Annual Trends Survey 2013

A move away from online channels and toward physical spaces — e.g., pop-up, outlet and brick-and-mortar stores — to market products is trending for Retail Online integration readers, at least according to this year's Annual Trends Survey. They'll also rely more on television, digital catalogs and social media this year to increase consumer engagement and ultimately grow sales. Their biggest challenge? For the third year in a row, customer acquisition.

For this year's survey, which as in years past focused on cross-channel marketing and promotional integration, we polled all of the Retail Online Integration and ROI Reportsubscribers in January. A total of 224 readers responded.

All About Our Readers
In terms of primary business classification, the majority of our readers identify themselves as brick-and-mortar retailers (33 percent), followed by online merchants (23 percent) and "other" (14 percent), which primarily included retail service providers and consultants.

Much like the findings from last year's survey, Retail Online Integration readers fall into two main types of retail executives: CEOs and high-level marketing professionals. In fact, 40 percent of the respondents are company CEOs and 25 percent are in a marketing position.

The annual revenues for our respondents' companies generally fall into the "less than $1 million" and "$1 million to $4.9 million" range, with 28 percent in the former category, 22 percent in the latter. Nineteen percent of respondents hailed from companies that generated more than $100 million in revenue last year.

Online Channels Decline in Usage
Despite all the talk of today's digitally connected consumers, online marketing channels such as search engine optimization and search engine marketing, display ads, and affiliate programs saw decreases in usage by survey respondents compared to last year. SEO/SEM saw the biggest decline in usage, down from 47.5 percent of respondents in 2012 to just 33.3 percent of respondents in this year's survey; online display ads dropped from 39.2 percent of retailers using them in 2012 to 33.3 percent using them in 2013; and only 22.8 percent of respondents indicated they market via an affiliate program, compared to 27.7 percent who did so last year.

On the flip side — and somewhat surprisingly — physical storefronts appear to be in the midst of a resurgence. Nearly 54 percent of respondents said they market via retail stores, up from 46.7 percent in 2012. Furthermore, the use of pop-up and outlet stores increased this year as well.

Another interesting finding in regards to what marketing channels retailers will be using in 2013 is that television figures to see a more prominent role, with 20.5 percent opting for the medium compared to 16 percent last year. Yet not all visual marketing channels seem to be growing. Retailers use of online video has plateaued for the moment, with 16.8 percent of respondents saying they used it in 2012 compared to just 12.8 percent this year.

Brick-and-Mortar Spending Rises Sharply in 2012
Continuing a theme found throughout the survey, brick-and-mortar stores remain a viable channel for cross-channel retailers. Respondents upped their marketing spend in the channel in 2012 over 2011. Nearly 38 percent of respondents said they spent more than 40 percent of their marketing budget on retail stores in 2012, compared to just 31 percent who did so in 2011.

In addition to increased spending on brick-and-mortar stores, retailers allocated more money to social media in 2012 than the previous year. Close to 13 percent of respondents spent more than 40 percent of their marketing budget on social media in 2012, compared to just 9.5 percent who did so in 2011.

Catalogs, both of the print and digital variety, also saw a larger share of marketers' budgets in 2012. While print catalogs remain relevant, they saw a more modest increase in budget allocation last year. Digital catalogs, on the other hand, appear to have gone mainstream in 2012, with 21.9 percent of respondents spending more than 20 percent of their marketing budget on the channel vs. just 12 percent who did so in 2011.

As for the areas where marketers cut spending last year, direct mail took the biggest hit, followed by tablet-optimized websites and e-commerce sites. The survey revealed that marketers focused more on mobile apps last year than mobile websites, with spending on apps rising.

Maybe 2013 is the Year of Mobile
It is if we're looking at retailers planned spending on the channel this year. Growing consumer adoption of tablets (which are segmented as mobile devices by some retailers and not by others) last year didn't go unnoticed by retailers. Nearly 22 percent of respondents plan to spend more than 20 percent of their marketing budget in 2013 on a tablet app, compared to just 5.2 percent who did so last year. Furthermore, spending on tablet-optimized websites this year will be increasing significantly as well, according to the survey.

Retailers aren't forgetting about smartphones, however. Upwards of 22 percent of retailers will be allocating more than 20 percent of their marketing budget to mobile-optimized websites this year, up from 13.7 percent who did so in 2012. And 14.3 percent of respondents said they'd spend between 40 percent to 100 percent of their marketing budget on mobile apps in 2013, compared to just 2.4 percent who did the same in 2012.

In fact, only two marketing channels — telemarketing and affiliate marketing — are forecast to see a drop in budget allocation this year. That said, three print-based channels — print catalogs, print ads and direct mail — will only be seeing slight increases in marketing dollars this year.

Digital Spending to Rise, Print to Fall
This shouldn't come as a surprise to anyone that's been paying attention to what's going on in the retail industry over the last several years. More expensive and harder-to-attribute print campaigns, from ads in magazines to direct mail pieces have been falling out of favor with retailers, while digital initiatives such as email programs, social media campaigns and optimized websites have become more popular.

This year's survey results reflect that industry trend. More respondents (52.9 percent) said they expect to increase their promotional spending on their website than any other channel. A slew of other digital channels also will see increased promotional spending from retailers in 2013, including social media (35.3 percent of respondents), email (31.4 percent), SEO/SEM (26.8 percent) and mobile-optimized websites (23.5 percent).

On the flip side, traditional print channels will be forced to produce more with less in 2013. Close to 23 percent of respondents said they're budgeting less for print ads in 2013, while 21 percent will be cutting their print catalog budget. Direct mail is another area that will see less promotional spending this year, as will traditional marketing vehicles TV and radio.

New Challenges Ahead
While 39 percent of survey respondents feel customer acquisition is the No. 1 challenge their business faces (as it was for the past two years as well), only 4 percent feel customer retention is an issue. However, 11.8 percent of respondents have found competing on price to be a new challenge not to be ignored. This could be attributed to the influx of new retailing models introduced over the last year.

Other challenges respondents will be dealing with in 2013 include adapting retail marketing strategies to direct and online channels, SEO and SEM, and managing multiple marketing channels, which was cited by nearly 4 percent. Interestingly, only 2 percent of survey respondents find showrooming to be a challenge for their business. Respondents also seem to be unphased by issues with website analytics, operations and fulfillment, and database marketing, all of which were under 1 percent. In fact, sustainability (3.3 percent) and social media (2 percent) are greater concerns for retailers this year.

The Staying Power of Social Media
Although the majority of respondents said their primary use of social media is for customer engagement (32.9 percent), 24.3 percent use social platforms to generate sales, up 7 percent from last year. Various trends over the last year, including the growth in popularity of visual social platforms like Pinterest and Instagram as well as social gifting solutions, have helped retailers attain a new level of customer engagement and loyalty.

Less than 4 percent of respondents said the primary goal of their social media program is customer acquisition (3.9 percent), the same percentage that cited customer service. One of the more surprising findings is that even with multiple social platforms available, 9 percent of respondents still don't have a social media strategy.

Mobile Strategy?
Despite the fact that nearly 22 percent of respondents plan to spend more than 20 percent of their marketing budget on tablet apps this year, 37 percent of respondents don't have a mobile marketing strategy in place. Twenty-five percent of respondents said generating sales is the primary goal of their mobile marketing program, followed by consumer engagement (10.5 percent), driving web traffic (9.9 percent) and driving store traffic (9.9 percent). Mobile devices have now surpassed desktop PCs as the preferred way consumers shop on retailers' websites.