, 2014

FacebookAs Facebook tweaks its algorithms to balance sponsored versus organic content,77 absolute engagement becomes a more important gauge of brand investment—capturing paid efforts to push content to non-fans outside a brand’s direct reach.78 While organic fan count and overall interactions are clearly correlated, outliers are easy to spot. For example, REI posts yield more interactions than Best Buy even though Best Buy’s fan base is over eight times that of REI. Meanwhile, Marshalls’ absolute engagement is 73 times that of Sam’s Club, despite having a community size only 1.1 times larger. While sponsored posts benefit from contextual relevance, there is little evidence that Big Box brands were using timely themes to drive either their organic or paid strategy. Searches for “Back to School” typically peak in August and September. A survey on Facebook found that only a handful of brands strategically employed these keywords, with only 3.6 percent of brand posts from August through September referencing “back to school.” The top 10 brands in mentions did so in more than 9 percent of their posts, and the top two brands – BJ’s Wholesale Club and Dollar General – mentioned “back to school” in over 20 percent of posts. Brands that over-indexed on this subject matter typically paired content with a call-to-action around a continuing sweepstakes or contest.

77. “Facebook Admits Organic Reach Is Falling Short, Urges Marketers to Buy Ads” Advertising Age, December 2013.78. “Socialbakers Now Recommends Interactions over Engagement Rate,” Social Bakers, June 2014.

Big Box: Total Engagement vs. Community Size on FacebookSeptember–October 2014, n=61 Brands Facebook Accounts

Big Box: Top 10 Facebook Pages, by Fan CountNovember 2013 vs. 2014, n=61■ 2014 ■ 2013

Walmart Target Macy’s Kohl’s Best Buy Walgreens Toys “R” Us Sears DICK’S SportingGoods

JCPenney

100%

+4.7% +4.5% +18.6% +5.2% +4.4% +57.5% +11.3% +28.5% +49.2%+8.3%

14,4

38,1

1712

,178

,333

11,1

44,1

0210

,590

,562

7,05

5,59

06,

760,

305

4,70

5,65

34,

344,

060

4,31

9,02

7

2,74

3,07

2

4,11

2,43

33,

695,

724

2,30

0,25

33,

432,

368

22,1

23,5

40

23,1

13,8

76

33,1

43,8

72

34,6

98,8

39

3,67

8,11

12,

863,

256

Macy’s

Target

Best Buy

Sam’s Club

Buy BuyBaby

REIMarshalls

Kohl’s

Walmart

FOLLOWER COUNT

ENGA

GEM

ENT 10,000,000

10,000,000 100,000,000

1,000,000

1,000,000

100,000

100,000

10,000



http://adage.com/article/digital/facebook-admits-organic-reach-brand-posts-dipping/245530/

http://www.socialbakers.com/blog/2199-socialbakers-now-recommends-interactions-over-engagement-rate

45


November 24, 2014

Facebook (Cont’d)

BJ’s Wholesale Club had the most popular back-to-school post by interaction rate, and linked to a back-to-school sweepstakes.

Ross reposted images as back-to-school ads from its influencers Madison Pettis and Denyse Tontz. The brand also encouraged fans to tell what their favorite outfit was to win a $100 gift card.

The Macy’s Lip Dub Challenge solicits lip dub videos created by schools to the Beach Boys song “Be True to Your School” in one take. The contest is featured on Facebook, Twitter, YouTube, and on the brand blog, in advertising, and on the brand site.



46


November 24, 2014

TwitterWhile 95 percent of Big Box brands have a presence on Twitter, just 46 percent maintain auxiliary accounts, which can expand a brand’s following materially. The top 10 brands by total community size used secondary accounts to expand their followings by 66 percent, on average—with Kmart and Sears more than doubling their follower counts.

These additional brand channels focus on specific aspects of the business that would interest their followers, such as sales and offers, fashion and style, and customer service. For example, Kmart’s following from its three secondary accounts (@KmartDeals, @KmartFashion, @KmartCares) have driven a 179 percent increase in reach. Notably, @KmartDeals actually boasts about 25,000 more followers than the primary account.

Big Box: Top 10 Roll-up of Secondary Twitter Accounts (Extended Reach)Relative Share of Total FollowersNovember 2014, n=150 Twitter Accounts ■ Primary Accounts ■ Secondary Accounts

Kmartn=4

Searsn=8

Walmartn=10

Home Depotn=5

Office Maxn=3

Targetn=5

Hobby Lobbyn=5

CVSn=5

Lowe’sn=3

Petmart

100,773 179,947

176,937130,278

570,305

228,795 124,152

25,706 11,518

1,357,200

52,114

228,567

169,759

494,083

17,999

76,813

49,759

330,901

58%

64%

37%

35%

31%

27%

26%

25%

23%

Big Box: Top 10 Primary Twitter Accounts by FollowersNovember 2013 vs. 2014, n=61 ■ 2013 ■ 2014

