Retail trends 2016

FIVE MUST-KNOW RETAIL TRENDS IN MOBILE AND SOCIAL MARKETING APRIL 2016 Cooper Smith & Nancee Halpin

Growth in smartphone and social media usage is setting the basis for all types of retail marketing trends. In this report, we’ll look at individual trends within mobile and social media. For example, we’ll analyze how devices and platforms are used as consumer touch points for retailers and measure the return on investment of social channels. We’ll also look at how beacons — in-store devices that wirelessly beam promotions to a consumer’s handheld device — are driving shopping interactions on smartphones. We’ll also examine the role of affiliate marketing within retail.

1. S martphones are already the leading consumer touch point for retailers An increase in consumer smartphone usage is having a significant impact on retail marketing trends.

• 60% of US consumers’ time spent interacting with retailers online now occurs on mobile devices, according to comScore. That’s up from 53% two years ago.

Moreover, time spent interacting with retailers via smartphones is growing at a much faster rate than on other devices. Interaction with retailers on smartphones increased 98% between 2013 and 2015. On tablets it increased 55% during the same period, and on desktop it increased just 38%.

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2. Expect an uptick in shopping app usage US consumers are spending the majority of their time in shopping apps as opposed to on mobile shopping websites, according to comScore. In response, Apple recently launched a new category in its App Store called “Shopping,” which makes it easier for users to find retailers’ apps. Apps found in this category include those for e-commerce, omni-channel commerce, auctions, price comparison, and product reviews. These apps were previously harder to find since they were folded into the “Lifestyle” section, which also included apps related to dating and nightlife.

• Creating a dedicated section for retail apps is a huge benefit for brands that are looking to boost mobile app engagement, as searching the App Store is the No. 1 way users discover new apps, according to comScore.

Apps are already playing a big role in shopping; 44% of e-commerce time spend occurs in mobile apps, according to data from comScore. Moreover, within mobile, apps are where the majority of time is spent. However, many users still quip that the mobile shopping experience — checkout, in particular — leaves a lot to be desired. Nevertheless, now that there is a dedicated Shopping category for apps, we could see the higher-rated shopping apps rise to the top of the rankings.

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3. Beacons are finally going mainstream this holiday season Many beacon programs went mainstream during the holidays this year. Beacons are small, wireless devices that allow brands and retailers to push mobile coupons and promotions to shoppers’ smartphones based on their physical locations. The rise of mobile shopping apps has served as a proxy for proximity-based marketing systems such as beacons. Usage of shopping apps on tablets and smartphones increased 174% in 2014 — more than any other app category, according to app analytics company Flurry. Merchant adoption during such a critical time of the year for retail shows just how useful the devices are proving themselves to be.

In terms of types of retailers that are benefiting from beacons, those that sell consumer packaged goods (CPGs) are getting the biggest lift. The top five categories benefiting from beacons are: • Deli items • Over-the-counter medication • Wine & spirits • Nonalcoholic beverages • Snacks Beacon technology could specifically benefit shoppers looking for these types of products because CPGs are bought frequently and regularly. Thus, brands using beacons to push promotions and coupons for CPGs would likely see the highest engagement, as shoppers are always looking to save on these oft-purchased items.

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4. Facebook is driving social commerce actions Facebook is continually building out its e-commerce capabilities, and it is important to note that a lot of these new features are optimized to work exclusively on mobile devices. Mobile commerce currently accounts for only about 15% of total e-commerce purchases in the US, but Facebook’s massive user base may give it the potential to drive this even further.

Three in 10 purchase conversions from Facebook ads between January 2015 and May 2015 took place on a mobile device. That’s a 35% increase in purchases through this channel over the previous quarter on Facebook’s standard mobile app. This bodes well for Messenger, which is also moving toward building out its m-commerce and business-tocustomer interactions.

• Facebook recently started letting retailers and users chat through the app as part of their plan to bring a “one-tap purchase” experience to Messenger. Facebook has noted that it doesn’t plan on charging a fee for transactions. Rather, it plans on building out the number of businesses using the app and payments feature by making it free, and then monetizing the service with ads.

• Eventually, we envision Messenger facilitating transactions within chats. This form of “social commerce” may reduce some of the friction associated with m-commerce purchases. It will also help brands stay connected with users from the beginning of their transaction through delivery and beyond.

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5. M ainstream media and celebrities are making affiliate marketing popular again Many people associate affiliate marketing with the selling of diet pills, teeth whiteners, and other controversial products, but major retailers and publishers are coming together to use performance-based marketing to drive sales of all sorts of products — from electronics to apparel.

• Affiliate marketing now drives as many e-commerce orders in the US as email.

Both channels currently account for 16% of US e-commerce orders, according to marketing firm Custora.

• It’s also growing at a time when other referral channels, such as organic search and direct traffic, are seeing their share decline. Affiliate marketing jumped from 13% of US e-commerce orders in 2014 to 16% in 2015, while organic search declined from 24% to 21%, and direct traffic declined from 23% to 19%.

The growth in affiliate marketing is driven largely by two factors: 1. Mainstream media publishers are taking on a larger role in affiliate marketing, as they look for supplementary sources of income to hedge against the sometimes volatile digital ad pricing model. The 1,000 largest online publishers per Alexa rankings are either doing affiliate marketing now or considering it, according to a major

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affiliate network we spoke with.

2. Earned media, a type of influencer marketing, is growing via social networks.

Some of the most influential accounts on social networks like Facebook and Instagram are individuals, not brands. So social media users with large followings, such as food bloggers and fashion models on platforms like Instagram, are monetizing those accounts via an affiliate model — helping businesses push products to consumers.

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