MARCH 6, 2012
CATEGORY SHIFTING ONLINE E-commerce is a small fraction of total retail sales, but for certain categories Online shopping has reached a level that has retailers re-thinking the space allocated in stores. We know what happened in books and music … and a recent case is how Diapers.com grows while retailers across channels are left wondering where their baby business went. This PULSE reports which categories shoppers will switch from buying in stores to mostly Online -- moving us one step closer to understanding “What is the next category to move out of the store”.
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SOME CATEGORIES WILL SHIFT ONLINE FASTER THAN OTHERS We asked shoppers how likely they are to switch most of their purchases in categories they buy over to the Internet (assuming free shipping and 2-day delivery).
20%-39% CLIMBING SLOWLY
CLEANING AND FOOD & BEVERAGE Oral Care (38%) Cleaning Products (38%) Paper Goods (37%) Candy (33%) Beverages (33%) Alcoholic Beverages (33%) Items to Prepare Meals (31%) Snacks (29%) Breakfast Cereal (28%) Bottled Beverages (26%)
40%-59% NEXT TO CLIMB
HEALTH, BEAUTY AND PET Vitamins/Nutritionals (56%) Skin Care (55%) Cosmetics (52%) Pet Supplies (51%) Hair Care (49%) Men’s Grooming (45%) Wound/Topical Care (42%) OTC Medication (41%) Lip Care (41%)
60%-80% CLIMBING FAST
ELECTRONICS, BABY/KIDS & LUXURY Electronics (80%) Computers/Software (79%) Kids Toys & Games (77%) Handbags (74%; 38%) Home Décor (73%) Jewelry (69%) Fragrance (67%) Clothing (67%) Baby (Clothing: 66%) (Diapers: 64%) (Pers. Care: 62%)
Home Fragrance/Candles (66%) Shoes (65%) Tools & Home Improvement (63%) Outdoor Furniture (61%)
% VERY/SOMEWHAT LIKELY TO SWITCH MOST PURCHASES TO ONLINE (Base: Past Year Category Buyers) Q Assuming free shipping and 2 day delivery, how likely are you to switch most of your purchases in these categories to the Internet? *Single-Choice: Very, Somewhat, Neither Like Nor Unlikely, Not At All Likely
2
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CATEGORY SHIFTING ONLINE | MARCH 6, 2012
CATEGORY FACTORS MAKING THE SHIFT FASTER Categories shifting online faster are generally those where it is easier to browse an exhausting selection from your couch rather than travelling from store to store. The exception are the baby categories where it seems easier for busy parents to order online than go to the store.
DISCRETIONARY PLUS BABY/KIDS Electronics
80%
Computers/Software
79%
Kids Toys & Games
77%
Home Décor
73%
Jewelry
69%
Fragrance
67%
Clothing
67%
Baby - Clothing
66%
Baby - Diapers
64%
Baby - Personal Care
62%
Home Fragrance/Candles
66%
Shoes
65%
Tools & Home Improvement
63%
Outdoor Furniture
61%
Q Assuming free shipping and 2 day delivery, how likely are you to switch most of your purchases in these categories to the Internet? *Single-Choice: Very, Somewhat, Neither Like Nor Unlikely, Not At All Likely
3
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CATEGORY SHIFTING ONLINE | MARCH 6, 2012
CATEGORY FACTORS MAKING THE SHIFT SLOWER These mid-tier categories generally have long purchase cycles with regular replenishment, although OTC and Wound Care are often needed now.
HEALTH, BEAUTY AND PET Vitamins/Nutritionals
56%
Skin Care
55%
Cosmetics
52%
Pet Supplies
51%
Hair Care
49%
Men’s Grooming
45%
Wound/Topical Care
42%
OTC Medication
41%
Lip Care
41%
Q Assuming free shipping and 2 day delivery, how likely are you to switch most of your purchases in these categories to the Internet? *Single-Choice: Very, Somewhat, Neither Like Nor Unlikely, Not At All Likely
4
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CATEGORY SHIFTING ONLINE | MARCH 6, 2012
CATEGORY FACTORS MAKING THE SHIFT SLOWER Categories that are migrating online more slowly have 2 distinguishing features: they have entrenched routines that are part of the weekly shopping trip, or you need them right now… like a candy bar or a bag of chips.