JC Penney

Whole Foods

Target

Walgreens

Macy’s

Best Buy

Walmart

Toys “R” Us

Staples

TJ Maxx

327,354 +84%

3,821,084 +9%

1,357,200 +77%

892,685 +390%

596,842 +141%

571,277 +45%

570,305 +66%

524,479 +19%

292,628 +26%

284,509 +96%



47


November 24, 2014

SPOTLIGHT: E-CommerceAfter months of speculation, Twitter finally announced that it was testing a “Buy” button in September.79 Twitter announced twenty-eight brands, artists, and charities that would test this, including The Home Depot. The “Buy” button is currently limited to mobile, with promoted tweets linking to a separate page where users can enter their payment and shipping information for the first purchase. Subsequent buys will simply require three clicks from tweet to purchase, making it a native functionality of Twitter for the first time. Although brands are connecting to e-commerce without a “Buy” button, many still have some ground to cover, as 21 percent of brands are not linking to specific e-commerce pages. Meanwhile, only 11 percent of brands are using dedicated Twitter buttons to push to e-commerce or solicit email sign-ups, and only 8

79. “Testing a way for you to make purchases on Twitter,” Twitter, September 2014.

Source: AOL Platforms Research, September 2014.

Retailers: Average Conversion Rate of Paid vs. Organic Posts by PlatformQ1 2014, Convertro Cross-Client Attribution Data Pool ■ Paid ■ Organic

percent are taking advantage of AMEX Offers to purchase product that is paired with a discount (though a few years old, this feature is not widely used). Big Box brands are furthest behind in using advertising to connect Twitter and commerce. A survey of brand term searches found that while 47 percent yielded some form of promoted tweet, only 6 percent were coming from the brand. Meanwhile, no brands were placing promoted tweets on competitor terms. Once the Buy button is officially launched, brands that have experimented with promoted tweets and call to action cards will have an advantage over competitors in the budding Twitter commerce ecosystem.

Promoted tweets from The Home Depot will soon add a “Buy Now” button, bringing the point of sale within the platform.

92%

Facebook

92%

Twitter

3.9%

92%

Pinterest

3.0%

3.1%

3.9%

1.5%

0.2%

1.1%



https://blog.twitter.com/2014/testing-a-way-for-you-to-make-purchases-on-twitter

http://www.aolplatforms.com/myth-busting-social-media-advertising

48


November 24, 2014

YouTubeBrands on YouTube are averaging 5.5 million views per channel. While this is significantly stronger than the 2.3 million-view average for Department Stores, many Big Box brands live in the shadow of two media powerhouses.

Walmart and Kmart effectively dominate the wider Index, producing nine of the ten most-watched videos. Kmart remains the only Big Box brand that has produced content that garnered over 10 million views—and it has done so twice.

Big Box: Top 10 YouTube Brand Channels by ViewsNovember 2014, n=62

INDEX AVERAGE: 5,500,649

Walmart 63,039,644

52,681,906

49,219,590

31,932,387

16,897,773

10,832,180

9,726,412

8,910,146

8,415,021

7,922,641

Kmart

Lowe’s

Home Depot

Cabela’s

DICK’S Sporting Goods

Petco

Target

Michaels

RadioShack



49


November 24, 2014

YouTube (Cont’d)Big Box brands are missing the opportunity to connect content to commerce on YouTube. Brand advertising is uncommon, with only 13 percent of brands placing ads on YouTube brand search terms, and only 9 percent doing so on competitor search terms. Promoting commerce from owned content pales in comparison to other platforms, with only 20 percent of brands offering links to e-commerce from their most popular video’s descriptions above the fold.

Dick’s Sporting Goods tapped into World Cup enthusiasm with a 30-second spot that provided calls to action to its Adidas Predator soccer shoe collection.

Few Big Box brands are placing display ads on YouTube search, leaving them open to competitors.



50


November 24, 2014

WALMART - “Walmart Super Savings Rollback & Clearance Event”

Big Box: Top 10 YouTube Brand Videos, by Views November 2014

5/14/145/21/148/6/14

WALMART“See What You Can SaveWith Savings Catcher”

WALMART“Watch Savings Catcher

Compare Prices”

WALMART“Work is a BeautifulThing:Meet Patrick”

KMART“Kmart-Not a Christmas

Commercial”

KMART“Big Gas Savings”

18,116,382 7,885,170 7,104,779

6,527,0034,550,8334,353,9043,763,9253,605,4483,258,874

21,732,235

KMART - “Ship My Pants”

KMART - “Show Your Joe” WALMART - “Adam Richman’s Tip For The Perfect Steak”

RADIOSHACK“RadioShack Beats Pill

#UWANTIT Commercial”

4/10/14 11/15/14 5/6/14 8/30/14

8/4/14 4/29/14 3/14/14 9/12/14 5/22/14 1/25/14

YouTube (Cont’d)

