In an All-DTC World, Digital Natives and Chain Stores Gain Market Share While Department Stores Struggle, According to Bluecore
New York, New York | April 30, 2020
New Data Reveals That COVID-19 Has Expedited Consumers’ Migration from Brick-and-Mortar to Digital Sales, Signalling the 50/50 Online/Offline Shift May Be Occurring in Months, Not Years
A new report released by Bluecore shows that since the temporary closure of brick-and-mortar stores due to COVID-19, online sales have increased for department stores, chain stores and native DTC brands, as well as across the Apparel, Luxury, Beauty, Sports/Outdoors and Pharmacy verticals. Performance across a number of other KPIs reveal an accelerated shift away from brick-and-mortar retail that is likely to last beyond the pandemic. The new report, COVID-19 Retail Trends in an All-DTC World, reveals how traditional retail models are stacking up against established pure-play DTC brands during a time when their sales channels have essentially been halved.
Bluecore’s data reveals that chain stores are seeing the highest increase in online sales (+80%) and the most significant increases in other important KPIs, when compared to department stores and digital natives. With a 119% increase in first-time buyers and 89% increase in second-time buyers, chain stores are experiencing a large-scale migration to their digital channels at an accelerated rate. Prior to COVID-19, only 15% of brick-and-mortar retailers’ sales occurred on digital channels. That number was widely expected to increase to 50% within three years. Now, it appears the transition may happen in a matter of months.
Bluecore analyzed shopper behaviors across 70 brands’ and retailers’ ecommerce sites, spanning 115.9 million orders, $17 billion in total sales and across 42.9 million unique products. The company compared April 2020 performance to April 2019 numbers, as well as to pre-COVID numbers from February of this year. In addition to online sales, Bluecore reviewed other high-value online shopper behaviors, including products added to cart, email click-throughs, sign-ups and products viewed.
Key findings from Bluecore include:
Comparing the 3 Retail Business Models
- Digitally Native brands see significant increases across all KPIs, but not as much growth as chain stores selling online. Digital-only brands’ sales are up by 53% compared to April 2019, with a 53% increase in first-time buyers, 38% increase in second-time buyers, 53% increase in product views and a 25% increase in email sign-ups since April 2019.
- Department Stores see the least online traction despite a 44% increase in sales since last April. Their decrease in first-time buyers (-24%) and second-time buyers (-37%), compared to last April, suggest that a majority of sales are coming from highly loyal, repeat customers, rather than new first-time or second-time buyers. This could be due to a lack of investment in the types of digital experiences and marketing efforts they would need to win over new shoppers.
- Chain Stores are seeing the most significant increase in YoY sales; all other KPIs, including online sales (+80%), first-time buyers (+119%), second-time buyers (+89%), product views (+64%) and email signups (+89%). This might be due to an increased investment in ecommerce and more opportunity to grow online than already established Digital Natives.
Comparing the 5 Retail Verticals
- Apparel sees significant increases, but lowest growth of all verticals. Apparel has seen a 20% YoY increase in online sales and a 27% increase since February. These sales represent a 43% YoY increase in first-time buyers and 78% increase in second-time buyers. Apparel is one of the most mature retail Ecommerce verticals, which also means that a lower percentage increase could still represent more sales dollars than higher increases in other retail verticals.
- Pharmacy and Beauty well exceed 100% increase in YoY online sales. Pharmacy saw a huge 142% YoY online sales increase as shoppers prioritize essential products like hand sanitizers, disinfectants and otc drug products. This increase represents a 149% YoY increase in first-time buyers and 117% increase in second-time buyers. Beauty came in at 112% increase in YoY sales, a 147% increase in first-time buyers and 125% increase in second-time buyers, as consumers engage in more at-home self care and beauty maintenance.
- Luxury exceeded every other vertical in first-time buyers, but otherwise attracted “window shoppers.” Luxury saw a 181% YoY increase in first-time buyers and 102% more people added products to their shopping carts than during the same time last year, but not all shopping activity resulted in sales. Still, luxury saw a whopping 82% increase in YoY sales, at a time when many people are focusing primarily on essentials. This is likely due in part to increased promotions geared toward getting rid of inventory.
- Sports/Outdoors brands see focused and “high-intent” shopper. While high-value activities like “add to cart,” product views products, and email signups saw less significant increase than other retail verticals, sports saw a 45% YoY increase in online sales and a 77% uptick in second time purchases. This reveals higher intent buyers with streamlined paths to purchase.
“In normal times, the majority of retail sales are conducted in-store — warranting significant investment in the in-store experience,” said Fayez Mohamood, CEO of Bluecore. “As a result of COVID-19, we’ve been presented with a channel equalizer like never before: an apples-to-apples look at the variance between business models selling e-commerce only, and how each business model is shifting investments in preparation for the inevitable digitally-driven future.”
As brick-and-mortar retailers approach an eventuality where their digital sales account for 50% of their overall revenue, it will become increasingly important for them to focus on digital customer retention, performance, and increasing customers’ lifetime value. Doing so will ensure digital channels become as important or more important than offline channels.
Bluecore is a marketing technology company that’s reimagining how the world’s fastest growing retail brands transform casual shoppers into lifetime customers. Through its patented retail data model and the recent release of Bluecore Communicate™ and Bluecore Site™, brands are now able to personalize 100% of communications delivered to consumers through their email and ecommerce shopping experiences. Bluecore replaces manual processes with an intelligent, AI-driven workflow, allowing brands to manage these communications through a single interface. In 2019, the company bet big on itself when it introduced the industry’s first shared-success pricing model. It’s now credited with doubling email revenue, and increasing customer retention, lifetime value and overall speed to marketing for more than 400 brands, including Express, Tommy Hilfiger, The North Face, Teleflora and Bass Pro Shops.
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