The State of Retail Marketing- UBM Tech - 2013

The State of

Retail Marketing

An exclusive survey finds today’s digitally empowered consumers
are transforming the retail industry and creating important new
opportunities for innovative companies

Executive Summary
By Alan Joch

Digitally empowered consumers are upending
some tried-and-true business assumptions the
retail industry has relied on for years. As a result,
making the right decisions about how to serve digitally empowered shoppers can mean the difference
between surviving and thriving in today’s market.
Exclusive new research conducted by UBM Tech
and sponsored by Intel documents how retailers are
fundamentally rethinking their go-to-market plans
and finding ways to modernize the front- and backend operations that support these efforts.

Sponsored by

I

t’s no secret that digitally empowered consumers are upending some tried and true business assumptions that the retail
industry has relied on for years. After all, these savvy shoppers are more informed, more engaged in all phases of the
purchasing process, and more enabled, thanks to the latest Web
and mobile resources. So, long before they lay down any cash,
they grab their trusty laptops and smartphones to gather product
information and read online reviews from friends, family and
complete strangers. As a result, they hunt for the best prices,
even when shopping for luxury goods, and they have heightened
expectations about the level of customer service they’re entitled
to get from retailers.
Surprising, though, is what it takes from a strategic and infrastructure standpoint to understand and satisfy these clients. A
new survey entitled, “The State of Retail Marketing,” which was
conducted by UBM Tech and sponsored by Intel, found that many
retailers are fundamentally rethinking their go-to-market plans
and the front- and back-end operations that support these efforts.
For many retailers, making the right decisions about how to serve
digitally empowered shoppers can mean the difference between
surviving and thriving in today’s market.

The State of Retail Marketing
“In a world where I can shop the Web for the lowest
price, the question for a brick-and-mortar store is, ‘How
are you going to compete?’ The answer is: ‘You’d better have
customers who are really, really loyal to you,’” says Laura
Davis-Taylor, senior vice president and managing director
of ShopWork, a BBDO Proximity domain practice devoted
to cross-channel shopping behavior. “To build loyalty, you
add value to their lives and make them feel [as if] they’re
not just buying a commodity, but that they’re experiencing
something that is important in their world.”

Figure 1. Which of the following are touch points you
use to engage your shoppers/customers?

A Multitouch World

Print media

The practice of customers “showrooming,” instant reviews on
social media sites, and ubiquitous access to product information all mean that retailers must deliver ever higher levels of
customer service and perform flawlessly across all the touch
points at which they interact with customers. Known by
insiders as “omni-channel” marketing, this area is well known
to the participants in “The State of Retail Marketing” survey,
in which companies large and small say they routinely connect with customers across multiple venues.
The reality of omni-channel marketing and sales means
some tough challenges for retailers, especially for organizations with back-end operations that maintain separate
customer data and fulfillment systems for each channel. But
some leading companies also see a way to gain a competitive
advantage. For example, Ahold USA is the $24 billion parent
company of a group of regional supermarkets that manage
nearly 800 stores throughout the Eastern seaboard. Brands
include Giant Food Stores, Martin’s Food Markets, and Stop
&Shop. Ahold also owns the Peapod online grocery and delivery service, and rather than viewing the physical stores and
online operation as separate entities with unique customers,
Ahold looks for natural synergies. “Our strategy is to help the
customer through the key phases of planning, acquiring and
enjoying our products,” says John Dettenwanger Jr., CIO at
Ahold USA. “To do that we need to take that omniview and
not force customers through a single channel.”
This means that in some markets, shoppers can now create
a shopping list online by entering product names or by using
their smartphones to scan the bar codes of items already in
their pantries. These customers may then choose to have
the order delivered to their door or have the items packed
and waiting for pickup at their local supermarket. This year,

Online
76%

Email
73%

In-store
50%

46%

Phone
43%

Mobile
42%

Brochures
34%

Snail mail
22%

Print Catalogs
16%

Print media coupons
15%

Electronic wallet (e.g. NFC-enabled smart phone)
6%
Note: Multiple responses allowed
Data: UBM Tech survey of 159 professionals responsible for
marketing strategy and plans in retail, consumer goods or the
hospitality industry, December 2012
“Omni-channel” is the new normal in retailing, with companies of all
sizes regularly utilizing multiple touch points to engage with customers.