Views



51


November 24, 2014

SPOTLIGHT: Emerging Platforms

Big Box: Top 10 Instagram Accounts, by FollowersNovember 2014, n=54

Big Box: Top 10 Pinterest Accounts, by FollowersNovember 2014, n=57

108,025

68,596

83,782

329,787

269,249

247,779

112,186

193,424

121,593

116,376 INDEX AVERAGE: 45,625

Target

HomeGoods

Whole Foods

Macy’s

Kohl’s

REI

T.J.Maxx

Cabela’s

Marshalls

HomeDepot

Hobby Lobby

Whole Foods

Target

Jo-Ann Stores

Home Depot

HomeGoods

Cost Plus World Market

Bed Bath & Beyond

3,485,633

418,912

214,423

202,059

199,680

181,719

179,450

193,077

177,343

123,796

INDEX AVERAGE: 107,867

Lowe’s

Michaels



52


November 24, 2014

SPOTLIGHT: Emerging Platforms (Cont’d)

Using Like2Buy, Target and four other Index brands can bridge the gap between Instagram profiles and commerce pages.

Twenty-six percent of brands are linking back to their websites using rich pins, integrating price and availability information.

$29.97In Stock



53November 24, 2014


Best-in-Class Loyalty ProgramsOver 70 percent of Big Box brands offer smartphone apps, indicating the importance placed on loyalty investments in a space otherwise not particularly advanced in digital efforts. The strategy is grounded in sound logic, as 23 percent of consumers80 increased their allegiance to brands with programs over the past year. Several of the biggest brands in the business have made great strides in using digital properties to enhance loyalty, yielding convenient rewards tracking and in-store use.

The Sears Holding Company operates Sears and Kmart, both of which benefit from the Shop Your Way mobile app. This program offers local deals and gives “Surprise Points” applied to specific products, sent via push notification. Shoppers can redeem deals through in-app purchase, with points earned added immediately to the user’s account.

With Shop Your Way, users can discover nearby deals and events, use points and coupons to purchase product, share shopping experiences with friends, read and write reviews and get benefits for being a returning customer.

Target’s loyalty program, Cartwheel allows users to redeem multiple coupons with a single scan of the barcode. Consumers can use offers repeatedly, even piling them on top of other coupons, sales and REDcard savings.

80. “Consumer Research Results,” Accenture, 2014.



http://www.accenture.com/Microsites/retail-research/Pages/consumer-research-results.aspx

54November 24, 2014


Best-in-Class Loyalty Programs (Cont’d) Target Cartwheel offers shoppers a simple way to accumulate and use coupons. Provided a wide range of offers, users can add up to 15 to a “cart.” Upon in-store checkout, the cart’s digital barcode is scanned through the app or Passbook to draw immediate savings. Popularity of the app is evidenced by its inclusion in the Top 100 most-downloaded iPhone apps and the $36 million dollars in savings applied to Cartwheel purchases in the first eight months of its existence.81

Walmart’s Savings Catcher is more than just an element of the retailer’s general app, which offers one of the cleanest m-commerce experiences. The innovative program showcases Walmart’s commitment to low prices and unique use of smartphone cameras. Users are encouraged to scan receipts within a week of purchase. The Savings Catcher then compares prices of purchased items against those advertised by local competitors. If any competitors beat Walmart’s price, the difference is automatically applied as store credit for future purchases.

81. “Target to Expand Omni-Channel Features,” Retail Solutions Online, June 2, 2014.

Walmart’s Savings Catcher compares all advertised prices of an item sold at Walmart, and refunds the difference if a local competitor’s pricing is lower. The program also allows users to check their balance and transfer funds to an eGift Card.



http://www.retailsolutionsonline.com/doc/target-to-expand-omni-channel-features-0001

55November 24, 2014


Preparing for Holiday Shopping SeasonNovember and December account for 20 percent of total U.S. retail volume according to the NRF.82 With online sales growth of 8.6 percent83 versus a decline of 3.6 percent84 for stores, Holiday 2013 was a tipping point for e-commerce. With online expected to grow 8 to 11 percent this holiday, retailers are preparing early and aggressively. In September, Macy’s began the addition of 4,000 iBeacon devices to its nearly 800 U.S. stores and rolled out My Wallet, a virtual file that houses credit cards, digital coupons and promotions.85 With this, Macy’s hopes to provide richer product content, more personalized offers and a faster way to close a sale. Trying to accommodate more user preferences, e-commerce veteran Staples launched the office supply industry’s first-ever iPad app in time for holiday. This allows shoppers to tap into their Rewards balance, access deals, check store availability and filter search results. Though declining sales and profits have weakened Staples’ stock, the brand hopes its online edge will help it regain market share against slower-moving competition this holiday season.86

82. Holiday Sales as Percentage of Annual Sales (2013), NRF.83. “Optimism Shines as National Retail Federation Forecasts Holiday Sales to Increase 4.1%,” NRF, October 7, 2014.84. “Full 2013 Holiday Performance Data: Brick & Mortar Traffic Down 6.5% YOY,” RetailNext, January 14, 2014.85. “Macy’s Takes iBeacon Technology Nationwide, Installing More than 4,000 Devices,” MarketingLand, September 16, 201486. “Can Staples Turn It Around After Crashing 23% in 2014?,” The Motley Fool, September 30, 2014

Amazon has already begun its holiday savings campaign and encourages visitors to subscribe to daily email updates highlighting one-day deals.

