2 | Bain Retail Holiday Newsletter 20182019 Issue #4 | Bain & Company, Inc.
Store foot traffc is up this season. The number of store shoppers visiting the 10 major retailers we
tracked with the help of Placer.ai climbed 1.4% between November 1 and December 11, compared with
the year-earlier period. Traffc is also up 3.6% from a year earlier at the 900 shopping centers, outlets
and malls that we tracked. This growth was most pronounced for higher-end A- and B-grade malls,
where traffc grew 4.8% during this period. Lower-end C- and D-grade malls saw a 0.2% decrease.1
Online sales continue to soar. Sales through websites increased 16.4% between November 1 and De-
cember 6, compared with the same period last year, according to Adobe Analytics. Sales were lifted
by slightly higher web traffc, as well as increases in conversion rates and basket sizes. Retailers con-
verted website visits into sales at an 8% higher rate in key gift categories in November than a year
earlier (up 91 basis points from 11.4% last year), according to our analysis of data from online data
frm Jumpshot. Conversion rates increased the most in the toys and games category (see Figure 1).
On the mobile front, more shoppers are turning to apps for holiday shopping. The number of daily
average users for the top 50 Android apps in retail rose 14% between November 1 and December 11,
compared with last year, according to data from market-intelligence frm SimilarWeb.
Marketing to the 2018 holiday shopper
It’s a chilly Monday in Boston, and working mom Abby is scrolling through Instagram to pass the
time as she waits for the train to take her to the offce. She smiles as she taps through a friend’s fun-
Growth in website conversion rates from November 2017 to November 2018
Share of website interactions
Notes: Conversion rates reflect percentage of interactions that resulted in purchase; interactions refer to site visitors who viewed a product page or performed an
onsite search; width of bars indicates each category’s share of website interactions; analysis based on data from 10 major retailers in each category
Sources: Jumpshot; Bain analysis
Figure 1: Online conversion rates for key gift categories have grown an average of 8% since last year
3 | Bain Retail Holiday Newsletter 20182019 Issue #4 | Bain & Company, Inc.
ny Instagram “story”—a short series of annotated photos and videos—about tacky Christmas sweaters.
Before she moves on to the next story, one about a new book from her favorite author, she spots a story
from a specialty retailer where she frequently shops. It highlights top gift ideas, including several
products she has been browsing in recent weeks, such as French candles and cashmere pajamas. The
next item, a classic black dress, is intriguing enough to prompt her to visit the retailer’s site. When
the site launches, she sees that the dress is available for pickup in her size at a store a few blocks
away. She puts it on hold and decides to pop over during lunch. She then checks her email and while
reading an article, clicks a link to an embedded holiday video. Before the video loads, she watches a
15-second advertisement from a retailer whose website she visited yesterday. As she gets to the offce,
she receives email confrmation of her noon dressing room slot, with a note that the retailer will also
provide shoes in her size and some accessories to try on with the dress.
This is marketing today. This season, most retailers will be using their holiday marketing budgets to
target potential shoppers wherever they are, whether they are reading the news on their phones or
watching videos on social media. However, tomorrow’s industry leaders are going further to retain
new customers, deepen existing relationships and build the data infrastructure that will power their
marketing decisions for holiday seasons to come.
TV advertising is still king, but digital is ramping up
Retail media spending has declined 1.6% a year, on average, from 2014 to 2017, even as sales rose
3.8% (see Figure 2). And while overall fourth-quarter retail media spending has declined 0.2% annually,
consumers are right to feel inundated with holiday ads—media spending in the fourth quarter exceeded
quarterly spending for the rest of the year by an average of 32% from 2014 to 2017, while sales rose 15%.
We forecast this year’s fourth-quarter media spending to outpace last year’s by 3%, based on spending
increases from a sample of retailers we tracked with the market-intelligence frm Numerator.
Retailers that sell products in popular gift categories, such as consumer electronics and apparel,
experience fourth-quarter sales surges and tend to boost their fourth-quarter media spending most
(see Figure 3). Amazon also ratchets up media spending during the holiday months to draw Prime
members, who increase their monthly spending by more than 50% (see ”Is Amazon Primed to Conquer
Christmas Again”). In contrast, home improvement and convenience stores, which serve immediate
needs, do not experience the same revenue spikes and keep their media spending more consistent
While retailers typically increase their media spending during the fourth quarter, their preferred
channels are evolving. Television advertising has historically been the promotional medium of choice
for retailers, especially during the holidays. From 2014 to 2017, TV ad purchases made up 41% of retail
media spending during the fourth quarter, up from 36% during the frst three quarters of the year.
But retailers have been gradually shifting away from TV, cutting holiday spending 3% a year during
that time period. The mix shifted most aggressively in 2017, when digital channels captured an addi-
tional 8.6 percentage points of retail holiday media spending.
4 | Bain Retail Holiday Newsletter 20182019 Issue #4 | Bain & Company, Inc.
Notes: Bubble size based on US sales by NAICS category in the fourth quarter of 2017; Amazon bubble size reflects estimated gross merchandise value; revenue
and media spending growth is based on data from 21 retailers
Sources: Kantar Media; JPMorgan; US Census Bureau; Bain analysis。。。
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