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  • 2014 Epsilon. Private & Confidential

    Spending trends of the modern consumer How are they changing and what influences them?

  • 2

    The 2016 Home Shopping Trend report Where the data comes from Economic backdrop to trends Affluent buying pattern Buying pattern of the affluent consumer in 2015

    High end fashion Food & wine Home interiors

    The impact of weather on consumer spending in 2015 Buying patterns driven by Cyber Monday/Black Friday in 2015

    What will we cover?

  • 3

    Home Shopping Trends Report

    IndustryInterviews

    Research and Insight

  • 4

    The Abacus Alliance a data cooperative for retailers to share insight on buyers

    4800variables

    20bn spend

    580mtransactions

    refreshed weekly

    18mHouseholds

    26 million individuals

    Lifestyle attributes

    and demographics

    460multi channel retail brands

    50magazine titles

    post

    digital

    telephone

    email@

    Recruit

    Retain

    Realise

  • 5

  • 6

    Knowing more about your customers helps you market effectively

    What you know about your customer

    Postal address

    Spent 180 on a dress January 2014

    Female

    What Abacus knows about your customer

    Aged 50-60

    Subscribes to fashion magazine 3 a month

    Household income of 50k

    Travels on holiday 3 times a year

    Donated to 3 charities in last 12 months

    Spent 305 in Gifts & Gadgets 4 months ago

    Spent 248 in Music & Entertainment in lifetime

    Browsed 4 high end fashion websites in last month

    Reads quality newspapers

    Spent 68 on Wine 6 months ago

    Uses internet as an order channel

    Spent 230 in mid market fashion 2 months ago

  • 7

    UK GDP growth: 2.2%

    UK Retail growth: -0.1%

    Non Store Retail (Direct and Internet) growth:7.4%

    We do not think the referendum on Brexit will have a major

    impact of consumer spending either way. UK prospects good

    whether in or outside the European Union

    Economic Review

    CAPITAL ECONOMICS

  • 8

    Which categories are included?

    Members provided 24 months of transactional information Jan 2014 to Dec 2015.

    Home Shopping growth

    11.9%

  • 9

    Purchase Patterns of Affluent Achievers

  • 10

    Purchase pattern of Affluent Achievers

    Spend patterns of Affluent Achievers v Urban Adversity 2015 v2014

    Affluent Achievers

    12.7% increase in spend

    Urban Adversity

    16.5% increase in spend

    70

    90

    110

    130

    150

    170

    Jan-14

    Feb-14

    Mar-14

    Apr-1

    4May

    -14

    Jun-14

    Jul-1

    4Au

    g-14

    Sep-14

    Oct-14

    Nov-14

    Dec-14

    Jan-15

    Feb-15

    Mar-15

    Apr-1

    5May

    -15

    Jun-15

    Jul-1

    5Au

    g-15

    Sep-15

    Oct-15

    Nov-15

    Dec-15

    Affluent Achievers Urban Adversity

  • 11

  • 12

    High End Clothing

    Revenue up 13.4%

    Strongest growth in- September: +30.9%

    Average Order Value +0.7%

  • 13

  • 14

    Food & Wine

    Revenue 2014-15

    Revenue up 17.5% YOY

    Strongest growth in:

    - November: +28.7%

    Average Order Value + 1.3%

  • 15

  • 16

    Home Interiors & Household Goods

    Revenue 2014-15

    Revenue +13.6% YOY

    Strongest growth in:

    - September: +24.2%

    Lowest growth in

    - August: +4.5%

    - January +5%

    - AOV -2.8%

    Mailing volumes up 1.6%

  • 17

    The Impact of Weather on Spend Patterns

  • 18

    2nd Half of 2015 Weekly Variances compared to 2014

    Temperature 2015 v 2014 Rainfall 2015 v 2014

    Christmas trading period very warm after a cooler start to autumn

    Wetter during the second half of year especially in Wales, Scotland, north England.

  • 19

    October 2015

    Cooler and drier conditions stimulated demand for autumn/winter products. South east England had largest cold variance to 2014 which was 4th warmest in 55 years.Rainfall down (about 44% for the UK overall) from last October which was the 11th wettest in 55 years.