In preparation for the 2014 holiday season, Macy’s now offers a buy online, pick up in-store option.

Walmart’s site lets users search for Holiday deals by local availability.



http://research.nrffoundation.com/Default.aspx?pg=55#.VFf0zfTF-Vh

https://nrf.com/media/press-releases/optimism-shines-national-retail-federation-forecasts-holiday-sales-increase-41

https://nrf.com/media/press-releases/optimism-shines-national-retail-federation-forecasts-holiday-sales-increase-41

http://retailnext.net/blog/full-2013-holiday-performance-data-brick-mortar-traffic-down-6-5-yoy/

http://marketingland.com/macys-100162

http://marketingland.com/macys-100162

http://www.fool.com/investing/general/2014/09/30/can-staples-stock-turn-it-around-after-crashing-23.aspx

56November 24, 2014


Preparing for Holiday Shopping Season (Cont’d)In October, Target announced a string of initiatives to entice consumers back after last year’s damaging data breach.87 Not only will Target offer free shipping on all holiday orders, it is also promoting same-day rush, in-store pickup and ship-from-store. Mobile apps have been relaunched to make browsing, building lists and navigating the store easier. The Wish List app is particularly interesting, as it lets children build lists for Santa, which parents can then shop from at their convenience. With Amazon and Walmart launching Black Friday priced deals on November 1st and more retailers proactively planning delivery date cutoffs and live chat services, the battle for wallet share will be fierce. This holiday will test the efficacy of these digital innovations and a powerful showing will go a long way toward restoring investor confidence in underperforming brands and furthering valuation for those already at the top.

87. Target Pledges Free Shipping, a Pop-Up and Increased Security for the Holidays, FierceRetail, October 23, 2014

Staples created a new user-friendly iPad app focused on product browsing and e-commerce.

Target’s ship-from-store program will be unveiled ahead of the holiday season at 140 stores, and should facilitate its Free Shipping offer. This will ultimately give Target the ability to reach 91% of U.S. households by ground transit within one to two days.



http://www.fierceretail.com/story/target-pledges-free-shipping-pop-and-increased-security-holidays/2014-10-23?utm_medium=nl&utm_source=internal

http://www.fierceretail.com/story/target-pledges-free-shipping-pop-and-increased-security-holidays/2014-10-23?utm_medium=nl&utm_source=internal

57November 24, 2014


Holistic Commerce Home Depot

Home Depot has linked every facet of its business, putting the totality of its supply-chain infrastructure within reach of consumers and offering one of the strongest fulfillment operations in retail. This goes beyond adding fulfillment centers (although that effort is underway) to incorporating a range of services designed to connect products to consumers.88 Brick-and-mortar inventory is used to fulfill online orders when necessary, helping to support services like same-day shipping and in-store pickup. Supplier inventories are also on-call, with drop-shipping available to Home Depot Pro’s contracting and professional customers. Integration at the consumer level focuses on critical user design sensibility. Smartphone app users have access to real-time inventory in local stores, and can scan items in-store to find them online. The app’s “In-Store Experience” employs geolocation to provide store-specific maps, deals, and events, while product browsing has a user-friendly interface to let shoppers swipe to add products to a shopping list. The catalog can be sorted to display only products available in a specific store. This depth of fusion is rare in retail and embodies the perfect way to keep consumers informed, satisfied and returning. Online sales accounted for 4.2% of overall sales by Q1 2014, up from 3.1% a year previously, a portion likely to rise quickly.89 The Atlanta-based retailer experienced a massive data breach, with roughly 56 million cards compromised, in September 2014.90 Investors barely blinked, with the market confident enough in the company’s strategy to power a 20% spike in share price since August.

88. “Home Depot Increases Delivery Speed and Assortment with New Fulfillment Center,” Retail Touch Points, March 20 2014.89. “The Web Now Accounts for 4.2% of Home Depot’s Total Sales.” Internet Retailer, June 4, 2014.90. “How Home Depot CEO Frank Blake Kept His Legacy from Being Hacked,” Fortune, October 29, 2014.

Home Depot provides a product’s Aisle Number and Shelf location.

