© 2015 eMarketer Inc.
Omnichannel Retail—Seven
Trends in 2015
Yory Wurmser
Retail Analyst
May 14, 2015
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Agenda
 What is the state of omnichannel?
 Are physical stores losing their importance?
 How are consumers using their phones to shop?
 Will location-based services like beacons change the
retail world this year?
 How are retailers using personalization to help attract
shoppers?

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State of Omnichannel

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Consumers are already living an omnichannel life

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Omnichannel is
intrinsic to how
most US
Internet users
shop

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In some product
categories, more
than half of US
internet users
have mixed
online and
offline shopping

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But retailers still lag behind consumers

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Only 5% of US
retailers in a
2014 survey
said they had
executed
on most of their
omnichannel
strategy

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Seven Trends that Will
Drive Omnichannel in 2015

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Trend #1: Physical Stores
Retain Their Mojo

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Foot traffic is down in retail stores
7.1% drop
in holiday season foot traffic in the US*
* November 30, 2014, to January 3, 2015, compared with same time period in 2013, as measured by RetailNext

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… and ecommerce sales do represent a growing
portion of retail sales
 US retail ecommerce
sales will grow by
$43.4 billion in 2015
 US retail ecommerce
sales growth will be
14.2% in 2015

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But physical stores still dominate for sales
generation
 Total US retail sales
will grow by
$173 billion in 2015
 75% of the growth in
total retail sales will
come from offline

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The in-store
experience
continues to be
the most important
channel for digital
shoppers when
making
a purchase

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Pure-play ecommerce companies are finding
benefits in a physical store presence
“The world has become
lonelier through
technology and through
urbanization. Having a
great human one-to-one
experience is unique
these days.”
—Andy Dunn, CEO and
founder of Bonobos
“We did not predict just
how much promise
physical stores would
have for our business
from a profit perspective.”
—Jennifer Fleiss, co-founder
and head of business
development at
Rent the Runway

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Even Amazon is looking into ways to
approximate the brick-and-mortar experience
 Amazon locker
 Pop-up store in San
Francisco
 Refitted food truck selling
Kindles
 Same-day delivery
 Firefly visual-search tool
Source: @emilysteel, twitter via HuffingtonPost

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Trend #2: Consumers Want
Flexibility in Fulfillment

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Consumers want flexibility
“ One of the things we’re always trying to do at Barnes &
Noble is serve our customers in ways in which they want
to be served, in ways in which they’d like to consume
content. In the book world we’re used to dealing with not
just channels but formats, so the point is: We want to
mix and match those channels and formats so
that we can find the right customer experience
where someone’s going to go, ‘Oh, that’s
perfect.’
—Jaime Carey, chief merchandising officer at Barnes & Noble

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And at the same
time, US internet
users show strong
interest in a range
of fulfillment
options

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Stores can play
a central role in
enabling quicker
and cheaper
online fulfillment
through
‘distributive
fulfillment’
Image source: Shopatron
Online Order
Order management system

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Majority of consumers have used in-store pickup
70%
of online shoppers say that they have used buy online, pickup in
store services*
Source: Forrester via Internet Retailer

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Trend #3: The Smartphone
Is the New Retail Hub

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1.6% of total US retail sales in 2015 will be made
directly from mobile devices
 Mcommerce will
grow 32.2% year
over year in 2015
 Mcommerce will
account for 22%
of ecommerce
sales in 2015
$4.524 trillion
in offline retail sales
$76.79 billion
in mcommerce sales
$252.27 billion in
other ecommerce sales
Source: eMarketer

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Mobile influences a huge share of US retail sales
28% of US retail sales
were influenced by
smartphones in 2014 = $1.0 trillion*
* Deloitte Consulting research

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Mobile’s influence will only increase
“ I absolutely see mobile impacting
80-plus percent of every in-store
purchase over the next few years.
I see mobile becoming the
dominant sales driver over time.”
—Jeff Simpson, director at Deloitte
Consulting

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Smartphones
used mostly
to enhance
the in-store
experience
Leading Uses:
1. Find local store
2. Take a picture of
a product to share
with a friend
3. Search for a coupon
in-store

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Smartphone metrics are up across the board
 Smartphone visits
and orders grew at
twice the rate of
tablet orders and
visits during the
2014 holiday
season*
* on Branding Brand’s platform

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Smartphones are
gaining share of
US retail
mcommerce
sales from
tablets

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Trend #4: Context Is More
Than Location

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Some 86% of
US marketers
polled in 2014
used or
planned to
start using
mobile
location data
in their
marketing

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Location is important, but it works in tandem
with behavioral data
“ Location is a useful trigger, but it’s not
the only one. For me, behavior is by far
the most important one. Knowing that
someone added something to their cart
and didn’t check out is far more
interesting than knowing if they’re near
a store. Location is only a secondary
trigger off of something else,
probably behavioral.”
—Paul Adams, VP of product at Intercom