    Tem

    pera

    ture

    vs.

    Las

    t Yea

    r

    Prec

    ipita

    tion

    vs. L

    ast Y

    ear

    Weather driven demand examples

    Knitwear +5% UKEdinburgh +7%, Cardiff +4%

    Outerwear+11% UKLondon +17%, Blackpool +6%

    Soup +3% UKNorwich +12%, Glasgow +1%

    Cough-Cold +4% UKLondon +6%, Belfast +2%

  • 20

    December 2015

    Warmest December on record (going back to 1910) strained seasonal demand during the Christmas Record-breaking rainfall and flooding in Ireland, Scotland and Northern England.Extended period of warmth resulted in heavy discounting as retailers tried to clear excess stocks.

    Tem

    pera

    ture

    vs.

    Las

    t Yea

    r

    Prec

    ipita

    tion

    vs. L

    ast Y

    ear

    Weather driven demand examples

    Heaters -38% UKPeterborough -47%, Cardiff -30%

    Womens Boots -13% UKLondon -20%, Newcastle -11%

    Winter Coats -18% UKSouthampton -24%, Oxford -22%

    Hot Cereal -3% UKLondon -10%, Birmingham -6%

  • 21

    How weather affected spending behaviour

    The main purchasing trend we saw in 2015 was an increase in seasonal buying.

    Customers continued to buy products from our spring and summer collection well into autumn due to the delay of the colder weather.

    It seems that people buy for the weather at the moment rather than planning ahead for the next season.

    Robert McMahon Director UK Madeleine

  • 22

    How weather affected spending behaviour

    While in the past customers used to order early in the season, we saw the buy now, wear now concept speeding up

    I think this is due to commoditisation on the high street for some product areas, but also due to the uncertain weather patterns we have seen in recent years . Customers dont really want to spend until they need it.

    Lynn CordallCommercial Director

    Damart

  • 23

    The Impact of Black Friday/Cyber Monday on Spend Patterns

  • 24

    Black FridayCyber Monday Christmas

    1.1billion Black Friday 2015

    35% increase on 2014

    968m Cyber Monday 2015

    34% increase on 2014

    Total sales over the shopping weekend totalledmore than 3bn.

    IMRG

    Black Friday/Cyber Monday weekend sales in 2015 v 2014

  • 25

    Black Friday, Cyber Monday and Christmas

    In 2015, Black Friday and Cyber Monday had the effect of pulling Christmas sales forward for us so going into the future we will plan our business slightly differently to accommodate it.

    The use of digital gives a window of opportunity to get extra sales before Christmas from those people who order during the promotional period.

    Last year Cyber Monday immediately followed Black Friday but there is a separation in 2016 so it would be interesting to see if this affects spending patterns.

    Dara OMalley Head of MarketingJD Williams

  • 26

    Black Friday, Cyber Monday and Christmas

    We are very engaged with Black Friday promotions and we will continue to use this as an activity to gain market share.

    We believe that we would lose out if we didnt run any promotions during this time; anyone in our sector who ignores this opportunity would find themselves left out in the cold.

    Robert McMahon Director UK Madeleine

  • 27

    Black Friday, Cyber Monday and Christmas

    Black Friday and Cyber Monday had a big impact on sales.

    We noticed 87% of similar companies to ours were offering an average of 30% discount over this period.

    We felt that the impact of Black Friday brought the sales forwards which then effected the last 4 weeks of the year.

    After testing we found that some of our customers did not like Black Friday so next year we will group our customers to ensure that we tailor these offers in a different way.

    Lynn CordallCommercial Director

    Damart

  • 28

    Summary

    Strong UK Economy in 2015 driven by consumer spendingAffluent consumer spent more in 1st half a year than other socio types13.4 % growth in high end fashion 13.6 % growth in home interiors17.5 % growth in food & wineExceptional weather patterns in UK affected consumer behaviourBlack Friday/Cyber Monday look set to stay in the UK

  • 29

    2016 Home Shopping Trends Report

    www.epsilonabacus.com

  • Thank you

    2014 Epsilon D

    ata Managem

    ent, LLC. Private & C

    onfidential

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