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The Halo Effect Stephanie Cegielski, Vice President, Public Relations ICSC
The Mall is Dying Can Retail Recover? Online is killing retail THE RETAIL APOCALYPSE 2 5 % Record store closings o f m a l l s t o c l o s e i n n e x t 5 y e a r s
Major global trends impacting our industry Technology Omnichannel E-Commerce Customer Engagement Demographics Baby Boomers Millennials Urban Density Consumer Personalization Experience Value
Physical vs Online Sales
Omnichannel is coming to life Nearly 75% of multi-channel retailers are more profitable than their pureplay counterparts Stated Purpose for Most Recent VC Funding Round Survey of 13 VC-backed “evolved pureplay” retailers 31% Actual Stores Planned Used for Store Expansion Used for Other Expenses 2016 2017 2022 69% 5 25 100
The Halo Effect
Web traffic goes up in markets after retailer opens a new physical store 45% 36% Emerging Established Retailers Retailers On average , the share 27% of web traffic within a specific market when a new store opens. Emerging brands (less than 10 years old) see, on average, a 32 percent climb in their share of web traffic when a new store opens, and established brands enjoy a 27 percent bump in their share of web traffic.
Most store openings result in higher share of web traffic 86% 78% Increase in traffic Increase in traffic Emerging Retailers Established Retailers The vast majority of the time, 86 For established brands there is a percent , emerging brands see at lift in web traffic 78 percent of least some boost after opening at the time. least one new store in a specific market.
Out of sight…out of mind The share of web traffic within the market goes down when a retailer closes a store The greater the proportion of stores closed in a market, the greater the decline in the share of web traffic in the markets where the retailer operates stores.
Brand Health
The more stores per capita in a market, the higher the awareness of that retailer 100% 83% in awareness when a retailer grows from 1 store per 3M population 75% Awareness of retailer to 1 store per 1M A clear trend emerges for awareness of a retailer based on number of stores per 50% capita. The lower the population count per store, the higher the awareness of that 25% retailer. 0% 0 2,000,000 4,000,000 6,000,000 8,000,000 Population per physical store in a market
The Omnichannel Shopper
In markets where stores are present, more shoppers have shopped in stores than online only Consumers still prefer to shop in a Shopping Behavior: All Tested Retailers physical store if they are able to do so. In tested markets with physical stores present, more than half of respondents have only shopped in the physical store . In markets where stores are present, 84% of respondents have shopped in the store while 16% have shopped online only.
Who’s your shopper? Omni-channel Shoppers Physical Store Only Online Only Shoppers Shoppers 19% Generations 16% 18% Millennials 36% 50% 49% make up half of omni- 28% 27% 37% channel shoppers. 8% 6% 6% Household Income 23% 22% 22% More than half of omni-channel shoppers have an annual income of 15% over $50,000 . Of shoppers with 48% 48% 14% 14% 42% an annual income of at least $100,000, 89 percent shop in- store only or 20% 16% 16% omni-channel.
The importance of physical stores holds true for Millennials across both emerging and established retailers Emerging Brands (Millennials) Established Brands (Millennials)
Expert Recommendations
Five must-do’s for superior stores 1. Experience and engagement 1 Retailers must compete for consumers’ attention. Many are already enhancing the in-store experience to lure consumers and increase dwell time by investing in F&B offerings and ensuring the 2. Personalization right merchandise mix, for example. 2 Using loyalty programs for example, retailers are capturing individual shoppers’ preferences across multiple points of sale to target consumers’ desire for customization and to maximize providing what is relevant without the noise. 3. Best-in-class curation 3 Customers value a convenient shopping experience with curated and thoughtful product assortments, in an engaging cultural and experiential environment. Retailers must learn the individual preferences of their customers and provide the best merchandising 4. Seamless shopping strategies to keep them coming back. 4 The ultimate goal for retailers is to provide a customer journey across all channels in which there are no barriers between consumers and products and the walls between offline and online shopping come down. 5. Culture of service 5 The core human desire for in-person connections persists. The engagements between shopper and staff should become solutions-oriented interactions where salespeople, with the assistance of in-store technological innovations, are able to provide better service and communication.
Global Perspective
Shopping behavior if a known retailer opens a store near a consumer’s home or workplace Europe Canada Global United States 94% 95% 96% 91% Visit new store 95% 95% 94% 96% 94% 97% 96% 96% 93% 95% 92% 91% Baby Millennials Baby Baby Baby Gen X Millennials Millennials Millennials Gen X Gen X Gen X OPEN Boomers Boomers Boomers Boomers Increase 35% frequency 33% 34% 30% of website visits 42% 35% 29% 34% 28% 41% 39% 26% 35% 28% 29% 39% Baby Baby Baby Baby Millennials Millennials Millennials Millennials Gen X Gen X Gen X Gen X Boomers Boomers Boomers Boomers
Shopping behavior if an unknown retailer opens a store near a consumer’s home or workplace 100% 95% 95% 94% 95% 93% 90% 85% 83% 81% 81% 80% 80% 75% 70% Global Average United States Canada Europe Visit Store Visit Website OPEN
Consumers who visited both store and website after an unknown retailer opens near home or workplace
Methodology
Methodology • From February 1 to May 23, 2018, an ICSC survey, conducted by the strategy and research firm Alexander Babbage, tracked retail web traffic and consumer brand awareness among emerging and established brands. • The web traffic analysis included retailers that opened or closed a total of 804 stores, with an estimated 18.6 million square feet of gross leasable area, in 145 markets covering a population of approximately 222 million residents. • For each store opening, a five-week buffer was set around the opening date, and the 13 weeks before and after the buffer were analyzed. For each store closing, share of web traffic was analyzed in the 13 weeks before and after the quarter in which the store closed. • The analysis of consumer perceptions, including approximately 4,200 respondents, compared results from a national benchmark (created from 21 retailers with 9,516 stores across the United States) to a subset of 923 stores in 10 markets where those retailers specifically had at least one store.
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