Ahold will take this a step further when it rolls out 50 new
drive-through locations — some in its store parking lots,
others in space it leases from other companies. Online orders

Survey Methodology:
UBM Tech polled 159 executives in a cross-section of retail companies, ranging from e-commerce sites, to physical stores, consumer product and consumer packaged goods organizations, and the hospitality industry. Survey
participants primarily hold positions as senior executives, store managers, marketing directors, division managers
and chief marketing officers.
2

will be filled from a central warehouse and then moved to
these convenient satellite facilities. “You’ll pull in, someone
will put your order in your trunk, and you’ll drive off without
ever getting out of your car,” Dettenwanger explains.
Dettenwanger expects that many customers will choose
each of these options at various times depending on what’s
most convenient on a particular day. “We don’t see them as
Peapod customers or Stop & Shop customers — they’re all
the same customers.”

in today’s competitive environment. A high percentage of
the respondents say they can distinguish new from returning customers, know their buying preferences and see
purchase histories across channels.
The data revealed a notable difference between small
companies (with 100 or fewer employees) and larger ones.
A solid 12 percent more small companies gave themselves
high marks for being able to identify new or returning customers, compared to large companies.

Consumers Expect Rewards

Figure 3. What are your biggest challenges?

Providing high levels of flexible and dependable service is
just one challenge retailers face today. Many technologically savvy customers also expect retailers to recognize and
reward them as they move across sales channels. Executives
in “The State of Retail Marketing” survey understand that
4% 4%
providing a successful customer experience is a requirement
Figure 2. As the retailer of digitally empowered
consumers who are highly engaged, how well do you
do the following?

Increasing margin
57%

Upselling
44%

Maintaining optimal inventory volume
37%

Providing an integrated shopping experience
32%

Know whether they are new or returning customers
4%

74%

22%

Cross selling

Know preferred products, services offers, and the
preferred method to receive them
2%

69%

29%

36%

57%

Enable online or mobile check of in-store product
availability
18%

38%

40%

56%

Provide personalized offers
9%

42%

1 - We do a poor job
3 - We do a good job

49%

2

Retailers are putting greater emphasis than ever on knowing the
likes and dislikes of clients.

3

Maintaining profit margins is an ongoing concern, but now retailers
are also looking for new ways to expand sales and reduce costs.

44%

Provide ways to purchase, track delivery & return via
any channel
4%

Opening new outlets
13%

Maintain a personalized cross-channel history of all
purchases
7%

32%

This is significant because retailers who get this right
often enjoy a competitive advantage if they react with promotions that turn first-time customers into regulars and
make loyal shoppers feel special. Conversely, stores that
underperform in this area risk losing a customer for good.
“What happens, whether it’s conscious or not, is that I,
as a consumer, may get angry when I know I’m a top-tier
shopper for a particular brand, but [the brand doesn’t] know
me,” Davis-Taylor says. “That’s a market opportunity for the
competitors that get there first.”
Likewise, giving shoppers the tools to check inventory
online or via mobile devices can have a big payoff. This is
still an emerging area, according to the survey, with about

44 percent of respondents across large and small companies
saying they perform well in this area. Davis-Taylor notes
that one national discount shoe chain recently announced
it was putting this strategy into action. It unveiled a service
where an in-store shopper who can’t find the right size of
a desired style can scan the bar code on the box and see
whether another store or the e-commerce site has the size in
stock. “That tells me that I’m never going to waste valuable
time in a store and not find the shoes I want,” she explains.
“And that will make me go to that store more [often].”

Survey participants see important bottom-line benefits as
the reward for better serving digitally empowered clients
and breaking down the barriers that separate various sales
channels. Topping the list of business benefits is the desire to
successfully increase profit margins, which the respondents
placed at the top of their list of challenges. Related to this are
difficulties associated with boosting sales through upselling
and cross-selling. Smaller companies in particular were sensitive to upselling challenges, with half of them seeing this
as a major problem versus 35 percent of large companies.
Figure 4. How important are each of the following to
your business?
Immediacy of information – to know what's happening
& when
75%

23%

A unified view of product and inventory data – to see all
inventory wherever it is
4%

34%

28%

1 - Not very important
3 - Very important

64%

2

Retailers are putting greater emphasis on gathering accurate, real-time
information about individual customers, inventories and products.

But the big question for many established retailers is:
What building blocks are required to achieve results like
these? “The State of Retail Marketing” survey found a clear
link between business success and having up-to-date and
4

Budget issues
66%

33%

Difficulty demonstrating return-on-investment
30%

Lack of executive sponsorship
12%

Do not see the value in this type of strategy
7%

Other (please specify)
5%
Budget constraints outweigh technology challenges when it comes
to courting today’s digitally empowered consumers.

62%

A singular view of each customer – to see and track
shopping in store, online, or mobile
8%

Figure 5. What are the roadblocks that keep you from
overcoming these challenges?

Technical integration challenges

The Payoff

2%

comprehensive information about customers and inventories across various touch points.
But survey respondents felt stymied by other challenges,
including tight budgets and technology hurdles.

