Digital IQ Index®: Specialty Retail 2012

Key Takeaways

in the first quarter of 2012 online retail spending reached 44.3 billion up 177% versus a year ago e-commerce is expected to grow at 13.3% annually reaching 361 billion in the US by 2016 with brick-and mortar retail flat or declining online sales and online growth is likely to be the primary metric for sorting the winners from the losers among traditional retailers one only needs to peruse the list of the fastest growing retailers to understand the two forces driving this shift from bricks to clicks mobile and Amazon the cocktail of mobile and Amazon is proving toxic for Big Box retailers today 82% of smartphone users report using their devices while shopping in store leading to a showrooming effect where users experience products in store but purchase Via mobile mcommerce is expected to grow at 30 to 40% per year reaching 31 billion in 2015 and in 2011 Amazon maintained a staggering 37% market share of this growing Channel and its investment in a supply chain that can offer same day delivery threatens to eat away at one of the few remaining advantages of terrestrial retail it is naive to think that specialty retail is immune from this threat specialty retailers have traditionally Protected Their margins with propr retary product aspirational Brands and Superior customer service Amazon is closing this Gap by now offering premium brand merchandise once Unthinkable for distribution on a mainstream site in addition Amazon is proving that servers and software can match and sometimes beat their organic competition the in store sales associate many specialty retail brands are responding department stores have leveraged scale and the burning platform of a decade of declines to devel velop robust mobile apps engage social media communities and sale oriented e-commerce sites Macy's repeats at number one in this year's index followed by Nordstrom and Victoria Secret at 2 and three trading spots from 2011 White House Black Market Lululemon athletica and Swatch all registered substantial gains in this year's index via improvements in their sites mobile and search respectively in addition Bloomingdale's made great strides in Mobile Innovation anthropology came out as the early leader on Pinterest and Neta Porte more than any other retailer in the index has dominated YouTube search optimization the brands at the bottom of the L2 digital IQ index are a mix of smaller brands that lack resources and larger firms whose leadership has not yet made the requisite investments in digital we believe these retailers are vulnerable Amazon will likely grow revenues by 20 billion in 12 the majority of which will come at the expense of other retailers while big box retailers have been the traditional prey we believe that the great white shark of retailing has broadened its food chain and smells blood in the waters of specialty retail brands that do not develop robust online offerings swim at their own risk l2's 2012 digital IQ index specialty retail attempts to quantify the digital competence of 76 retail Brands our aim is to provide a robust tool to diagnose digital strengths and weaknesses and help Brands achieve greater return on incremental investment members can download the full report at L2 tank.com