Home Depot offers free shipping (for orders $45+) and free returns, it also provides a seamless shopping experience across channels with real-time store inventory, buy online/return in-store, buy online/pickup in-store, buy online/ship-to-store.



http://www.retailtouchpoints.com/features/retail-success-stories/home-depot-increases-delivery-speed-and-assortment-with-new-fulfillment-center

http://www.internetretailer.com/2014/06/04/web-now-accounts-42-home-depots-total-sales

http://fortune.com/2014/10/29/home-depot-cybersecurity-reputation-frank-blake/

58November 24, 2014


M&A Synergies Focus on Digital Office Depot and OfficeMax

The office supply industry has largely been dominated by Staples, whose trailing twelve month revenues (as of August 2, 2014) were $22.9 billion compared to Office Depot’s $14.3 billion (as of June 28, 2014). The merger of Office Depot and OfficeMax in November 201391 gives Office Depot the opportunity to rival Staples’ market share while providing numerous synergies for the much smaller OfficeMax by taking on Office Depot’s best-in-class implementation of omnichannel. In October 2014, officemax.com was folded into officedepot.com, highlighting the superior digital and fulfillment capabilities of Office Depot. Only 11 percent of Big Box brands (including Office Depot) offer all three important but less widely held features – same-day shipping, ship-from-store, and direct-from-vendor. OfficeMax only offered direct-from-vendor. Beyond shipping, synergies include numerous drive-to-store and customer-service features. The old OfficeMax site lacked the use of geolocation to find stores and the ability to send directions to smartphones. Additionally, the user was neither able to get directions without leaving the page nor had the ability to save a preferred store to his/her account.

91. “Office Depot and OfficeMax Complete Merger,” Office Depot, Inc. November 2013.

Note: Office Depot was one of the few brands to offer same-day shipping, ship-from-store, and direct-from-vendor.

Ship-from-Store (14%

)

Sh

ips

Dire

ct-f

rom

-Ven

dor (

17%

)

Same-Day Delivery/ Shipping (6%)

Big Box: Fulfillment Options November 2014, n=64

All T

hree

Opt

ions

(11

%)

Two Options (9%)

Two Options (5 %

)

N/A (0%)



http://news.officedepot.com/press-release/corporatefinancial-news/office-depot-and-officemax-complete-merger

59November 24, 2014


M&A Synergies Focus on Digital (Cont’d) Office Depot and OfficeMax

OfficeMax also inherits Office Depot’s industry-leading customer service interface. OfficeMax’s previous online customer service offering was limited to calling an 800 number and sending an email. The brand, however, did acknowledge live chat’s importance stating “Chat With Us Coming Soon!” on the Customer Service page. Office Depot’s more fine-tuned approach enables users to get in touch via email, live chat, and telephone. The latter feature includes the ability to submit a phone number through the site for a representative to reach out directly to the shopper. And finally, OfficeMax will inherit fast checkout via PayPal, a feature they did not offer before.

The merger gives OfficeMax new customer-service capabilties such as live chat, and phone-number entry for contact from a representative.

Office Depot maintains a very comprehensive visual layout of Customer Service. It also offers the option to “Have Us Call You”, which is well ahead of other brands that don’t have Live Chat or don’t allow the shopper to initiate conversation.



60November 24, 2014


Optimizing Screen Real Estate DICK’S Sporting Goods

DICK’S demonstrates thorough mastery of maximizing screen real estate in its e-commerce domain. The desktop shopping experience proves this with a navigation bar at the top of the screen, which unfolds into a link-rich directory according to relevant sorting categories. Though useful but not uncommon, DICK’S goes a step further in recreating this field-maximization in mobile environments. The navigation bar on both mobile site and iPhone app adapts uniquely to user browsing. The nicely designed accordion-style links unfold on touch, and the screen automatically adapts with an unobtrusive, natural scroll to accommodate the full suite of sub-categories. DICK’S smartly uses text-only list menus, which require less vertical space than an image grid (allowing for more list items to be displayed at a time) and load faster because there are no image requests.92 This simple innovation helps set the DICK’S mobile commerce effort apart from competitors, and serves a valuable purpose beyond a superficial UI success. This is animation with function, maximizing the visible relevant links and driving users toward a product and ultimately purchase. Further demonstrating scrupulous attention to screen real estate, DICK’S maintains both a mobile and a tablet site, each of them optimized for landscape or portrait view. The tablet site, too, provides a navigation menu explicitly suited to its medium, with a functional dropdown system providing finger-sized buttons and intuitive sorting power.

92. “Mobile Navigation: Image Grids or Text Lists?,” Nielsen Norman Group, March 30, 2014.

Dick’s Sporting Goods provides a comprehensive link-rich directory according to relevant sorting categories.

Text menus are typically shorter than image grid menus allowing users to review the available options, with limited (or no) scrolling necessary. Text-only menus can be expanded via an accordion.