GROCERY CATEGORIES Oral Care
38%
Cleaning Products
38%
Paper Goods
37%
Candy
33%
Beverages
33%
Alcoholic Beverages
33%
Items to Prepare Meals
31%
Snacks
29%
Breakfast Cereal
28%
Bottled Beverages
26%
Q Assuming free shipping and 2 day delivery, how likely are you to switch most of your purchases in these categories to the Internet? *Single-Choice: Very, Somewhat, Neither Like Nor Unlikely, Not At All Likely
5
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CATEGORY SHIFTING ONLINE | MARCH 6, 2012
18-34 YEAR OLDS SHOW US THE (NEAR) FUTURE ONLINE Generational differences are a big factor in how fast purchases of a category will shift Online.
% VERY/SOMEWHAT LIKELY TO SWITCH MOST PURCHASES ONLINE AGE *Largest diffs in each tier Base: Varies By Category Purchasers
»! Younger shoppers, with habits less engrained, are more willing to shift purchases Online and lead the way in 32 of 34 CPG categories tested (all but Fragrance & Lip Care). •! Expect more purchases to shift Online as 18-34 year olds take their “click” shopping preferences into the future, and… •! As more mobile Internet technology like smartphones, apps, and tablets make it easier.
»! Older shoppers, are starting to catch-up Online in... •! Electronics, clothing and home décor – which have been traditionally strong direct-to-consumer categories with catalogues. FOR THE COMPLETE REPORT, PLEASE CONTACT: AMY MARCUS (VP BUSINESS DEVELOPMENT) AT AMARCUS@WSLSTRATEGICRETAIL. COM
18-34
35-54
A
B
C
%
%
%
71 C
58
36
+35
81 BC
66
57
+34
73 C
63
42
+34
85 BC
77 C
63
+22
Pet Supplies
61 C
54
38
+23
Vitamins/Nutritionals
61 C
58
51
+20
Hair Care
57 C
51 C
38
+19
Cosmetics
60 C
52
43
+17
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+%
ELECTRONICS, BABY/KIDS, LUXURY Baby Diapers Jewelry Outdoor Furniture Toys & Games for Kids HEALTH, BEAUTY & PET
CLEANING AND FOOD & BEVERAGE Alcoholic Beverages
44 BC
34 C
22
+22
Breakfast Cereal
39 BC
30 C
17
+22
Bottled Beverages
36 BC
27 C
17
+19
Candy
43 BC
33 C
26
+17
Q Assuming free shipping and 2 day delivery, how likely are you to switch most of your purchases in these categories to the Internet? *Multiple-Choice: Very, Somewhat, Neither Like Nor Unlikely, Not At All Likely
6
55+
PPT Diff* Youngest (-) Oldest Shoppers
CATEGORY SHIFTING ONLINE | MARCH 6, 2012
INSIGHTS TO ACTIVATE Don’t assume. The biggest learning here is to not assume your category will always be in a store because shopping habits are so entrenched. Categories that were presumed to be storebased because shoppers had to touch and feel the goods, have been among the fastest to move online, for example, shoes, clothing, expensive electronics, jewelry and fragrance. In these categories more shoppers have already found it easier to order online and make a return, than to shop the stores. Be prepared. Retailers are watching which categories are moving online and taking the lead to reduce in-store space. This makes it more important for you to help retailers create strong websites that will keep their shoppers in their chain – either the bricks or clicks – rather than lose the sales to Amazon. Link back to retailers. We know from our Buzz to Buy 2.0 report on digital and social media that manufacturer websites are the #1 place shoppers go for product information. It will be important to support link-backs between manufacturer and retailer sites to give shoppers complete product info, and lead to a sale at your key accounts. Stores will be with us for a long, long time. We are not giving up on the store, but now more than ever it needs to be kept interesting and relevant to shoppers who are looking for the easier way to shop. T O T H E A P P E N D I X TA B L E 7 © ALL RIGHTS RESERVED 2012
CATEGORY SHIFTING ONLINE | MARCH 6, 2012
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CONTACT AMY MARCUS @ AMARCUS@WSLSTRATEGICRETAIL.COM FOR QUESTIONS OR ADDITIONAL INFORMATION ABOUT THIS RESEARCH
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