Presented by: U.S. APPAREL RETAILING: DELIVERING A STRONG FINISH Jahnia Sandford Analyst Mary Brett...

Presented by:

U.S. APPAREL RETAILING: DELIVERING A STRONG FINISH

Jahnia SandfordAnalyst

Mary Brett Whitfield

September 2013

Senior Vice President

© Copyright 2013 Kantar Retail

Agenda

– Update on Landscape

– Best-in-Class Mobile Shopping Apps

– Hot Growth Tactics

Presenters



Jahnia Sandford

Analyst

Today’s Presenters and Agenda

3


Agenda

– Update on the Landscape: What’s Required to Deliver a Strong Finish?

• Macro

• Financial

• Seasonal

– Best-in-Class Mobile Shopping Apps– Hot Retailer Growth Tactics

5


Macro Trends Lend FavorabilityBut not all apparel retailers have been able to capitalize

6

• Consumer Confidence• Spending Sentiment• Material Costs• Inflation

• Weather• Strong Prior-Year Performance• Competition• Payroll Tax Increase• Housing Market Rebound

Diverts Discretionary Spending

Source: Conference Board, Kantar Retail ShopperScape®, research and analysis


A Few Retailers Capitalized and Grew at the Top and Bottom

Source: Kantar Retail analysis and company reports 7

1.6% 1.5% 8%

5.6% 3.6% 8%

7.6% 2% | 5% 34%

13.0% 9% | 9% 30%

5.0% 3.6% 18%

4.8% 3.0% 3%

8.0% 3.0% 11%


Top Retailers Not Able to CapitalizeTop and bottom line declines


-7.8% -14.0% -531%

-4.7% -15% | -10% -198%

-14.5% -17% | -12% -201%

-2.9% -5% | -7% -19%

0.5% -0.5% -4%


Apparel’s Leaders Sum up Biggest ChallengesHave needed to be more promotional to drive sales


On Women’s Apparel challenges:

Ronald L. Frasch, President and Chief Merchandising Officer, Saks: “The customer … is very discriminating, and she is moving to where the fashion is and clearly letting us and the brands know that she's not going to buy something if it's not to her liking. So I would say we're probably in the middle stage into this, much more work to be done.”

On Teen Apparel challenges:

Thomas P. Johnson, CEO, Aeropostale: “Clearly, the teen sector is challenged, and I think it's a number of different things. One is the promotional activity is high, which you would think would induce more purchases. But what it basically does is lower everybody's AUR, so that's obviously challenging.”

Robert L. Hanson, CEO and Director ,American Eagle Outfitters: “AEO's women's business had the biggest miss to plan, comping down 9% in the quarter … we saw weakness primarily in core and core fashion styles”

“We believe that fashion always trumps weather.” —Urban Outfitters President and CEO Richard Hayne

“We believe that fashion always trumps weather.” —Urban Outfitters President and CEO Richard Hayne


Seasonal UpdateDifficult spring leads to moderate/lackluster BTS

Source: Kantar Retail ShopperScape®, June 2013 and analysis 10

From a shopper perspective:

–Shoppers narrowed their destination sets

–Still choosing Walmart and Target as top destinations for supplies and apparel

–Season starting earlier and earlier … and the “season” is really all summer

Supplies 61% 36%

Clothing 39% 33%

Where Plan to Shop for BTS Category

Will Shop for BTS Clothing in Summer …

… as I see deals

… as budget allows


Marshalls Turns BTS/C into a Gift Giving Occasion

Source: Kantar Retail research and analysis 11


More Retailers Use Hashtags in BTS Campaigns



Catalog SpreeModern catalog shopping puts retailers toe-to-toe

13Source: Kantar Retail research and analysis

Style and brand take prominence over price


Walmart’s Cyber Monday in AugustLowest prices on back-to-school for one day


Early access for Facebook fans

Also prominent on mobile app homepage in days leading up


New Competition to ConsiderKroger Fashion Essentials and Meijer Style

Source: Kantar Retail store visits, retailer web sites 15

Full-family assortment


Seasonal Recap and Looking Ahead

– Spending sentiment favorable at macro level, but retailers of discretionary goods will need to earn share of wallet

• Those that do will be in a position to drive growth at top and bottom line

– Competition not slowing requiring retailers to be more proactive and innovative

Expect similar environment headed into the holidays

Source: Kantar Retail analysis 16


Agenda


– Best-in-Class Mobile Shopping Applications• Who’s playing?

• Who’s winning among users

• Best-in-class features

– Hot Retailer Growth Tactics

17


Why Discuss Mobile Shopping Apps?142 million shoppers own a smartphone:59% share of mobile market

Kantar Retail ShopperScape®, March 2013, comScore MobiLens, and analysis 18


Use of Retailer Apps on Mobile Growing

19

2012: 7%

2013: 11%

Source: Kantar Retail ShopperScape®, January 2012 and January 2013


Mobile by the Numbers!Retailers setting huge benchmarks

Source: Kantar Retail research, analysis and company reports 20

2011-2102 Y-O-Y mobile sales growth Number of fashion items sold per minute on eBay thru mobile

Portion of 2012 eCommerce sales from mobile

Position of fashion items among other categories based on mobile sales in U.S., U.K. Australia, and France

Portion of 2012 total sales from mobile

Expect 2013 results to eclipse these


What do each of these retailers have in common???


