E-commerce represents approximately 8 percent of all retail sales, and convenience, price comparisons, exclusivity among many other benefits are pushing more and more shoppers online. At our office, for example, most people rely on multiple orders a week from companies like Amazon and Stop N’ Shop’s Peapod service to fulfill their wants and needs. Granted we live in the city, it still reflects a mass shift in behavior from just a few years ago — and traditional big box retailers have taken note:
We’ve all been there before, flipping through full color newspaper inserts at our grandparents house. Home Depot has determined these print inserts are declining in impact, alongside the decline in print newspaper circulation and readership. According to MediaPost, expenditures on these freestanding print inserts were down over 6 percent in the first half of 2011. Home Depot is pulling away from them this holiday season in favor of digital ad buys, citing real-time bidding and the ability to target and track this ad spend’s impact as core reasons for the shift. While this particular article didn’t mention Facebook as part of Home Depot’s digital strategy, we know they have been experimenting.
Kohl’s CMO Julie Gardner shared with AdAge that this additional spend was increasing “significantly” in digital. In a quarterly earnings call, the retailer’s CEO Kevin Mansell highlighted that the company’s digital focus was in an effort to “stay ahead of the curve.” This effort includes a whopping nine homepage takeovers on sites like AOL, MSN and Yahoo! this holiday as well as an expansion of its targeted advertising on Facebook. The CEO remarked, “We recognize that spending money in categories like digital is very, very important for the future … it also does a better job of targeting, so we definitely are going to leverage that.”
When Walmart moves its marketing spend online, you know the industry is set to follow. Reporting that Walmart’s overall sales are 10x that of Amazon’s while 1/10th of Amazon’s retail sales, Ad Age explains that Walmarts calculated focus on digital, “has put Earth’s largest retailer and Earth’s largest online retailer on a collision course for what could be the retail battle of the decade.” Walmart is tailoring everything from organizational incentives to their hub-and-spoke distribution system to double down on this digital strategy — and Facebook has a large role within it. The company recently launched a My Local Walmart App, which connects users with offers specific to their local stores. Over 3,500 local stores have already been added to that App. Walmart also relies on both Facebook Marketplace Ads and Sponsored Stories in order to drive its digital strategy.
What other big box retailers have been shifting their budgets online? Let us know in the comments!