In particular, respondents cited difficulties selling modernization strategies to key decision makers. Davis-Taylor
sees this playing out in the retailers she meets with. “You’ll
see a marketing guy with the right attitude, but he’s not
empowered by the people at the top,” she observers. “So [the
marketers] either don’t get the funding they need, or they
don’t get the cross-departmental support that’s required. I
have seen many of these projects fail because the necessary
teams aren’t working together.”

An Action Plan
Fortunately, thanks to new technologies and maturing best
practices, it may be easier for some retailers to implement
the necessary support systems for successful cross-channel
marketing. This can also help “change champions” demonstrate a potential ROI that’s attractive enough to sway even
the toughest C-level skeptics. The trick is to focus on both
in-store and back-end operations which, when integrated

effectively, can open up new business opportunities.
The first step is to create a true single operational view
across all sales channels. Ahold is linking together its Peapod
and grocery chain databases into a unified repository. To do
this, Dettenwanger and his staff are turning to middleware
that combines point-of-service (POS) and back-office systems. Also helping are emerging technologies, such as a
new class of IT appliances that house transactional data. “In
the past, I would have had to build a centralized customer
database and create a unifying number to have everything
linked. That’s a big job,” he says. “But now I can have every
piece of transactional data in a memory-resident appliance,
so if a customer scans a bonus card, we can correlate that
with other activities and create a master customer record
on the fly.”
That could be the basis for another new resource designed
for technologically savvy shoppers. Ahold will be rolling out
a new Peapod app with a tool called Guess My Order. “We
married our POS transactional history with the customer
data, so [that] statistically — depending on the day of the
month — we can pretty much predict what you’re going to
buy,” Dettenwanger says. “We can refine the predictions by
letting users edit the lists and use that information to refine
the algorithm.”

they keep close watch on costly out-of-stock and overstock
items, with a significant percentage saying that the costs of
these problems can range as high as a quarter of a million
dollars in their operations.

Plug Cost Leaks

$5,000,000 or more

The second step is to get control of inventory, which the
survey found to be a priority, especially if it gives customers
and sales associates more accurate information and helps
organizations optimize promotions.
Figure 6. Do you have technology systems in place
that allow you to do the following?
Connect better with customers in store by providing
inventory intelligence
73%

Optimize promotions in the store to reflect real-time
inventory and product pricing
56%
Retailers today increasingly see back-office operations as a key
to success.

Better inventory controls can go a long way toward
strengthening the bottom line. Survey participants say
5

Figure 7. How much has inventory distortion (i.e.
out-of-stock merchandise, overstocks) impacted you?
$0; I always have the exact right about of inventory
18%

$1 - $49,999
51%

$50,000 - $249,999
18%

$250,000 - $499,999
9%

$500,000 - $999,999
1%

$1,000,000 - $4,999,999
1%

2%
Gaps in inventory management can be costly, especially when they
result in out-of-stock and overstocked items.

Here, the survey identified clear differences based on
company size: Large companies were more likely to report
higher costs, with 32 percent saying the losses ran between
$50,000 and $249,999. By comparison, only 12 percent of
small companies experienced losses in this range.
Some organizations are using a new strategy to cut down
on these expenses.
A large department store chain recently announced it had
joined the ranks of retailers that are shipping some orders
from individual stores, according to William Kuipers, a
partner at Spaide, Kuipers & Co., a management consulting firm specializing in multichannel retail operations and
fulfillment. “Although it may have a distribution center for
these orders, the company may opt to ship from a store
based on a set of business rules it has in place,” he says. The
benefit for store managers is that they suddenly have a larger

audience than usual. “So I sell my overstock of size small,
pink T-shirts without taking markdowns by exposing them
on the Web,” Kuipers adds.
Enabling these sales are new order-brokering systems
that can track inventories in master distribution centers, as
well as in each store. “The company or each store may set
up rules about when to make inventory visible to help the
system decide which stock to pull from,” he says. “It might
be based on who has the most inventory, who’s closest to
the customer, or other factors.”

