Back-to-School: Standing Out in the Crowd Advertisers expand their tactics to reach additional audiences

Transcription

1 Market Track Perspective TM Back-to-School: Standing Out in the Crowd Advertisers expand their tactics to reach additional audiences For many students across the US, the school year is underway after two months of Back-to-School (BTS) preparation and shopping. During BTS 2014, students, not parents, found themselves to be the target of many retailer and manufacturer promotions, marking a shift from years past. Advertisers utilized various media types to engage students and parents with competitive, creative promotional incentives and brand messaging, aiming to win their business during the second largest sales event of the year. From a sales perspective, industry experts were conflicted about when and to what extent BTS 2014 shopping would take place. According to a survey conducted by the International Council of Shopping Centers, more than one-third of shoppers said they had started their BTS shopping by the middle of July a month that showed a 5.4 percent increase in retail sales year over year. By contrast, a National Retail Federation study reported that 25 percent of parents said they planned to wait until right before school starts to do their BTS shopping. Advertisers have struggled to understand shopper behavior and keep up with their expectations, striving to catch shoppers attention in a variety ways and on multiple devices. For an event such as BTS, there is recognition that they are not just trying to appeal to parents who in the past were primarily making the purchases, but also to well connected students who now play a much more active role in the decision making process. In an increasingly digital world that affords limitless possibilities for interactions with both shoppers and consumers, it has become critical to take a deliberate and well-orchestrated approach to capturing the shopper s attention throughout their omni-purchase cycle. In This Article Market Track reviews advertising and pricing trends that stood out during the Back-to-School period, We examine the office/electronics, department, mass, e-commerce, and drug channels, uncovering: How promotions targeted specific BTS shopper segments Which retailers used an integrated promotional strategy across both traditional trade and new media Which categories and brands received the highest quality ad placements How online pricing for topselling BTS products fluctuated throughout the season

2 Figure 1: Back to School Themes and Targeted Shoppers, Office/Electronics & Department Channels In this issue of Market Track s Perspectives, we will review the trade promotion and brand communication activity during July and August We will share a time line of promotional messaging for the top office and department retailers throughout BTS, and which shoppers retailers targeted week to week. Though offers could be found throughout the two month focus period, we will identify when the most competitive prices could be found for top selling BTS products online, and highlight when drastic shifts in price occurred. We will also highlight several of the creative ways retailers used new digital media to engage and attract students and teachers to their stores. Finally, we will close with a year over year comparison of promotional volume to help understand which retailers are increasing or decreasing their promotional market presence. Audience appeal who were retailers targeting? Beginning the week of 7/6, retailers kicked off their BTS promotional campaigns. BTS themes were blanketed across print and digital media, and across competing and complementary retail channels. The start of BTS theming in 2014 fell on the same week as in 2013, yet unique to the themes in 2014 was a more targeted approach to retailer messaging. Where in past years retailers featured BTS products for all grades on the same circular front page, 2014 was marked by more focused engagement of elementary school, middle school, high school, OR college students. Figure 1 shows the circular front page themes by week for office/electronics and department channel retailers. Each week is color-coded to identify what grade level each retailer was trying to appeal to, based on both circular theme and product mix. According to our most recent Shopper Insight Survey, circulars are still the most prominently used media type by shoppers. Ensuring messaging appeals across multiple audiences is critical, in addition to speaking to younger demographics through new media channels. On the first week of BTS, Best Buy labeled themselves America s Back to School Techfitter, promoting deals on laptops, tablets, smartphones, and other classroom electronic products. The America s Back to School Techfitter theme was consistently on Best Buy s circular front pages through the week of 8/17, and was supplemented by themes like Grade-A Tech to Help You Succeed and Selection for High Learning, all of which contributed to Best Buy targeting more High School and College students. Additionally, of the 54 total products featured on Best Buy front pages between 7/6 and 8/17, 61 percent were either laptops, tablets, or smartphones. No other subcategory had more than 7 percent share of Best Buy circular front page promotions. At the other end of the spectrum fell Office Depot/ OfficeMax and Staples, who targeted more Elementary and Junior High students with their circular front page themes and categories. Office Depot/OfficeMax especially targeted younger students with their For School. For Less. campaign. 2 Market Track Perspective TM