Dick’s Sporting Goods provides a video-rich interactive catalog application designed to make researching and purchasing product easier for the customer.



http://www.nngroup.com/articles/image-vs-list-mobile-navigation/

61November 24, 2014


Two Mobile Strategies Dollar General and Belk

Dollar General and Belk pursue starkly different mobile strategies that nevertheless harmonize with their particular objectives and needs. Dollar General’s drive-to-store focus derives from the nature of budget retail, still dominated by brick-and-mortar presence. The consolidating space has rivals Family Dollar merging with Dollar Tree, while Dollar General has tendered an offer to acquire Family Dollar for $80 per share.93

This consolidation will inevitably lead to stores coming under the ownership of fewer entities. In this environment, Dollar General is poised to benefit with a digital infrastructure that connects with more consumers and services loyalty efforts. Unlike its discount rivals, Dollar General’s mobile site offers coupons and deals in a mobile-optimized layout, redeemable directly from the mobile browser. Further,

the brand’s app provides an attractive interface for coupon management.Belk, meanwhile, has brick-and-mortar operations in only 16 states concentrated in the South. While expanding the store base remains a key priority, explosive growth of e-commerce (up 42.5 percent in 2013) is notable. Subsequently, strategic investments have been directed to increase e-commerce to 10 percent of sales (from 5 percent today).94 Belk has pursued an aggressive program with special attention to m-commerce. Both the app and mobile site provide digital coupons applied to the checkout price with just one click. Though the app also features deals with passbook integration for in-store checkout, the highlight is certainly the easy-to-navigate shopping and the drive-to-purchase interface.

93. “Dollar General Extends Tender Offer to Acquire Family Dollar to December 31, 2014,” Dollar General, October 31, 2014.94. “FY 2014 Annual Report,” Belk, Inc., 2014.

Belk offers convenient coupon downloads and automatically applies the discount at checkout.

Dollar General’s ads are easily browsable and coupons are easily redeemable in-store.



https://investor.shareholder.com/dollar/releasedetail.cfm?ReleaseID=879599

http://www.belk.com/media/pdf/AboutUs/CorporateInformation/FY14AnnualReport.pdf

62November 24, 2014


0 to 100 / The Catch Up Whole Foods

Social media plays a prominent role in Whole Foods’ digital strategy. Virtually every metropolitan area in the U.S. with a store maintains active Twitter and Facebook accounts as well as dedicated pages on the site. This granularity enables hyperlocalized messaging – a feature that is impossible to execute without significant digital investment. The brand’s Facebook page, for example, sports a locations tab that links to active accounts for all nearby stores; only Walmart has accomplished this impressive feat. The brand is highly interactive across social media – with store-level Twitter accounts exchanging ideas with each other and with @WholeFoods. It is the second-most-collaborative brand on Pinterest, with 63 percent of its boards having many contributors. And the brand’s Instagram account frequently re-grams shopper’s photos, irrespective of their status as “influencer.” Despite social media success, this longtime grocery darling is playing catch-up to round out a comprehensive digital strategy. Competition has increased for its high-margin organic food, with traditional grocers, startups, and digital

powerhouses like Amazon all entering the fray.95 The brand is now focused on facilitating grocery delivery nationwide. While other brands took years to build infrastructure, test the service, and expand city by city, Whole Foods has obtained this almost overnight. The brand forged its first collaboration with delivery provider Instacart, which sends dedicated shoppers to Whole Foods and brings both click & collect and one-hour delivery to consumers.96 While being tested in Boston, Massachusetts and Austin, Texas, Whole Foods can potentially extend its reach far beyond that of any competitor by piggybacking on Instacart’s infrastructure, which already provides one-hour delivery to 15 cities. Whole Foods is also keeping up with new developments in mobile payments, as one of the first brands to adopt ApplePay, which has become the mobile payment leader in the United States virtually overnight.97 While not the only Index brand to participate at the onset, it is the only grocer to do so outside of Meijer, keeping the brand ahead of the curve of direct rival Trader Joe’s.98

95. “Victim of Success,” Whole Foods, August 2014.96. “Whole Foods and Instacart Turn Up the Heat in the Delivery Wars,” Fortune, September 2014.97. “In 72 hours, Apple Pay is Already the Wireless Payment Leader in the US,” Engadget, October 2014.98. “Apple Pay,” Apple, October 2014.

As part of the brand’s hyperlocal strategy, its Facebook page links to active Facebook accounts for specific stores.

Whole Foods was the first grocer to collaborate with Instacart in an effort to provide one-hour delivery to its customers nationwide.

Whole Foods is among the ten Big Box brands to accept Apple Pay at launch.



http://www.economist.com/news/business/21610289-peddler-pricey-organic-and-natural-foods-finds-it-has-competition-victim-success

http://www.engadget.com/2014/10/27/apple-pay-leader/

http://www.engadget.com/2014/10/27/apple-pay-leader/

https://www.apple.com/apple-pay/

63November 24, 2014


Exceptional Use of Social Commerce Kmart

Kmart excels in its use of YouTube as a marketing vehicle. The brand exceeds the Index average by tenfold, garnering nearly 59 million views. Its most popular videos “Ship My Pants” and “Show Your Joe” have amassed 21 million and 18 million views, respectively, since launching in 2013. Their standout success makes them the most-viewed videos in the Index and the only ones to surpass the 10-million view mark. Moreover, Kmart maintains four of the top 10 most-viewed videos in the Index. Beyond these metrics, social media plays a significant role in Kmart’s overall digital strategy. Upon reaching the homepage, users are greeted with an autoplay video, currently their popular “Not a Christmas Commercial” ad. After the video plays, users can then browse through a highly organized set of playlists: including tabs titled “hits,” “seasonal,” “fashion,” and “entertain.” The landing page also integrates a live Twitter feed as well as a store locator.