Get Closer to Customers
The third step to retail modernization is to use the combination of unified sales channels and better inventory
controls to create targeted marketing programs for key
shoppers. Stores are starting to do this by tracking and harvesting the rich supply of in-store shopping-behavior data.
The survey found that while a majority of the respondents
can track how consumers engage a product, capturing
more granular data, such as how long a consumer’s eye lingers on a message, is still something only a small number
Figure 8. Which of the following are you able to
measure?
How consumers engage a product
57%

How you create a more effective, engaging 1:1
marketing experience
41%

Where a consumer's eye travels when they walk up to
the shelf

of organizations are able to measure currently. Digital
signage teamed with gaze-tracking analytics can document
how long a shopper focuses on a promotion or product.
The best solutions also give retailers insights into the gender and age group of the viewers.
Data like this is essential for developing and presenting
the right messages at the right time. “Gaze-tracking helps
us learn what types of messages people find valuable while
they’re in the store,” Davis-Taylor points out. “If I’m selling
laundry detergent, it’s probably a coupon that will get the
most attention. If I’m selling a video game for kids, the information I want to see more may be reviews by other parents.
You’ve got to understand what the barriers are in peoples’
minds as they are weighing whether to buy a product —
and what’s most likely to tip them into making a purchase.”
Ahold is among the large retail chains that is making a new
commitment to customer data analysis. It recently created an
internal group devoted to data analytics and leveraging the
large volumes of transactional data Ahold collects.
Efforts like this will supplement current strategies for
forging closer relationships with customers. For example,
the organization recently sent out 1.6 million home mailers
to its various grocery store customers, and the vast majority — 1.2 million — were unique, based on the recipient’s
buying preferences. Not only did the consumers receive
offers for products they’re likely to buy, but the stores
promoted items that, from a business standpoint, were
priorities to sell. The key is matching customer needs with
products. “If you get promotions for things you have no
intention of buying, it’s a waste of money and it undermines the credibility of the retailer,” Dettenwanger says.
“It looks like you’re just trying to be opportunistic rather
than helpful to consumers.”

23%

How long a consumer's eye lingers on a message
22%

How you move the consumer from a device (i.e. tablet
on shopping cart) to the shelf
21%

How you move the consumer from digital sign screen
to the shelf
11%
Gathering information about consumers while they’re actively
shopping will help retailers deliver the right messages at the right
time to influence buying behavior.

6

Invest in the Future
The survey participants have clear ideas about how they’ll continue to evolve their operations in the future. PCI compliance,
the underlying controls for securing credit card transactions,
is high on the list. A close second is the desire to implement an
end-to-end solution that integrates sales channels and creates
a unified experience for demanding consumers.
In the end, solutions like these may help in-store locations reclaim business from online sellers and capitalize
on unique benefits that only physical retailers can offer.
“People still crave human interaction and experiences
that are multisensory and engage us emotionally,” DavisTaylor says. “It’s hard for an e-commerce transaction to
create much emotion beyond, ‘This transaction was quick
and it was easy.’ But a visceral emotion can happen in a
physical store when, for example, you smell or taste or
find something that’s fabulous and unexpected. There’s life

Figure 9. Please indicate your level of interest in the
following on a scale of 1 to 3 where 1 is not interested,
and 3 is very interested.
PCI compliance solution to protect transaction data
24%

36%

40%

Shelf display solution to create brand awareness of the
product
34%

31%

35%

Cloud & mobile advertising targeted messages
19%

44%

37%

End-to-end-retail solution that delivers consistency
across channels
25%

36%

39%

that happens in physical stores, and that’s the opportunity
for retailers.”
The takeaways are clear—today’s digitally empowered
consumers are driving forward-thinking retailers to redefine their marketing strategies as they simultaneously
look for ways to closely integrate each of their multiple
sales channels and modernize their front- and back-end
technology environments. Retailers who understand and
address these trends create opportunities for big payoffs,
in the forms of customer loyalty and retention, tighter cost
controls, and more efficient operations. One other trend is
obvious: Given the level of commitment to omni-channel
marketing shown in this survey, the time to act is now.
For more on technology-driven marketing strategies,
visit Digital Canvas Retail, the global community for
retail marketing.

Secure POS touch screen solution
35%

32%

33%

Mobile insta-couponing through mobile devices
45%

25%

30%

Virtual shopping solution to expand in-store & online
inventory
30%

40%

30%

Intelligent consumer trend & inventory matching
solution
25%

41%

34%

About Intel
Intel® (NASDAQ: INTC) is a world leader in computing innovation. The company designs and
builds the essential technologies that serve as the
foundation for the world’s computing devices.
Additional information about Intel® is available at
www.intel.com/pressroom and blogs.intel.com.

AVA vending station giving fresh data for brand
promotion & product placement
35%

44%

21%

Intelligent dispensing solution
30%

40%

30%

Electronic 'customer assistant' for in-store consumers
37%

37%

26%

Shelf compliance to minimize inventory distortion
43%

36%

21%

1 - Not interested
2 - Somewhat interested
3 - Interested/Very Interested
Retailers have clear ideas about how they want evolve their
operations in the future, including a desire for comprehensive,
end-to-end retail solutions.
© 2013 UBM LLC. All rights reserved.

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