3 Figure 2: Macy s New Media Promotional Engagements, Back to School They promoted both school supplies and low prices on their circular front pages from 7/6 through 8/24. Between those dates, 84 of the 106 products Office Depot/OfficeMax featured on their circular front pages were school supplies, and 55 of those 106 products were promoted at $1 or less. Compared to their BTS counterparts in the office/electronics channel, department stores featured a mix of circular front pages that targeted specific grade levels, and those that featured offers for students at all grade levels. Kohl s started their BTS campaign with a College studentcentric circular front cover, themed Destination Dorm, before moving to less targeted themes and category mixes through the middle portion of BTS. JCPenney began their BTS-themed circular promotion on 7/24, with a focus on Elementary and Junior High School students. They featured boys and girls tees at $4.99, and a 60% off doorbuster on boys and girls tees and shorts on 7/24, before mixing in categories for High School and College students as BTS progressed. Macy s uses new media to target students Compared to their direct competitors, Macy s did not target Elementary school students separate from College students, nor Junior High students from High School students. They did, however, target students directly with their promotional messaging more than any other retailer, inside or outside their channel. Figure 2 highlights a few of the new media promotional tactics Macy s used to engage students during BTS In each of their 7/27, 7/31, 8/3, 8/10, and 8/17 circulars, Macy s featured their The Text campaign, which debuted during BTS The campaign targeted students in 2013 with social media promotions on their MacysBTS hashtag, and a Back to School Savings Pass that took 20% off apparel and 15% of footwear purchases. In 2014, Macy s Engagement techniques create a win/win situation To supplement their trade promotional schedule during BTS 2014, Office supply stores engaged BTS shoppers using a variety of new and creative promotional strategies. These strategies included everything from video contests, sweepstakes, and free with purchase offers. Staples did a particularly good job thinking out of the box with their creative advertising. Their Imaginary Cart Contest which challenged shoppers to submit a video of themselves pushing an imaginary cart down an imaginary aisle, and adding imaginary products to their cart rewarded the shoppers who submitted the best video with a $250 gift card, and a chance to be in a Staples commercial. Staples also ran an Endless Summer Sweepstakes, for which shoppers could complete challenges (such as answering a brainteaser correctly on the Staples Facebook page) to earn submissions for prize drawings. Prize Packs prizes included everything from an ASUS 2-in-1 Laptop, to school supplies, to Staples gift cards, while grand prizes included a 3-Day trip to see Katy Perry in concert in New Orleans. The Power of Market Intelligence 3

4 Figure 3: Subcategory Ad Quality, Market Track Value Index* (MTVI), Back to School 2014 added to the campaign with both mobile promotions and brand communications, and the Lip Dub challenge with a link to Macy s YouTube page. Students from any school could submit a video of their student body lip syncing a performance of The Beach Boys Be True To Your School song, with a chance to win $25,000 for the top video submission. Macy s offered more student engagement opportunities to find deals and win prizes for their BTS shopping than any of their competing retailers, and exemplified the trend towards targeting the student rather than the parent with BTS promotional deals. Office supplies take a backseat to tech categories Where Macy s took a creative approach to appeal to students of all age groups, Best Buy showed throughout BTS that they were targeting the segment of students who need technology High School and College students. From 7/6 through 8/31, 27 percent of front page promotions on Best Buy circulars were allocated to Laptops and Tablets. Comparatively, Office Depot was the next closest at 14 percent, and Staples and Walmart each allocated 7 percent of their front page circular promotions to Laptops and Tablets. Across all subcategories promoted by office/electronics and mass channel retailers, Laptops had the second highest cumulative ad quality, behind Office/School Supplies-General, as shown in Figure 3. Tablets were also in the top five promoted categories in terms of ad quality, ranked fourth between Glue and USBs/Flash Drives. Best Buy drove the cumulative ad quality of the two categories up the list with their commitment to promoting both with premium page positions and ad types. Figure 4: Laptop Brand Ad Quality, Market Track Value Index* (MTVI), Back to School 2014 New brands emerge in the Tablet category Among the top promoted Laptop brands during BTS 2014 were Hewlett Packard (HP) and Toshiba, yet both saw significant drops in ad quality compared to BTS 2013 (Figure 4). The decrease was attributed to both a decrease in total number of ads for both brands, and about a 35 percent decrease in circular cover page ads for both brands. Across all Laptop brands, ad count was down significantly (over 30 percent) from BTS 2013 to *Market Track Value Index (MTVI) is Market Track s proprietary measure of ad effectiveness, which includes factors such as placement, size, retailer, and market. 4 Market Track Perspective TM