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Hyper-local
messaging is
set to grow
rapidly
Beacon-related revenues
are expected to rise
nearly 1,000% in 2016

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Current use of beacons is centered on coupons
 Half of beacon-triggered
messages are for coupons
(Source: Shopkick via BI)

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Beacons’ real power is contextualization
“ In the 1.0 approach [to beacons],
retailers used them as another form of
delivering coupons. Brands and
retailers are realizing that where
these devices are really powerful is
in the personal delivery of
information and contextualization.
... I want the store to be tailored to me.”
—Maya Mikhailov, co-founder and CMO at
GPShopper

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For beacons, 2015 will be about resolving four
major challenges:
1. Scaling beacons requires a middleware layer
2. App penetration is low for most retailers
3. Beacons only work with existing customers in stores
4. Marketers lack experience building a notification
strategy that enhances the shopping experience

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Trend #5: Enterprise
Mobile Is on the Rise

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Clienteling apps are transforming sales
Burberry Customer 360
 Customers share shopping history
 Information is piped to iPads held
by sales associates
 In-store customer behavior is
tracked with RFID
Dick’s Sporting Goods
 “Endless aisle” showing range of
options for customers
 Integrated inventory view for
associates

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Enterprise mobile extends expertise to broader
range of associates
“ We’ve been able to take the expertise
of the A associate [the expert], and
give this selling experience via mobile
device to the new associates—what
we would call B, C or D associates.
It’s a win for the retailer and it’s a win
for the customer.”
—Ken Morris, partner and co-founder,
Boston Retail Partners

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Retailers are getting better at providing
information to their associates via mobile
Edgell Knowledge Networks found that:
35% of retailers let associates track and manage orders on their
mobile device
32% of retailers provide associates with customer information
29% of retailers let associates track and manage inventory on
their mobile device
Source: EKN, 2014

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Good service generates sales
31%
Premium in sales from excellent customer service
Source: Edgell Knowledge Network, 2014

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Ultimate expression of digitizing the physical
store turns it into a showroom for online store
 Restoration hardware converted its
stores to design galleries
 Associates with iPads have access to
digital catalog
 Trailing 12-month (TTM) revenue had
20.4% growth (as of Jan. 31, 2015)
 3-year CAGR for revenue is 24.9%

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Trend #6: Data Integration
Underpins Omnichannel

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Digital shoppers
say inventory
visibility at a
physical store is
the most
important
omnichannel
retail capability

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A unified customer view also boosts growth
rates
 Based on McKinsey’s
analysis of big-box stores
with unified analytics
compared with otherwise
similar competitors
without unified
analytics.*
* McKinsey, “Digitizing the Customer Decision Journey,”
June 2014
10%
2%
Without unified
analytics
With unified
analytics

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… but current
systems limit
what many
retailers can
do

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Trend #7: Personalization
Works in Tandem with
Trust

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A majority of
US consumers
value privacy
over relevant
offers

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Loyal
customers
generally
trust the
retailer
already

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Consumers don’t
mind when
purchase data is
used for
personalization

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Consumers love some in-store omnichannel
technologies, but cringe at others
Cool
% of US internet users who rate tech as ‘cool’
 In-app scanner linked to product
reviews: 76%
 Interactive store map with
directions from current location
to searched items: 69%
 Personalized mobile notifications
triggered by in-store location:
44%
Creepy
% of US internet users who rate tech as ‘creepy’
 Facial recognition technology
informing sales associates that
you’re a high-value customer: 75%
 Salesperson greets you by name as
you enter based on mobile device
ID: 74%
 Videos triggered by facial
recognition technology: 73%
Source: RichRelevance 2015

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Use data discreetly to minimize privacy
intrusions
“ People don’t need to know we’re sending them a
message because of where they actually are.
We just need to get them the right messages
at the right time in the right place, so it feels
magical.”
—Jennifer Kasper, group VP for digital/new media and multicultural
marketing at Macy’s

© 2015 eMarketer Inc.
Takeaways
Seven trends will influence omnichannel this year:
1. Brick-and-mortar stores still play the dominant role in retail
2. Consumers expect flexibility in shopping and fulfillment
3. Mobile is the new retail hub
4. Context is more than just location
5. Enterprise mobile is becoming more important
6. Data integration underpins all of omnichannel
7. Personalization is key but requires trust
Final point: Omnichannel is now intrinsic to retail

© 2015 eMarketer Inc.
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Yory Wurmser
Omnichannel Retail—Seven
Trends in 2015
 Omnichannel Trends 2015: Mobile is the New Retail Hub
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