How is the retail industry spending its digital marketing budgets? According to the latest report from think tank L2, retailers are spending 52% of their digital budgets on mobile channels and maximizing customer engagement on the social media powerhouse Instagram. And while department stores like Nordstrom and Macy’s have become more digitally savvy than ever, they still can’t compete with the digital domination of Amazon, but that doesn’t stop them from trying. MediaPost.com shared more from the report to show how more retailers are buying into digital marketing tactics.
While traditional retailers are purchasing digital advertising more than ever, these stores are simply trying to catch up to leaders like Amazon Prime. According to the report, 69% of these brick-and-mortar stores are now offering next-day shipping and 27% have started offering same-day delivery. But these efforts may not be enough. Despite the growing digital advertising presence and comparable shopping amenities now being offered by department stores, Amazon is still predicted to surpass Macy’s next year as the largest U.S. retailer of apparel and accessories, with a whopping $28 billion in retail sales.
And Amazon is only one of the obstacles faced by department stores today. Retailers are facing increasing competition from progressive fashion stores like H&M and Uniqlo. In addition, they’re also dealing with decreasing department store distribution by specialty brands like Michael Kors and Coach, which helps differentiate a department store’s overall shopping experience.
But retailers aren’t going down without a fight. They’re turning to digital marketing to reach the ever-growing and always-spending online shopping audience. And some stores are doing this impressively well.
For the report, L2 analyzed the digital IQs of department store retailers and ranked them by their digital marketing tactics, social media usage, mobile strategies, and overall website and e-commerce skills. Four of the top 10 stores reached what was deemed the highest “genius level.” These stores were Nordstrom, Macy’s, JCPenney, and Kohl’s. The remaining stores ranking at the lower, yet respectable, “gifted” level included Bloomingdale’s, Neiman Marcus, Saks Fifth Avenue, ASOS, Marks & Spencer, and Sears.
With mobile being responsible for 45% of online shopping traffic in early 2016, brick-and-mortar stores have started adding more mobile shopping features to their websites. Yet conversion continues to be a challenge since 90% of consumers who add items to their mobile shopping carts fail to complete their online purchase. But this is not stopping department stores from making their mobile shopping experiences faster and easier than ever to claim a larger share of mobile shoppers.
Just as important as mobile in online shopping engagement is social shopping star, Instagram. A full 50% of Instagram users follow their favorite brands and want to see what they have to share. Yet some brands are not enjoying the same engagement as others. The report showed that the top seven brands with the highest engagement earned 77% of total brand interactions during the last year. In that same period of time, one-third of Instagram users made mobile purchases on their smartphones, making them 70% more likely to buy online than non-Instagram users.
With so much research showing the power of digital advertising, mobile access, and Instagram, traditional retailers would be wise to devote more of their budgets to these channels to ring up more sales and success.
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Written by Michael Del Gigante