As shown in our latest Retail Index, we are currently witnessing the retail industry undergo a total transformation, and those who are not evolving to meet the demands of their consumers are suffering the consequences. During the current turmoil, however, successful retailers are taking bold steps to find their footing and win over consumers. These retailers are connecting their data points throughout their entire organization and swiftly acting on data-driven insights.
In our recent DynamicAction Retail Index: Spring 2017, an analysis of more than $9 billion in consumer transactions globally, we found retailers are taking steps to effectively compete against Amazon and utilize promotions, shipping and inventory intelligence to avoid a costly race to the bottom, as well as steadily reduce their reliance on markdowns and promotions.
Although the latest Index indicates orders using a promotion are up an average 24% in North America in 2017 versus 2016, most of that is due to January’s being 67% up YoY. February and March trended in a more positive direction for retailers, with a 4% decrease in promotions in February and 1% decrease in March 2017 versus 2016. Additionally, orders using a markdown are down 9% in 2017 compared to 2016, with March showing a positive trend in North America through a 15% decrease in orders using a markdown versus the previous year. In turn, that translates to better profits, as margin erosion from markdowns is down an average 9% thus far in 2017 and down an average 16% in March.
Another trend we see in DynamicAction’s Spring ‘17 Retail Index is that new customer orders are down an average 4% this year. However, the rate of first time purchasers converting to second time purchasers is up 5% so far in 2017 in North America, versus 2016. The relationship between those rates leads us to believe that retailers are doing a better job cultivating that elusive loyal customer. Naturally this is good news, as returning customers provide better long-term value for retailers.
Retailers are meeting shipping expectations, as our CMO, Sarah Engel, discussed with Women’s Wear Daily. The numbers for timely shipping have improved over last year, with a 37% reduction in late-to-ship orders thus far in 2017 versus 2016. March showed a 45% decrease in late-to-ship orders YoY. Free shipping ticks up only slightly at a 3% increase so far in 2017. February showed a large 13% dip in free shipping, while March is heading back up with a 12% increase in orders using free shipping versus 2016.
Customers want their orders now—and they are willing to pay for it—with orders using express shipping up 138% in 2017 thus far versus 2016. As much as free shipping remains a powerful element in the competitive arsenal, an upward trend in demand for paid express shipping signals an opportunity to improve current margins even further.
While retailers have a long journey ahead to improve customer experiences and consistently increase their bottom line, this latest edition of the DynamicAction Retail Index shows merchants are making significant strides to bounce back from retail’s race to the bottom.
DynamicAction puts connected data, instant insights and prescribed action plans at your fingertips so you can answer critical questions and take immediate, fact-based actions that directly impact profit growth. Retail teams know exactly where to focus, what to do and how much financial impact to expect. Consider it a retailer’s treasure map.
See How >>