Alongside the overwhelmingly positive industry news about the performance of the holiday season, the vast majority of you across our 300+ client base are reporting good to great holiday results, with only a few exceptions. This applies across most categories and company life stages, as we reported earlier in the season. The only category with hints of weakness is the older women’s apparel category, perhaps due to the changing mindset and styles of the older consumer to a younger point of view. We have read every holiday press release, and here are the highlights that stand out to us:
- Retail sales from 11/1 to Christmas Eve increased 5.1% according to Mastercard SpendingPulse.
- Ecommerce had high double-digit growth- plus 17.8% according to Adobe Analytics and plus 19.1% according to Mastercard.
- By all accounts, the apparel category saw the highest level of growth with up to 7.9% growth according to Mastercard.
- After reporting declines in store traffic Thanksgiving weekend, visits to stores jumped 58% on 12/23 according to location-data provider Prodco Analytics.
- For the first time smartphones accounted for half of all web traffic, while generating about one-third of the revenue. (source: Adobe Analytics)
- Department stores continue to struggle. In 1985, department stores accounted for 14.5% all retail purchases. That has fallen to 4.3% and it continues to decline. (source: GlobalData Retail)
- The mall vacancy rate hit 8.6% last year, its highest since 2012. (source: Reis, real estate reach firm)
I think we can all agree Amazon is a category all on its own.
- Amazon was 49.1% of ecommerce sales in 2018 compared to 43.5% in 2017. This means Amazon controls nearly 5% of the total U.S. retail market. The second largest online retailer is Ebay with 6.6% of sales. Walmart is only 3.7% for perspective. (source: eMarketer)
- Amazon took an incredible 81% of internet sales against other big box retailers between 12/1 and 12/19, according to Edison Trends, a firm that tracks market share of online retailers.
- The top growing categories for Amazon are Apparel/Accessories, Health/Beauty/Personal Care, and Food & Beverage, with 38-40% YOY growth. (source: eMarketer)
- Interestingly, Amazon is still only 4.1% of all U.S. digital ad spending, compared to 57.7% for Google and Facebook. This is expected to increase to 7% by 2020. (source: eMarketer)
THE CHANGING MARKETING MIX
This year we saw new records for retail direct mail, and we are excited to see so many new, exciting brands in the mail alongside the long-time mailers. For us, it has been a year of validation of the role of DM in the marketing mix, in all forms- from catalogs to folded pieces to shared mail. As our own client base has grown to include as many digitally native retailers as traditional catalogers, the vast difference in our conversations with each client always stands out to me. For traditional catalogers, they continue to try and “de-invest in catalogs” at the same time that online retailers are trying to “de-invest in Facebook.” I think we can all agree that a cross-channel marketing mix is more important than ever.
Looking back on the creative highlights in print in 2018, we have to call-out the success of the new generation of mailers with more story-telling and branding, less item density, fewer pages (especially for fashion), more white space, and anything-but-gloss paper. There is no way to deny the fact that the new 36-page catalog is driving the same (or better!) sales per piece as the more traditional 60+ page catalogs.
SOCIAL MEDIA TRENDS
Over the last few years, we have worked with new clients who have built their businesses on Facebook. For those thinking about de-investing in the Facebook platform, the good news is that Instagram, Twitter, and Pinterest continue to show great promise, with only some limitations around audience scale. At the same time that CPCs and CPMs dropped for Instagram (down 19-21% QOQ), click through rates are up almost 9%. (source: AdStage Paid Media Benchmark Report) At the same time, Facebook’s prices continue to rise while CTRs dropped 35.7% between Q2 and Q3 2018 (same source). On the other hand, like Instagram, Twitter is seeing declines in CPCs and CPMs while CTRs are improving. Pinterest is also showing strong early results. Regardless of all these trends, we know one thing for certain: clients who heavily invest in other marketing channels in addition to DM have higher response rates when they do reach the mailbox.
LOOKING AHEAD TO HOLIDAY 2019
We are already getting asked about the shorter holiday season ahead in 2019. The short answer is that holiday sales will likely condense rather than fall short but here is our advice to be conservative: each weekend has a sales tally and each weekday an average sales per day. Consider the number of weekend days and weekday days that are removed, and estimate that X% of the demand on those fewer days could be lost, to be conservative. With this question also comes the timing of promotions. There is no reason to believe we won’t see promos start in early November just as we have for the last few years. There are also no indications the level of promotional activity is going away, though better sell-through and inventory planning means less items for mark-downs which could be favorable for margins.
Finally, don’t miss our Belardi Wong 2019 Annual Marketing Summit in Napa. We have an incredible speaker roster and an unparalleled group of industry marketers joining us. Please look for the registration link for this invitation-only event starting next week. We’d love to see you there.
As always, we are forever grateful to have such an amazing group of clients and industry leaders, and we look forward to helping you make 2019 more successful than ever.