[On the DSW mobile app’s impending launch] “That's one of the most requested thing from our customers … people don't shop on [native iPhone mobile browser] Safari, they shop on an app. They're conditioned to do that because it's more secure and it's easier.”

– Kelly Cook, SVP of Marketing, DSW Inc.


Steady Demand for Tablets Supports Belk Anthropologie on Tablet Play … Smartphone Play Soon

Source: Kantar Retail ShopperScape,®, January 2012 and 2013 22

Upcoming iPhone app launch, after success of the Free People app launch in June ’13, which in in 3 short months achieved more than 80K downloads and a higher sales conversion rate than the brand’s online site

Digital currently the fastest growing business at Belk… ramping up investment in all areas


Who’s Playing?

Source: Kantar Retail research, analysis, and iPhone iTunes app store 23

Last update as of 9/12/13*User ranking based on all iPhone versions to date

Retailer iPhone App Last UpdateUser Ranking*

(out of 5) # of Reviews

Ralph Lauren Ralph Lauren Collection Apr-09-13 3 8,932Sephora Sephora to Go Aug-19-13 3.5 3,232Tory Burch Tory Daily Aug-06-13 4 274JCPenney jcp for iPhone Jun-18-13 2 259Macy's Macy's Aug-23-13 3 6,969Dillard's Dillard's Mar-15-13 3 66Nordstrom Nordstrom Jul-05-13 3 744Saks Saks Fifth Avenue for iPhone Feb-12-13 4 201Sears Sears2go Sep-09-13 2.5 9,780Forever 21 Forever 21 Aug-24-13 4 15,636H&M H&M Jul-02-13 3 160Mango Mango MNG Jun-28-13 2.5 253TOPSHOP TOPSHOP ON THE GO Sep-02-13 2.5 5,172Zara ZARA for iPhone Aug-22-13 4 107Gilt Groupe Gilt - Shop Designer Sales Sep-07-13 3.5 23,044HauteLook HauteLook Aug-27-13 4.5 8,291ideeli ideeli Jun-04-13 3 855Rue la La Rue La La - Shop All Day Aug-09-13 4.5 9,684Zulily zulily Aug-19-13 4.5 9,684Target Target Aug-27-13 3 104,425Walmart Walmart Aug-12-13 3 47,277HSN HSN shop app Aug-14-13 3.5 3,254QVC QVC for iPhone Sep-09-13 3 6,417Amazon Amazon Mobile Aug-14-13 3.5 106,656eBay eBay Jul-02-13 4 205,158Fab Fab.com Sep-09-13 4.5 11,363Mod Cloth ModCloth Aug-19-13 5 2,321Athleta Athleta Feb-06-12 3 243Banana Republic BR Feb-07-13 3 892Bebe bebe Mobile Aug-21-13 3.5 1,864Express EXPRESS May-01-13 4 2,932Free People Free People Aug-02-13 4 53Gap Gap Feb-06-12 2 19,593Old Navy Old Navy Mar-18-13 3 11,466Victoria's Secret Victoria's Secret for iPhone Jul-04-13 3.5 32,328Abercrombie & Fitch Abercrombie & Fitch Aug-06-13 3 4,675American Eagle AE Aug-14-13 2.5 916Delia's dELiA*s eCatalog Apr-08-13 3.5 143Hollister & Co. Hollister Aug-22-13 4 4,168PacSun PacSun Jan-24-13 2.5 256PINK PINK Nation Aug-26-13 3.5 3,630Urban Outfitters UO Jun-27-13 2.5 1,788

Specialty Apparel

Category Specialists

Teen

Department Stores

Apparel at Mass

Fast Fashion

Non-store

Online-only

Flash Sales


ModCloth’s Attention to Detail Aids in the Purchasing Decision

Source: Kantar Retail research, analysis, and retailer iPhone app 24


Gilt and Rue La La Sync Sales to Shoppers’ Schedules


Add sales reminders one-day out

Add sales reminders multiple days out


And these??Giving shoppers other ways to connect in lieu of full mobile store app launch



American Apparel’s Shopping Assistant Syncs all Channels


Augmented Reality Experience

Check-out from device using scanner and PINMust create an

account or sign-in to use full app


International Retailers Apart of U.S. Shoppers’ Routines


Interactive weekly fashion/lifestyle magazine

Singing alarm clock and weather reporter


Kate Spade SaturdayUses pending mobile launch to direct traffic online



Ann Wants to Be Your BFFUses corporate culture to connect with users


If you love the brand so much why not work there…

Allows users to save favorite mantras, dates, trends from the community and career opportunities


lululemon’s Lifestyle ApproachTargeting yogi community


Upcoming classes automatically load when app is opened


Neiman Marcus’ Unique ApproachSells gifts and shoes only (SWAS concept on Mobile)


NM Gifts Today's Shoe

Free expedited deliveryFree gift wrapping


Other Standout Features


One Click Ordering

“Personalization is even more important on mobile because of the more limited screen real estate.”