5 Whereas many of the same Laptop brands were leaders in ad quality during both BTS 2013 and 2014, several new brands were seen within the top ten in the Tablet category. Both Apple and Apex saw significant gains in ad quality in Apple s increase was driven primarily by a drastic increase in total print promotions year over year they saw a 225 percent increase in ad count across the office/electronics, mass, and department channel BTS circulars. The increase in Apex s MTVI was driven by improved page positioning, along with an increase in total ads. All of their BTS print promotions were featured either on a circular front or back page. Competition among brands for Tablet ad space intensified during BTS 2014, as Apex, Dell, Toshiba, and Nobis each made their introductions to the top ten Tablet brands in ad quality for the first time. Additionally, the Tablet category did not see the same erosion the Laptop category did. There were only two fewer Tablet ads during BTS 2014 compared to 2013, and the total number of Tablet promotions during BTS outpaced Laptop totals for the first time. When is competition hottest? Up to this point, we have reviewed how retailers engaged BTS shoppers using themes and category mix. And though we have found that retailers consider Laptops and Tablets to be important BTS categories as seen by their high ad quality measures we have yet to look at these two categories from a shopper s perspective. When can shoppers find the best price on these larger ticket BTS items? To address this question, we took a look at the online prices of a sample of the topselling Laptops featured on Amazon.com, BestBuy.com, and Walmart.com. Figure 6 shows the average price trend line for the Laptop products on each retailer website. Per Figure 6, we found the big BTS discounts for Laptops occurred at different times for each retailer. Walmart s BTS discount on the five Laptops we examined happened early in BTS, around the second week of July. The average price of the five top-sellers dropped from just under $650, to just over $500 a discount of between percent. BTS shoppers had to wait two weeks for Best Buy to discount their top-sellers, which happened on 7/24. Their discount was much less pronounced than Walmart s, as the average price among the four products we examined dropped from about $590 to $550. Figure 5: Tablet Brand Ad Quality, Market Track Value Index* (MTVI), Back to School 2014 Teacher Focus According to a survey conducted by ACSD (formerly the Association for Supervision and Curriculum Development), teachers nationwide spend more than $1 billion out of their own pockets annually for classroom supplies. For a profession in which the national average salary is under $40,000, the amount teachers spend on their classrooms is a challenge. Retailers acknowledged this by featuring teacher-centric digital media trade promotions and brand communications throughout BTS Office Depot promoted their Teacher Appreciation Days on their Facebook page, an event that offered teachers 20% off qualifying items, as well as free in-store giveaways. From July 25-31, Walmart offered 10% back on classroom supplies to K-12 teachers, which they promoted on their website home page. Office Depot and Walmart were among several retailers that engaged teachers specifically during BTS this year, showing again how BTS promotional strategies were more targeted than in year s past. *Market Track Value Index (MTVI) is Market Track s proprietary measure of ad effectiveness, which includes factors such as placement, size, retailer, and market. The Power of Market Intelligence 5