Videos are firmly tied into e-commerce objectives. The “Not a Christmas Commercial” ad is a tongue-in-cheek viral hit with over 4.5 million views to date – not just a simple repurposing of a 30-second spot. The video prompts users to go to Kmart’s website which offers call-to-action links to the Layaway program; it also provides links to the brand’s Facebook, Twitter, and ShopYourWay pages. “Kmart Pay In Store Karaoke Commercial” highlights the brand’s click-and-collect service via a music video that links to Kmart’s shopping portal, its YouTube video “hits” playlist, and more information about Pay-In-Store. Moving past the initial success, Kmart continues to keep the excitement going with follow-up content. The brand has put up an additional 15 videos featuring the ad’s actress in response to the overwhelming buzz and specific comments from social media followers.

Kmart gained extra mileage out of its popular “Not a Christmas Commercial” ad with calls-to-action around shopping and social media.

The brand highlights other shopping capabilities in recent videos, such as its click-and-collect feature called “Pay In Store.”

Kmart’s custom tab autoplays video introduction, followed by robust navigation to dedicated playlists.



64November 24, 2014


Home Depot is one of very few retailers who posts the actual quantity available in-store for any given item.

Inventory Interfaces Home Depot, Toys “R” Us, Dillard’s

Virtual inventory pools give retailers unprecedented ability to track SKU movement and location in a dynamic fashion. By accessing and analyzing real-time inventory data, retailers gain a competitive advantage that allows for better purchasing, pricing and promotion decisions – resulting in improved profitability.99

Select brands are using this information very effectively by directing consumers toward available product or to inform them of an item’s limited supply. Dillard’s used information from their linked inventory, Wish List, and CRM system to provide an email alert saying that only two remained of an item on the user’s wish list, sending a powerful cue to purchase. Mobile apps are proving invaluable to this integrated information pathway. Best Buy’s app lets users toggle between “closest stores” and “immediately available” to direct shoppers toward a store they can pick up their purchase from. Home Depot’s product pages provide a clear list of stores and remaining stock for each item. Selecting a size and color on the product page of Belk’s app leads to an immediate update of that precise item’s remaining stock. However, unlike the other brands mentioned, Belk fails to include a sophisticated inventory interface on its desktop site. On both app and desktop, Toys “R” Us gives a clear and simple list of stores (based on ZIP code) that hold and do not hold the item in question. Notably, the brand goes the extra mile in updating the quantity currently available in the shopper’s “selected store”.

99. “5 Ways Real-Time Inventory Data Improves In-Store Merchandising,” Shopatron Retailer, June 6, 2014.

Toys “R” Us allows customers to check in-store inventory availability based on ZIP code.

Toys “R” Us is one of very few retailers who posts the quantity available for any given item in the cart at the shopper’s “preferred” store.

Though just over half the Index sends email reminders, Dillard’s is one of very few retailers who highlight the actual number of items left in stock – prompting an urgency to purchase before it is sold out.



http://ecommerce.shopatron.com/blog/5-ways-real-time-inventory-data-improves-store-merchandising

65November 24, 2014


Digital First Steps T.J.Maxx

T.J.Maxx came late to e-commerce, picking it back up in September 2013 – 8 years after the failure of its first attempt to go online in 2004. The brand’s reticence to deviate from their strategy is understandable given the incredible sales growth and share price appreciation (3x) over the past five years, while weathering the recession better than most retailers in the business. The key to this success has been a brutally efficient supply chain and a consistent pipeline of fresh inventory. With occasional discounts on highly coveted items, the store has established itself as a destination for deals rather than specific items. For each product, T.J.Maxx places a comparative department store price on both mobile and desktop sites. Keeping prices low motivates shoppers to buy rather than wait for a sale later. The system works to perfection in a brick-and-mortar environment, according to Fortune, but the challenge is to bring this “treasure hunt” mentality into the online space.100

The lack of an expedited checkout option (which half of the Index already offers) is a prominent deficiency when trying to drive a quick convenient purchase. T.J.Maxx’s four-click checkout process is long compared to Amazon’s one-click checkout. Including options like Visa Checkout, MasterPass, or PayPal Checkout could help recreate some of the spontaneity of in-store selection and acquisition. The site assures shoppers that returns are free and easy, in-store or by mail. For this holiday season, the brand is extending its return window to January 23, 2015 for purchases made October through December.

100. “Is T.J. Maxx the Best Retail Store in the Land?,” Fortune. July 24, 2014.

