ETD: 930 Join Them; The Online Shopping Advantage; Luxury
Consumption Index Reaches Its Lowest Point Ever
E-Tailer's Digest
etd_post at gapent.com
Tue Nov 8 15:52:38 GMT 2005
E-Tailer's Digest --- Everything for the Retailer
Issue #0930 November 8, 2005
George Matyjewicz, Moderator mailto:georgem at gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Join Them
[3] The Online Shopping Advantage
[4] Luxury Consumption Index Reaches Its Lowest Point Ever
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[1] Greetings.
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Hi All:
"If you can't fight them, join them." Perhaps the music industry
should follow this logic. Broadcast TV and the book publishers are
changing their ways of doing business. Why not music?
E-tailing is expecting to be quite good this holiday
season. Companies are offering free shipping. We all know that
nothing is free. They will be making it up some place
else. However, it is nice to know e-commerce should do well.
List member Pam Danziger reports that the luxury market reached it's
lowest point ever this past quarter. That may be the start of more
to come with the economy.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem at gapent.com
http://www.etailersdigest.com
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[2] Join Them
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If you can't fight them, join them, is a common adage. Broadcast TV
stations ABC, NBC and CBS have all decided to offer their programs on
a pay per view (PPV) basis to cable operators (iPod for ABC). This
is a major change in strategy for these network executives, who have
long resisted these efforts by cable operators, worrying that it
could cannibalize their existing businesses by eroding their ability
to sell advertising for programs and reap lucrative profit by selling reruns.
Perhaps the recording industry should take note, and also join
them. This week Grokster was shut down as part of a legal settlement
announced this week with the music industry. IMHO, this move will
not stop the illegal sharing of music. Rather the other companies
will move offshore, where the US Federal laws don't comply (Tortola
is nice ;-)).
Rather than fight this illegal copying, the music industry should try
to take advantage of it. Why not charge companies like Grokster a
fee for every copy of their software that is distributed? That money
could then be used to compensate the artists, like it is now done.
I had a meeting with a friend who is COO of one of the country music
associations and suggested this alternative. At first she was
resistant, saying it was illegal. I explained how it works for Apple
(iPod) and other companies. So why not figure an alternate to make
money, rather than spend money on lawsuits?
It's about to happen in the book publishing industry with Amazon's
plan to 'iPod' books.
What do you think?
George
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[3] The Online Shopping Advantage
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The online industry will walk a fine line in using the fuel issue to
attract buyers. The convenience of shopping at home is a selling
point, as is saving gas. But emphasizing gas costs could remind
people they don't have as much to spend, said Scott Silverman,
executive director of Shop.org, an association of online retailers.
Four out of five online retailers plan to offer free shipping this
holiday season despite high gas prices. That's because four out of
five online shoppers say free shipping can make or break a deal,
according to a recent survey.
"I think it's the most effective marketing that retailers are using,"
said Rob Solomon, general manager of Yahoo Shopping.
Creative Incentives
The pressure is on online retailers to be more creative this holiday
shopping season for a couple reasons: The economy is threatening
their fast-growth sales pattern and precious days for holiday sales
are slipping away.
At least 60 percent of online shoppers say they begin shopping by the
end of October, according to the Shop.org/BizRate Research Online
Holiday Mood Study.
Meanwhile, analysts expect a challenging economy to moderate what has
been the torrid percentage growth of online sales.
JupiterResearch reported Tuesday that it expects online holiday sales
to rise 18 percent to US$26 billion, the smallest percentage increase
in five years. Forrester Research predicted a 25 percent increase to
$18 billion. The eMarketer, another online marketing and research
firm, sees 22 percent growth to $26 billion.
Different companies use different time periods and even categories in
their estimates, so projections can vary widely.
A Small Piece of the Pie
While the percentages sound impressive, online sales make up a small
fraction of retail sales.
Store sales are expected to total about $435 billion for the
holidays, according to the National Retail Federation, up about 5
percent from 2004.
