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GSI Commerce provides ecommerce and interactive marketing services to brands and retailers. Fiona Dias, executive vice president, strategy and marketing, spoke with eMarketer’s Tobi Elkin about retailers’ prospects for the holiday shopping season.
eMarketer: What is your outlook for the upcoming online holiday shopping season?
The consumer psyche looks like the stock market right now—people are happy, people are sad, they’re happy, they’re sad. It’s an incredibly volatile period for retail overall. The June results were disappointing. My outlook is very cloudy.
Online, we continue to be a very lucky industry. A recent Shop.org study based on a number of different companies indicated that, on average, the growth was 15%. I don’t know if that will hold up throughout the whole year, but certainly now we’re seeing online continues to be much stronger than the retail stores.
eMarketer: Do you think online shopping behavior and attitudes will be different this year?
Dias: In terms of consumer psyche, people are still focused on value.
eMarketer: Will consumers make greater use of certain online shopping strategies or different types of websites?
Dias: The three big trends that we see revolve around social, mobile and the private sales space. Those are growth areas. On the social side, two years ago every retailer discovered Facebook and had a Facebook page. Now they’re starting to integrate the “like” button on their pages, so they’re getting a little savvier about how to use it. It’s still a bit of a mystery as to how to monetize Facebook. Maybe retailers are collecting a few email addresses and a zillion fans but I’m not sure what that means exactly.
eMarketer: How do you see flash sales figuring into the holiday period?
Dias: They are enormously powerful tools. In the retail space, Groupon and LivingSocial offer limited-time deals in specific areas. They work because urgency has always worked online. When you set up urgency online, you drive conversion. If you offer me something that’s relevant to me, I’m more likely to buy. By making it local, it’s that much more relevant. These things also have a social aspect: I can invite 10 friends to take advantage of an offer with me.
eMarketer: More consumers are shopping online on Black Friday, what are the implications for large brick-and-mortar retailers?
Dias: It’s going to get sort of ridiculous. A lot of retailers are doing their Christmas in July specials online and off. The Black Friday concept is becoming a permanent state of mind—Black Friday is going to be any Friday and Cyber Monday is any Monday.
For the holiday season, the earliest retailers start to make noise around Halloween. So by the time Black Friday comes around, the most savvy shoppers have already taken advantage of Black Friday–like prices and Cyber Monday–like prices a good month ahead of time. The really smart customers don’t wait until Black Friday. All the best specials are on Thanksgiving Day anyway. Retailers start at 6:00 a.m. on Thanksgiving Day. The message to the consumer is “Go early!” and don’t wait until Black Friday or Cyber Monday.
eMarketer: Will retailers change their mix of online marketing channels this holiday season?
Dias: There’s an increase in digital marketing. A lot of the money that used to go to TV and radio ads is now flooding into the digital space. The trend will continue in spades because online media is so accountable and measurable.
There’s a lot of work being done in the database area. Retailers are following behavior patterns and past purchases to come up with relevant email messages. We’re seeing more targeted email strategies. I’m seeing retailers spend less in paid search and invest more in search engine optimization.
eMarketer: What effect will mobile shopping have this holiday season?
Dias: It depends on the retailer. For example, eBay expects to see a billion and a half dollars come through its mobile commerce channel in 2010. Mobile is perfect for the flash and private sales space because you’re not always sitting at your desk in the six hours that the flash sale is going on.
Certain categories of business and certain retailers love mobile commerce apps. There are other retailers that are selling high-ticket items that don’t work as well. It doesn’t make sense to buy a TV set based on a tiny little image on a mobile screen.
eMarketer: What role will Facebook and Twitter play in retailers’ holiday marketing strategies?
Dias: Facebook and Twitter are engagement tools. I’m much more intrigued with Twitter. With Twitter, retailers can do marketing, customer service, sales channel updates, flash sales. Sales associates are helping answer customers’ questions using Twitter. Retailers can tweet sales and promotions and get some very nice revenue during the period of that sale. Twitter offers a lot of flexibility.
eMarketer: What should retailers be doing now to prepare for the online holiday shopping season?
Dias: We tell retailers they need to have a contingency plan. So if the trend looks positive, you know how to get more inventory quickly. Conversely, if it’s not looking good, you have to come up with contingency plans to offer promotions to get rid of excess inventory. We tell people that they can’t have just one plan.
Retailers just need to learn that it’s probably not a good thing to run out of inventory. What might happen with consumers, and this is speculative, is that they may want to shop earlier because if inventories are lean, there may be nothing left by the time they get around to shopping on, say, December 21.
eMarketer: Should the economy worsen, what will retailers do to be competitive?
Dias: I don’t think we’ll ever see those 70%- to 75%-off sales again like we did in 2008. Retailers are more conservative and aren’t going to have too much excess inventory. Retailers and brands have trained their boards and Wall Street that they may not see as much in the way of revenue growth, but they’re going see more margin growth. They’re chasing margin growth at the expense of revenue growth. Retailers aren’t going to change that strategy. They’ll grow sales some but they’ll do it with 20% to 25% discounts, not 75% discounts.
The full version of this interview is available here, to eMarketer Total Access clients only. Every day they have access to new interviews with digital marketing leaders and trendsetting entrepreneurs.
Check out today’s other article, “Social Networking Doubles Among Boomers and Seniors.”
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