6 Figure 6: Online Price Trend, Laptops, Back to School 2014 At the time of Best Buy s discount, the average price of the 12 Laptops we reviewed on Amazon had hovered at just under $550, with no big discount during July. On 8/11, however, the average price of the 12 products dropped to just below $500. Compared to Best Buy and Walmart, this price change occurred late in the BTS season, and might have been a competitive price reaction to Best Buy and/or Walmart. Amazon kept the discount active through 8/16, after which their average price slowly increased over the next ten days. Tablet pricing on Amazon.com, BestBuy.com, and Walmart. com did not see any huge shifts for the duration of BTS, though some interesting price battles occurred late in the BTS season between Amazon and Best Buy (Figure 7). Throughout the majority of BTS 2014, the average price of the six Tablet products we tracked on Amazon held fairly steady between $350 and $375, while the average price of the 12 products we watched on BestBuy.com hovered between $375 and $400. On 8/17, however, Amazon dropped their average price to $350 and remained at that price for a full week. Best Buy s average price during that week held flat at $385, save for one price drop on 8/20 to $365 that lasted only that day. The key takeaway after reviewing these price trends is that there is a high degree of variability between retailers in regard to the pricing strategy for large ticket BTS items. Walmart tended to discount Laptops and Tablets early during BTS and remain at the discounted price for the duration of the season. Amazon and Best Buy featured more price variation among their top-selling Laptops and Tablets, particularly late in the season as they tried to push their remaining stock within the categories. For retailers and manufacturers, the variance in pricing strategy between these three retailers creates a competitive environment that requires constant and consistent visibility into competitor pricing. As we saw within Laptops and Tablets, discounts can occur at any time throughout BTS, and without visibility into the change, competitors could take advantage of any delayed response time. Walmart communicated deals early, and stuck to them Walmart s price discounts on Laptops and Tablets early in the season were a microcosm of their pricing and discounting strategy for BTS The mass merchant reported that they had 30% more BTS items available online than last year, and reduced prices on 10% more BTS items compared to 2013, both in-store and online. Special savings opportunities were made available in-store on August 1st for a list of BTS products, supplemented by online deals on August 4th. In figure 8, we compared the prices of certain products included in Walmart s in-store event starting 8/1, and Cyber event on 8/4, to the average online sale price on Walmart.com for the entire BTS period. Of the in-store event deals we examined, we found that the average online price for five of the eight products over the duration of BTS was higher than the early August deals. Particularly during key sales periods like BTS or the Holiday Shopping Season, more and more retailers are sharing information with shoppers on their top deals of the season well before the season itself. Walmart engaged shoppers before their in-store sales event to make them aware of the savings 6 Market Track Perspective TM

7 Figure 7: Online Price Trend, Tablets, Back to School 2014 opportunities available to them by going in-store, and stuck to those in-store only deals, as shown in comparison to their online pricing in figure 8. This is not the first time Walmart has used this strategy to drive traffic to their stores similar deal formats were available to shoppers during the last holiday shopping season. The disparity between the prices Walmart promoted prior to their sales event and the actual online prices of their highlighted products shows that, from a competitive standpoint, retailers cannot rely solely on one promotion or one information source to track competitive pricing, nor can they assume their competitors online prices match in-store. Having everyday insight into the omni-channel pricing of featured products during BTS or Figure 8: Walmart BTS Special Savings Deals Compared to Average Online Prices Holiday can save retailers from over-discounting their products in response to a competitor promotion, and ultimately save margin on those items. Departures in typical circular volume strategies Key calendar events such as BTS have typically been marked by a spike in print promotional volume relative to non-event periods, and in recent years, a spike relative to the same event period the preceding year. During BTS 2014, the spike characteristic of the period was much less pronounced, and in some cases, retailers actually decreased their print promotional volume from BTS Figure 9 reviews the count of circulars, pages per circular, and count of products per page, along with the percent change from the previous year, for the office/electronics, department, mass, and drug retail channels. Among the office/electronics channel retailers, Best Buy and Office Depot/OfficeMax kept their count of circulars flat year over year (OfficeMax was down from their count of 10 in 2013), while Best Buy decreased their pages per circular by 7.5%, and Office Depot/OfficeMax featured a slight increase in pages per circular year over year. Staples, on the other hand, increased their circular count by one year over year, yet decreased their pages per circular by nearly 20%. Where Office Depot/OfficeMax added density (ie. additional pages) to their circulars, Staples opted for more total circulars with decreased density. Staples circular strategy changes from BTS 2013 to 2014 were more in line with the department channel than the office/electronics channel. JCPenney, Kohl s, The Power of Market Intelligence 7