–Steve Jacobs, CIO, Gilt.com

Personalization

Timing and Overall use of Notifications

Convenience/ Omni-shopping


Apps Eliminate Need to Carry Around Physical Card, Ups Convenience Factor



Retailers Driving Cross-Channel ShoppingPac Sun gives online shoppers 5 reasons to go mobile


PacSun sells its mobile phone app’s uses and benefits to online shoppers

Shopper won’t have to click thru to app stores to find out


Others Enhance the Store Locator Feature



And Some Retailers Highlight other Brands


Though 4-separate apps available, Gap allows users to shop all banners from any of the apps, eliminating the need to download each one

Introduces shoppers to newest banner and growth brand with brief back story

Shows sneak preview of merchandise and app layout


In Targeting Gen Y, Games and Interactivity Take Prominence Over Shopping


6+ different gaming options


Mobile App Recap:

– Have a mobile presence and showcase product whether selling or not! Shoppers are looking

– Mirror shopping at other channels but keep in mind space and time constraints

• Showcase most relevant targeted messages upfront on app to engage immediately

• Mobile app should be easiest shopping platform of all channels, strive for fewest clicks

– Applying CRM insights just as important here as with other channels and mediums

– Focus on practical but “wow” details such as store locator features and virtual wallet

– Market mobile app and its features across other channels, use as competitive differentiator

– Incorporate key store/ online strategies, i.e., exclusives (styles and deals), early access, shops

Fast growing, highly relevant selling channel attractive for retailers and shoppers



Agenda


– Best-in-Class Mobile Shopping Applications– Hot Retailer Growth Tactics

• Partnerships and collaborations

• eCommerce

• In-store

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Recent and Upcoming CollaborationsPopularity not slowing


9.27.139.27.13

12.5.1312.5.13

11.14.1311.14.13

Feb 2014Feb 2014

20142014


Three Signs that Partnerships Are Here to Stay


Extensions and Expansions

Acceleration/ Turn Around

Surprise Opportunities Revealed


eCommerce Newbies

– TJX– Saks Off-fifth

The last of the top value players get in the game


H&M debuted U.S. eCommerce Aug. 1, 2013, simultaneously with mobile phone shopping application

TJX relaunched TJMaxx.com on Sept. 18, 2013


Driving Traffic to StoreOld Navy creates an event around one product


Using the model on other products with higher price points


Retailers Carve Out Space on the Selling FloorInfluences and accommodates a longer stay in store

Source: Kantar Retail store visits, research and analysis 45

Nordstrom Juniors Sitting area

Urban Outfitters Media Bar

Nordstrom Habitant Bar/Café


More Space also Dedicated to Interactivity Fun and enjoyable elements targeted toward Gen Y


Urban Outfitters

Nordstrom


Rack Does Mobile Checkout RightArming the store for an efficient digital checkout process

47Source: Kantar Retail store visits, research and analysis


Cross-Merchandising Evolving, Blurring Department Lines

48Source: Kantar Retail store visits, research and analysis

Making every category relevant to the shopper

Urban Outfitters

Macy’s

Gap


Macy’s Making Impulse a destinationApparel, beauty and shoes today … mens, kids, home/ kitchen next?



Delivering in the Back Half:

― Shoppers are more confident and willing to spend than they were a year ago.

― Each shopping touch point will be important in driving traffic, conversion and return trips. Consistent and thoughtful execution is essential.

― Extending value beyond price by communicating and delivering on shopping experience, exclusivity, brands, and convenience will bode well with shoppers when they make destination decisions.

― Mobile is an important and profitable touch point, especially during holiday where routine browsing and pre-trip planning takes place.

Environment no less challenging but full of opportunities



–Delivering a Strong Finish

– Best-in-Class Mobile Shopping Apps

–Hot Retailer Growth Tactics

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QUESTIONS?Submit questions on Q&A panel on right side of screen


585 S. Front St.Suite 50Columbus, OH 43215

www.kantarretailiq.com

585 S. Front StreetSuite 50Columbus, OH43215

www.kantarretailiq.com

Jahnia Sandford

Analyst

[email protected]

T + 1 614 355 4045



[email protected]

T + 1 614 355 4010

Presented by: U.S. APPAREL RETAILING: DELIVERING A STRONG FINISH Jahnia Sandford Analyst Mary Brett...

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Transcript of Presented by: U.S. APPAREL RETAILING: DELIVERING A STRONG FINISH Jahnia Sandford Analyst Mary Brett...