The Favorite 50
A Special Report Sponsored by
Click on chart to see a list of the Favorite 50.
O reo is America’s favorite cookie. Pizza holds the top spot when it comes to most-loved food. Football gets the nod as the nation’s preferred sporting passion. And in the world of e-commerce, it’s Amazon.com, the granddaddy of the Internet, that claims the coveted customer “favorite” label. In STORES’ latest installment of the Favorite 50, a consumer survey conducted by BIGinsight, Amazon.com retains the top spot for the sixth consecutive year. The e-commerce pure-play powerhouse was cited by 46 percent of the more than 8,700 consumers surveyed as the “most preferred online merchant” for both apparel and non-apparel items. And if Amazon keeps cruising along according to founder and CEO Jeff Bezos’ grand plan, it will be difficult for anyone to challenge that status for the foreseeable future. Amazon.com’s stock is up 397 percent in the last five years, and analysts predict that it has the potential to hit $100 billion in revenue by 2015, 21 years after its founding. To put that in perspective, it took Walmart, the world’s largest retailer, 34 years to hit that mark. Pam Goodfellow, consumer insights director at BIGinsight, notes that the number of survey respondents citing Amazon.com as their site of choice for apparel and non-apparel items rose by one-quarter — from 37 percent to 46 percent — over the last year. “That’s a commanding increase,” she says. Such growth is possible, she says, because “Amazon.com has incredibly loyal shoppers and ... does everything possible to serve their customer — from introducing new product lines, such as their recent move into apparel, to refining personalization and speeding up fulfillment.” Earlier this year Amazon bought Kiva Systems, a company that uses robotics to speed product movement within a warehouse. Walmart.com, eBay.com and BestBuy.com took the next three spots on the Favorite 50 list, reprising last year’s standings. Kohls.com (No. 5) and JCPenney.com (6) swap positions from a year ago. Interestingly, three traditional department store brands — Kohl’s, J.C. Penney and No. 8 Macy’s — appear in the top 10, and Nordstrom moves up five spots to No. 25, suggesting that these retail stalwarts are making significant strides in the quest to serve today’s omni-channel consumer. J.C. Penney’s e-commerce sales remained relatively flat at $1.5 billion, while gross margins decreased. At Kohl’s, e-commerce reached the $1 billion sales mark in fiscal 2011 and was cited by top execs as “a key contributor” to the company’s overall sales performance. Macys.com (which includes bloomingdales.com) and Nordstrom clearly have momentum in the e-commerce arena. Macys.com executives have poured their energy into omni-integration, including site-to-store-to-door delivery — allowing Macy’s to fulfill online orders with store inventory — while Nordstrom has been investing heavily in its online business. Last year the Seattle-based retailer bought HauteLook, which offers temporary deals on designer goods, and earlier this year it made an investment in online men’s apparel brand Bonobos. Nordstrom has also ramped up spending on website navigation tools, expanded selection and began offering free shipping for all online purchases last fall. Seven newcomers appear on the 2012 list of favorites: Ross Stores, Nike, Dillard’s, Hollister, Banana Republic, Fashion Bug and 6PM. Five of the seven are apparel retailers, though each caters to a somewhat different customer demographic. Footwear represents the majority of sales for Nike and 6PM, though both sell apparel as well.
Investing in selling tools
Looking over the Favorite 50 list, it’s clear that the days when books, music and electronics dominated online selling are history. Apparel and footwear, items that alarmists asserted would be a tough sell, are now among the leading items sold online: The category is reported to have eclipsed $30 billion in sales and is expected to grow by double digits over the next decade. Research firm eMarketer estimates that apparel and accessories will grow 20 percent, to $40.9 billion, by the close of this fiscal year.
Goodfellow attributes the success of these segments to a plethora of rich selling tools that include zoom, 360-degree product rotation, fabric/color swatching and virtual fitting rooms. Along with more sophisticated shopping tools, e-commerce retailers across the board are benefitting from expanded free shipping offers and more flexible return policies: In many instances, returns are not only easy, they’re free.
Investments in shopping tools that showcase apparel cannot come soon enough. With Amazon.com’s next target identified as designer apparel — and its go-big-and-spare-no-expense credo finely polished — department and specialty stores are feeling the heat. Amazon.com has already signed on hundreds of contemporary and high-end brands, including Michael Kors, Vivienne Westwood, Catherine Malandrino, Jack Spade and Tracy Reese, and word has it they are continuing to woo well-known brands.
The biggest mover on this year’s list is HSN, which jumps 13 spots to No. 31. For the St. Petersburg, Fla.-based retailer, the lift is likely attributable to what CEO Mindy Grossman describes as a “maniacal focus on digital expansion.” Grossman told STORES earlier this year that recent investments in innovation, personalization and customization have been very important to the success of the business. The linchpin of HSN’s success, Grossman asserts, is its ability to navigate the intersection of content, community and commerce, bringing stories to life in ways that engage the consumer.
