Box 2 - Make the Web Work for You

By Anuj Ghaghada, Industry Analyst, Retail Team, Google UK

As retailers gear up for the busiest and most profitable time of the year, the world economy continues to struggle as countries attempt to keep their finances in order and protect themselves from the risks posed by the troubles seen in Greece, Italy and Spain. Consumer confidence has remained low as shoppers tighten their belts and defer purchases as household budgets are squeezed. This inevitably has had an effect on the high street where, in the last year alone, many established retailers have gone into administration including Clintons, Jane Norman and Habitat. On the other hand, others such as John Lewis are posting record sales and double-digit weekly sales growth figures. The fact is, consumers have changed the way that they shop, and those who have adapted their strategies with this in mind have reaped the benefits.

According to the Office of National Statistics consumers in the UK spent £42.1bn in December last year with online sales driving much of the growth (up 16.5% year-on-year) contributing around £7.9bn. Looking at online queries over Q4 for the last 3 years we can see that queries have continued to grow strongly (queries were up 18% year-on-year in 2011) with the peak being Cyber Monday that traditionally falls on the last Monday of November. Interestingly in the last two years, the peak has been less sharp as consumers continue to browse for Christmas gifts over a longer period to get the best deals. Retailers often make the mistake of peaking too early in their online advertising campaigns by running out of budget, or switching them off entirely after Christmas Day. However, this leads them to miss out on the large number of shoppers who are back on their computers searching for Boxing Day deals as seen below.

So what has changed? The three key themes I would strongly recommend retailers to take notice of are:

  1. The emergence of the 'nonline' shopper
  2. The meteoric rise of mobile
  3. Post-Christmas is just as important as pre-Christmas

1. The emergence of the 'nonline' shopper

What we used to call 'colour televisions' have now become 'televisions' and 'cellphones' are more commonly labeled as 'phones'. In the same way, consumers are beginning to distinguish less and less between online shopping and offline shopping. This new breed of 'nonline' shoppers are comfortable shopping wherever they are whether in-store, on a mobile device, or desktop. Never has it been more important than now to offer them a seamless experience regardless of the platform they use. One idea that has seen great success is the 'click and collect' model where consumers can research and reserve an item online and pick it up locally in a nearby store. Argos has been a pioneer in this retail model and now almost half of their £4bn sales come through multi-channel paths. As a result, it has become increasingly more important for retailers to be able to correctly attribute the values of sales to online. Google partnered with Vodafone to show the impact of "Online to store" or O2S. The results showed that for every £1 spent online £1.75 was spent in-store as a result. For pureplay retailers, correct attribution of online activity is just as important and has to extend beyond the last click model. Using an Analytics package, you can see what paths customers take that convert best for you. It maybe that a customer sees your email marketing, considers the purchase and then returns either through search or direct to your site. Considering this more expansive model will help ensure to make sure you are present and relevant at the crucial touch points for your target audience. Christmas has the added challenge to it as consumers generally start their journey looking for gift ideas using very generic terms such as 'christmas gifts for him' or 'dresses' before filtering their search down to often very long-tailed queries for a specific model. It is important for retailers to consider the searches that potential consumers may make further up the purchase funnel and to be present and front of mind.

2. The meteoric rise of mobile

2012 is the year of mobile. Smartphones and tablets have placed the internet in the hands of millions and for 28% of smartphone owners it is their primary access point. Retail queries on desktops have increased by 15% year-to-date while mobile queries are up an astounding 147% with no signs of slowing down. In fact, mobile queries are projected to overtake desktop queries in 2015, which is no surprise when you see the relative growth rates of queries on these platforms.

Mobiles have fundamentally changed the way that consumers shop by empowering them with more information with which to base their purchasing decisions. 28% of smartphone users have purchased something using their mobile and 34% check prices in-store. Smart retailers even use proximity targeting (currently in beta) through Adwords to target consumers who are in a given radius of a competitor's store and who decide to search for a better deal online. With over a third of mobile searches having a local intent, having dedicated mobile campaigns to engage with these consumers with mobile specific calls to action is a must.

Despite this growing trend, 73% of advertisers still do not have a mobile-optimized site, which leads to a frustrating and fruitless experience for consumers if they have to constantly pinch-to-zoom and scroll to navigate to your site. There is a wide range of free tools that can help you evaluate how your site renders on a mobile device, what you need to work on and even partners that can help you develop a mobile site. (For more information go to www.getmo.com). For advertisers that have neither the resource nor time to develop a dedicated mobile site, the incredible rise of tablets presents another opportunity. Tablet users tend to be affluent and use their device simultaneously while watching television or using their phone. They spend on average one and a half hours a day on their device and spend 10-20% more on their orders than the average Internet user. As the graph below shows, while the day is dominated by desktop activity the mornings and evenings have greater mobile and tablet usage.

Last Christmas, mobile searches peaked on Christmas day where they made up 26% of all queries and this year's Christmas period is likely to see even greater activity on mobile devices.

3. Post-Christmas is just as important as pre-Christmas

In 2010, the UK saw some of the worst weather that brought large parts of the country and infrastructure to a grinding halt. Christmas tends to be the few periods where customers normally accept to pay premiums to ensure prompt delivery. One interesting trend from last year was that shoppers held off their gift purchases longer than usual in anticipation of shops discounting heavily. In a self-fulfilling prophecy, retailers were forced to discount heavily in order to drive customers through the door. The key mistake that advertisers make is peaking too early with their online advertising campaigns, and missing out on a significant number of potential customers who are looking for deals after Christmas Day.

Traditionally, searches drop on Christmas Day until the evening when people are back online after overindulging in their Christmas dinners. Last year however, retailers were much more aggressive with John Lewis and Superdrug among a group of retailers who started their clearance sales on Christmas Eve. Given the tough economic conditions faced by all, consumers will continue to be price conscious and will be happy to compromise on delivery times to get bigger discounts. A key recommendation would be to ensure an 'always on' strategy over the Christmas period to ensure that you don't miss out on these customers who continue to shop after the initial Christmas shopping rush has passed.

Despite the difficult conditions across most of Europe, Christmas is geared to be another season full of retailers posting recording-breaking sales figures and consumers out in force on the high street and on eCommerce sites. Make the Web work for you by being present wherever your customer is and delivering the best user experience to keep them coming back again and again.

Anuj Ghaghada - Industry Analyst, Retail Team, Google UK

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