TJX is maximizing use of its Free Shipping, Free Returns offer, making shopping convenient by extending its return window to January 23, 2015 for purchases made October through December.

TJX has been able to maintain relatively strong comp-store sales and margins over the last five years due to frequent opportunistic buys during the height of the U.S. recession and its slow recovery.



http://fortune.com/2014/07/24/t-j-maxx-the-best-retail-store/

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November 24, 2014

Scott Galloway Professor of Marketing, NYU Stern Founder, L2 Professor Galloway founded L2 after developing an algorithm to assess the digital competence of brands. Scott is a Clinical Professor at the NYU Stern School of Business where he teaches brand strategy and digital marketing. In 2012, Professor Galloway was named “One of the World’s 50 Best Business School Professors” by Poets & Quants. He is also the founder of Red Envelope and Prophet Brand Strategy. Scott was elected to the World Economic Forum’s Global Leaders of Tomorrow and has served on the boards of directors of Eddie Bauer (NASDAQ: EBHI), The New York Times Company (NYSE: NYT), Gateway Computer, and UC Berkeley’s Haas School of Business. He received a B.A. from UCLA and an M.B.A. from UC Berkeley.

Maureen Mullen Co-Founder, Head of Research, L2 Maureen leads L2’s research and advisory practice, where she helped develop the Digital IQ Index®. She has benchmarked the digital marketing, e-commerce, and social media efforts of more than 300 brands across pharma, auto, luxury, specialty retail, beauty, and CPG. Maureen also has led digital strategy consulting engagements for a variety of Fortune 1000 clients. Before joining L2, Maureen was with Triage Consulting Group and led managed-care payment review and payment benchmarking projects for hospitals, including UCLA Medical Center, UCSF, and HCA. Maureen has a B.A. in Human Biology from Stanford University and an M.B.A. from NYU Stern.

Jane Thorn Leeson Research Lead, L2 Jane is a research lead at L2, with a focus on Retail. She has spent her career working in finance, beginning with investment banking at Morgan Stanley, followed by 6 plus years in equity research. Prior to joining L2 in 2014 she worked at KeyBanc Capital Markets, where she covered Specialty Retail, Footwear & Accessories companies. She has a B.A. in Economics from Boston University.

Kevin Handerhan Research, L2 Prior to joining L2, Kevin marketed private-label LED solutions for T-Opto and managed sales support at Building Control Systems, Inc. He served on the 2014 Beauty E-Commerce Collective project and contributed to the Digital IQ Index® in Sportswear and Beer verticals. He holds a B.S. in Decision Science from Carnegie Mellon University.

Akpanoluo Etteh Research, L2 Akpanoluo began his career at Yale’s Office of Marketing and Trademark Licensing where he drafted and designed the University’s first Brand Identity Guide. He went on to work at R/GA in the Mobile and Social Platforms Department, writing articles for the company’s internal blog, as well as trend briefs to advise clients on developments and opportunities in technology and advertising. At L2, he has worked on numerous reports and led the 2014 Digital IQ Index® Auto. He holds a Bachelor of Science in Psychology (Behavioral Neuroscience) from Yale University.

Colin Gilbert Research Director, L2 Colin Gilbert joined L2 in 2011. He currently oversees all research across the luxury, drinks, and auto verticals. To date, Colin has authored over 10 reports for L2, including the organization’s first dedicated research on mobile, tablets, and wearables. In addition to this research portfolio, Colin helps cultivate partnerships with industry, ensuring L2 members have access to subject matter experts from leading creative agencies, technology platforms, and media companies. Colin joined L2 with a background in strategic consulting. Previously, he served as a Principal at the Civitas Group in Washington D.C., where he helped establish the firm’s cyber security practice. Colin received a B.A. in History from Stanford University and an M.P.A. from the London School of Economics.

Marielle Gross Art Director, L2 Marielle is L2’s Art Director and manages the Graphic Design team. She has worked at a diverse range of companies from corporate annual report and branding design firms to luxury advertising agencies. Marielle received a B.F.A. from School of Visual Arts.

Nary Han Senior Designer, L2 Nary is a Senior Designer specializing in data visualization, branding and identity. She has experience in areas ranging from motion graphics, interactive and environmental experiences, and graphic design. She has worked in many areas to design, conceive, and execute identities for several clients including Fidelity, Vivo Health & Wellness, and NASDAQ. She graduated with a B.F.A. from Parsons School of Design.

Radhika Patel Graphic Designer, L2 Radhika Patel is a graphic designer who specializes in publication design as well as data visualization. She also has experience in motion graphics, electronic media, experience design, and animation. Radhika received her B.F.A. in Graphic Design from West Virginia University.

Special thanks to: Stasha Rosen, Rachel Kim, Mariah Lamb, Olivia Reaney.



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November 24, 2014

Upcoming Events

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November 25, 2014 · Paris

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BREAKFAST: BEAUTY

November 28, 2014 ·Geneva

BREAKFAST: YEAR IN REVIEW

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