8 About Market Track Market Track is a market intelligence firm dedicated to increasing our customers returns on their advertising investments and providing real-time visibility into e-commerce pricing. We support our 850+ clients through monitoring and analyzing over 200 U.S. and Canadian markets for every channel of trade and 1 billion buy pages from 3,000 global merchants, enabling dynamic decision making by turning data into actionable insights. Figure 9: Circular Volume Review, Back to School 2014 vs and Macy s decreased the number of pages per circular published compared to BTS 2013, yet increased their total number of circulars published. Kohl s and Macy s had a larger overall market presence in print than did JCPenney, publishing more total circulars and a higher average pages per circular during BTS. Rather than simply increasing their print volume because it was an event period, print volume strategies varied from retailer to retailer. It is no longer a given that print volume will increase during key sales periods rather, retailers are making print volume adjustments within their larger promotional engagement strategy. It will be important in finalizing plans for holiday 2014, and in planning for BTS 2015, for retailers to keep a close eye on how their competitors are modifying their print volume. There may be opportunity to better allocate print promotional volume increases during one or two weeks, rather than blindly increasing volume each week during the event period. More is not always better strategic volume decisions based on how competitors have promoted should govern volume decisions, particularly during key event periods. Treat Back to School as a precursor for the Holiday Shopping Season Many of the promotional trends observed during BTS 2014 were similar to those seen during last year s Holiday Shopping Season (HSS). Sale periods and discounts were consistently available to shoppers from the beginning of July, through August, and into September. Retailers such as Walmart highlighted their top deals of the season before BTS started, just as we saw several retailers highlight Black Friday deals early in November Online price battles occurred on top-selling BTS electronics, as retailers jockeyed to stay ahead of one another on price. And many BTS products saw late season discounts online as retailers tried to push the last of their BTS inventory to shoppers who waited until the last minute to complete their school lists. What can be expected for BTS 2015 and the upcoming HSS? Lots of moving parts, and lots of opportunities and risks depending on how closely retailers and manufacturers monitor their competitors trade promotions, pricing, and brand communications. Trade promotional volume, category allocation, and cadence varied from BTS 2013 to 2014, opening up risk to retailers who failed to adjust their own trade promotional strategy. Price changes and discounts occurred at different times throughout BTS, particularly in the online space, which can hurt retailers who are not monitoring competitive price changes the longer it takes to notice a price change, the longer your competitor has the advantage of having a more attractive price point. Key event periods are, and will continue to be high maintenance periods. Expect your competition to engage your shopper base with a mix of promotional incentives across different media, and be ready, with the tools in place, to make strategy adjustments on-the-fly either proactively or in response to your competitor s promotional and pricing activity. Key Takeaways Promotional targeting is an important tool in ensuring a retailer or manufacturer wins the segment of shoppers that match their value proposition, particularly during holiday periods, when retailers and manufacturers are competing vigorously to capture shopper attention. Your event period promotional strategy should be designed to ensure you win your high value shoppers. There are no off promotional weeks during holiday periods. Shopper behaviors vary as well, with certain shoppers fulfilling their school lists early in the season, and others waiting until just before school starts. For BTS 2015, retailers and manufacturers should anticipate competitive BTS offers each week from the beginning of July through the beginning of September. The importance of engaging shoppers with enticing promotional offers across ALL promotional media continues to grow. For an event like BTS, where the consumers (not necessarily the shoppers) fall into younger demographics, retailers leveraged new media including social, online video, and mobile to establish a connection and maintain a dialogue with students throughout BTS. If a retailer or manufacturer lacks promotional presence in one or more media types, they open themselves up to risk of losing the segment of shoppers who seek deals within those media types. Learn More For more insight into the entire promotional landscape or an analysis of your digital and print strategies, call Market Track at or perspectives@markettrack.com Market Track. All rights reserved.