The online industry will walk a fine line in using the fuel issue to
attract buyers. The convenience of shopping at home is a selling
point, as is saving gas. But emphasizing gas costs could remind
people they don't have as much to spend, said Scott Silverman,
executive director of Shop.org, an association of online retailers.
Patti Freeman Evans, an analyst with JupiterResearch, doesn't think
that will stop the trend toward marketing free shipping.
Freeman Evans says some online retailers have been emphasizing fuel
savings in their pitches, including eBags, which specializes in
purses, with e-mails that talk about paying too much at the pump.
Smaller Profit Margins
Higher shipping costs may squeeze margins, she says, but many
companies will manage it.
For example, Amazon.com, the giant online retailer, uses the U.S.
Postal Service, which does not add a fuel surcharge as do UPS and
FedEx. The company also has distribution centers around the country,
so packages don't have to be sent by air, which is more expensive.
"The market is maturing and there's more competition," said Silverman
of Shop.org. "You need to be more aggressive in marketing and promotion."
According to the Shop.org/BizRate study, online retailers are
expanding their advertising horizons, using TV, radio, billboards and
direct mail to get their message out. Another critical feature: search.
"If your search site doesn't work, people will get frustrated and
leave quickly," Silverman said.
As for the hot categories, the usual suspects show up: consumer
electronics, books, music, DVDs and clothing.
"There is some trepidation and consumer confidence isn't as high,"
Yahoo's Solomon said of retail sales. "The Internet is a much better
place to find bargains and values."
Article at...
http://www.ecommercetimes.com/story/47137.html
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[4] Luxury Consumption Index Reaches Its Lowest Point Ever
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Luxury consumers' confidence plummeted during the third quarter 2005,
according to Unity Marketing's exclusive Luxury Consumption
Index. In its sharpest drop since the index began in 2004, the
Luxury Consumption Index reached 94.4 points. The index measures
luxury consumer feelings about their personal financial status and
the prospects for the country as a whole.
The drop in luxury consumer confidence at the end of the third
quarter came on the heels of the greatest increase in the Luxury
Consumption Index at the end of the second quarter when it topped out
at 104.7.
Despite Index's Drop, Spending on Luxury Rose
While luxury consumers were in a funk in terms of the attitudes the
index measures, they actually spent more money buying luxuries during
the third quarter. Luxury consumers spent an average of $14,534 on
luxuries in the third quarter, up 24 percent over average spending of
$11,714 during the second quarter.
In a survey of 1,171 luxury consumers (average income $142.4k and age
42.9 years) conducted in association with Unity Marketing's quarterly
luxury consumer tracking study, the average amount luxury consumers
spent on personal luxuries, such as apparel, fashion accessories,
jewelry and watches, wine and spirits, was up 18.9 percent and home
luxuries, such as electronics, linens, appliances, art, antiques,
furniture and tabletop, rose 12.5 percent. By comparison luxury
consumers' spending on experiential luxuries, such as travel, dining,
entertainment and home services, declined in the third quarter by 19.5 percent.
Over the seven quarters of luxury tracking, we have seen an inverse
relationship between spending on home and experiential
luxuries.Consistently when home spending goes up, experiential
spending goes down, and vice versa. This quarter is no exception
with luxury consumers investing significantly more buying luxuries
for their home, in particular art and antiques, garden/outdoor,
upscale kitchen appliances and luxury linens and bedding. The
ferocious weather much of the country faced last quarter likely
contributed to a decline in travel.
Commenting on the rise in this quarter's Luxury Consumption Index,
Thomas Bodenberg, economic forecaster for Unity Marketing and former
Conference Board executive says, "The Luxury Consumption Index posted
a significant drop from the previous quarter's pre-Katrina index of
104.7. The bad news from the Gulf coast hurricanes, rising gas
prices and continuing strife in Iraq took their toll this quarter in
luxury consumer confidence. But on a positive note, over half of the
panel members indicated the next twelve months will be better than
current conditions."
Unity Marketing publishes its Luxury Tracking Study quarterly with
the next due in January 2006. For more information, visit
http://www.unitymarketingonline.com/reports2/luxury/luxury3.html or
call Pam Danziger at 717-336-1600.
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