Lessons from the Web: Online Analytics Translate Into In-Store Strategies

In April, research firm eMarketer reported that online sales of apparel and accessories in the U.S. will increase 19.7 percent in 2012, to $40.9 billion. This is the biggest increase of any category in its forecast. So as the American consumer's appetite for bagging clothes online continues to grow, retailers that want to rule the high street as well as the web need to work harder than ever to lure customers into their stores. But many are missing out on additional sales by failing to link in-store merchandising with data about their customers' behavior online.

There are many reasons why a fashion retailer's digital and high-street shops make awkward bedfellows, but chief amongst them has to be the perception of competition between the two. After all, it's not unreasonable for traditional merchandisers to assume that customers who have bought online are less likely to buy in store; if the customer is happy with her online purchase, where's the motivation to visit in person? In truth, however, a boost in online sales need not be bad news for the high street.

Google's own research reveals that 57 percent of apparel shoppers are now searching online for clothes to buy and that four out of every 10 consumers actually prefer to do their research online and then complete their purchase in store. Most important, however, is that regardless of whether they buy online or from the high street, with each purchase a consumer makes, she invests a bit more of herself in the retailer's brand. It is this emotional trigger, coupled with smart merchandising, that can make the difference between the consumer stepping through the door and walking on by.

So how can a merchandiser tap into this relationship between its physical and virtual outlets? It all starts with a close look at data drawn from a retailer's e-commerce site, together with its online marketing campaigns. Effective analysis here can generate valuable insights that a merchandiser can transfer to the shop floor.

Using today's analytics it is possible to obtain graphs on almost any conceivable metric from a retailer's site, so knowing where to start is half the battle. The trick is to get into the mind of the customer and track her online purchasing journey from start to finish, unearthing gems along the way.

Search data: a window on consumer trends
A great place to begin is with Google and the data available from the retailer's search engine marketing (SEM). These campaigns are often managed by search engine marketing agencies that specialize in identifying the retailer's most relevant and popular search terms and manage the retailer's bidding process in order to secure sponsored links at the top of the search listings. This data alone can give merchandisers great insight into what consumers are searching for, both online and on the high street.

This window into "what's hot on the web" has a number of advantages for merchants. First, it is drawn from the wider use of the internet, not from the retailer's own site which, by definition, is a captive audience that is already engaged with that particular brand. Looking beyond existing customers to the wider internet means that trends identified for particular lines of clothing reflect the generic views on the high street, as opposed to those of regular customers who frequently visit the store. These insights should enable merchandisers to better target individuals who are not frequent buyers, thus expanding their customer base.

Second, popular search term data is immediate. It reflects what consumers want right now, enabling merchandisers to react quickly to changing consumer trends, usefully supplementing what can often be rather fuzzy predictions of what is hot this month, or worse, this season. If a spike in search data is seen during the week for a particular brand or style, merchandisers can react by creating window displays or tailoring in store promotions that tap into the demand and drive an increase in sales.

Browsing behavior
Merchandisers know very well that customers often buy more than the product they originally had in mind, and as such have made a science out of creating engaging store layouts and stock displays. But how many are feeding their strategies with data drawn from the behaviour of their online customers?

Examining how customers browse online can provide real depth of insight into how individuals review and compare products before making a buying decision. Even data relating to how a customer chooses to order the products they are viewing online — by highest or lowest price, most popular or recently added, for example — can give clues to the triggers that turn browsers into customers. In the case of maxi dresses, for example, are customers influenced more by price or do they simply want to secure the latest designs and trends? This data can then be fed into the marketing messages that underpin stock displays and the pricing strategies for different collections.

The bottom line: consumers' style desires are the same regardless of whether browsing in a physical store, on a PC at home, or on a smartphone or tablet while traveling. The more a merchandiser can learn about consumer habits, selection criteria and the triggers that compel a shopper to add an item to her basket, the more alluring they can make their high street stores.

Budgeting for analysis
Perhaps the toughest question to answer is "how much budget should a merchandiser commit to data analysis?" Trial and error is the key here, since the effectiveness of these strategies will differ from brand to brand, season to season and retailer to retailer. Tracking sales conversions, both in-store and online, is the key to establishing whether a strategy is working, or whether it should be tweaked, or thrown out entirely. If starting small, be prepared to grow the budget as store sales start to respond to the changes.

The right partner
Crucial to the entire process is finding a trusted specialist partner that knows the retail space and is capable of creatively exploring SEM and site analytics data in an open and collaborative manner. For many merchandisers this will be new territory, so without a collaborative rapport, it will be tough for them to unlock the rich source of information that is available just under the skin of their online stores. Questions should be asked of any SEM firm that is reluctant to engage in this kind of expansive discussion; after all, the objective is to help clients maximize profits from their online activities. Fundamentally, this task is no different at all.

Ian Harris is CEO of Search Laboratory.
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