Online Xmas Sales: Australian Case Study
In the lead up to Xmas 2012 many traditional bricks and mortar retailers were struggling to cope with forecast web demand and having a website that was capable to handle the volumes of impending traffic. Some retailers have failed to see the online demand and did not have web strategy and would have lost sales as a result.
Online sales continue to surge. In Australia Xmas online sales were predicted to be the highest ever in the nation. During November 2012 online sales grew by 27 per cent over the previous year and 32 points higher than October (Adelaide Advertiser, 8/1/13, p.35) whereas traditional Retail was in decline for the same period. This was replicated during December and the Xmas sales.
What is happening?
There appears to be a shift for the way that people want to interact with retailers. Customers want to be able to shop 24/7, have price transparency and choice (Australian Financial Review 21-26/12/12, p.41). This means that customers won’t necessarily want to visit a retail shop but will want to shop online via PC and mobile. In fact, mobile is in significant growth. In 2010 $155m was bought by mobile, today this has grown to $5.6 billion in Australia alone.
This means that traditional retail strategies must change. While a web site execution is important there is an opportunity to shrink retail space, use technology such a queueless checkout via apps instore (customers have the ability to find a product, buy it via their mobile and leave without having to queue for an hour in the Boxing Day sales) and provide a reason to shop either as an advertising space or for the ‘experience’.
In my business we continue to shrink the retail space down from 250 square meters to 100 today. Part of the reason is to reduce cost so that we can afford to be in the major shopping centres and partly so that we can create ‘billboards’ so that customers see our brand more regularly in places where they shop rather than destination stores.
We are also investing and testing our web site experience to bring more value and choice to our customers with price transparency.
As a result we are on track for a record year online and in traditional retail for our merchandise sales. Citigroup Analyst Craig Woolford said recently “Consumers are not weak, it’s Retail...There are opportunities for retailers to capture more of the retail dollar.”
Steve Kulmar from RetailOasis agrees: “Retail in Australia is not mature, it’s simply stalled in development due to lack of insight, lack of resources and adoption of best practice and not enough time spent on identifying what’s happening, where it’s happening.”
Case Study – Operation Save Xmas
In my business I had a lot of concerns about my merchandise part of my business in the lead up to Xmas. Our buyer had not followed the strategy and had failed to buy suitable product in August and we had failed to attain budget for most of the financial year (July to June in Australia). I had appointed a new manager to run the business for me and tasked her to ‘save Xmas’!
While some new stock was urgently sought and placed into the shops, this alone was not going to help us hit target. We need to find new ways to interact and convince our customers to buy in the lead up to Xmas. So a targeted campaign commenced including:
· Two dedicated Merchandise newsletters sent out during the month of December – the first on December 4 and another for the post Xmas sale on December 27
· 12 days of Xmas promotion with daily deep discounts on one selected product
· Better use of web marketing such as key words, SEM and structure of the site
· Focus on getting the right product to the customer at the right time
· Deep post Xmas sales on 20 items and 10% off store wide
· Free postage within Australia
The first newsletter generated a 27% open rate with 593 items sold (very good for my small merchandise business) with a 48.64% conversion rate. The key item people were buying was Alcoholiszers where people can check that they are under the alcohol limit – very important for the festive season. In the second newsletter after Xmas the open rate was similar at 27% with 650 items sold at a 46.56% conversion rate across the 20 heavily discounted items. This is a really high conversion rate where I normally have 5-10% conversion which suggests that the offers were at the right time at the right price and offer.
Free postage was seen by the customer as a real enticement. It enabled them to buy at the same price as at a Shop without having to leave the comfort of their home. While we ‘lost’ $10 per order in postage, the stock was only handled once and did not need to be displayed on expensive real estate, so we actually ‘saved’ $10 that we gave back to the customer.
The other key learning is that online works and complements bricks and mortar. This activity helped to drive foot traffic into my Shops and we ended up at the end of December at 10% over target meaning that we are exactly half way to achieving our annual target which is a big improvement on the activity for the year thus far.
Having the right product at the right time is essential. Customers will buy in retail if they value the product and experience, trust the retailer and the price is right.
The key learning for me over the Xmas period is that Retail is not dead, but you need to have a robust web strategy to enhance and compliment you retail strategy.
If the offer is right and the price is good people will buy. The key is to enhance the experience and to let customers know what you have on offer and that they can buy 24/7 with transparency and choice on product and pricing.
For me this meant that 20% of my Xmas sales this year were driven online and I attained target by 10%. Without a web strategy I would have missed target by 10%. The web is definitely the difference.
It is interesting to note that even traditional web laggards are getting onboard. David Jones (Australia’s high end retailer) was launched a web site in the past 12 months and for the first time this year actually set a target for Xmas Day sales without a store being open. Web sales (and early Boxing Day specials) were offered online only and the reports were that the sales were good!