WomanWithin.com climbs five spots to No. 17 — evidence of its appeal to plus-size shoppers. The brand, part of Redcats USA’s OneStopPlus Group, recently launched CatView, a new feature on its Woman Within iPhone app that incorporates the digital shopping experience with traditional paper catalogs via mobile. Moreover, the retailer now offers shipping to 90 countries.
Gap’s sleek, functional and user-friendly websites win kudos from industry watchers and online shoppers alike: Gap.com moves up four notches to No. 23 on the Favorite 50 chart, OldNavy.com retains the No. 11 spot and BananaRepublic.com debuts at No. 46.
Behaviors and influence Along with compiling the Favorite 50 listing, BIGinsight provided STORES with some relevant e-commerce data from its semi-annual “Media Behaviors and Influence Survey.” The findings shine a light on consumers’ attitudes and actions regarding e-commerce. Among all adults, 43 percent say they search online for maps/directions regularly. Almost a third (31 percent) search for travel and nearly as many (29 percent) look for restaurants. Rounding out the top five areas of search items are product information/comparative shopping (28 percent) and clothing and shoes (27 percent). Gen Y, defined as those born between 1983 and 1993, is far more inclined to search for online entertainment (50 percent) and movies (46 percent). Gen X (1965-1982) is also more likely than the total pool of respondents to search online for entertainment, movies and tickets for concerts and sporting events, but it’s interesting to note that this demographic is also more apt than others to search for product information and do comparative shopping — a behavior likely tied to their life stage, which involves setting up a home and raising a family. The oldest demographic — those born in 1945 or earlier, and dubbed the Silent Generation — appear to search online with less regularity than other shopper segments, but the disparity is not as great as it might have been just a few years ago. A quarter of the seniors polled say they regularly search for travel, and a third go online in search of maps and directions. Fifteen percent routinely search online for medical information/services, which is nearly on a par with every other generation. What prompts consumers to commence an online search? According to the nearly 25,000 respondents surveyed, the triggers are pretty traditional — with face-to-face communication being the No. 1 driver and magazines, television and reading an article included in the top five. A stand out: 36 percent say coupons sparked an online search.
Goodfellow at BIGinsight points out that coupons have proven to be highly effective sales tools for businesses of all shapes and sizes and the media used to deliver the coupon is not likely to alter the positive response. “Coupons are still very popular and shoppers continue to search every nook and cranny for a deal,” she says. “There are times that consumers will break their routine to take advantage of a good coupon, so it’s not surprising that coupons generate more than a third of online searches.” The percentage of shoppers who research products before purchasing them is considerable: 91 percent regularly or occasionally turn to the Internet to do some investigating before heading out to the store to make a purchase. Among the younger demographics, the percentage of those who research “regularly” or “occasionally” before buying in person or in a store are roughly about the same. Interestingly, among Boomers and the Silent Generation, “occasional” online product research is more common, yet when the “regular” and “occasional” responses are combined it still nets a 90 percent share or better. In short, Internet search is indispensible for today’s shopper — regardless of age. The survey asked shoppers to identify which types of products they researched online before buying in person. Not surprisingly, electronics, apparel and shoes were the “most searched.” What’s more revealing, however, are the products that appear to be bubbling up: More than a quarter are researching food and groceries before buying in person. Why would shoppers research food online? Goodfellow surmises that several factors could be in play. “With so many new labels — think gluten free, vegan, organic, sustainable — shoppers may be trying to better educate themselves before they get to the store. It’s a time-saver,” she says. “It’s also safe to assume that they’re doing their homework on best prices before they head out to the supermarket.” Other notable segments that shoppers are researching include medicines/vitamins/supplements and home improvement items.
Continued growth Earlier this year Forrester Research vice president and principal analyst Sucharita Mulpuru reported that e-commerce sales topped $200 billion in 2011. Sales are projected to rise 12 percent, to $226 billion, this year, with double-digit growth rates likely to continue for the next few years. As mobile devices used to access the Internet and facilitate online shopping continue to proliferate, it doesn’t appear there is any force on the horizon that can idle this engine. The BIG-insight data finds that 58 percent of all shoppers “occasionally” purchase products online; 28 percent “regularly” press the buy button. More than two-thirds, 68 percent, of the Silent Generation report “occasional” online purchases. Among Gen X consumers, 34 percent regularly buy online — likely a function of convenience and trust. This demographic, which grew up with the Internet, is apt to stick with that behavior as it ages — an indicator that growth has the potential to be ongoing.