Epsilon Targeting Releases Annual Multichannel Trend Report: Economic Climate Impacts Consumer Buying Behavior
Improved Outlook for 2010; Sales Increase in Q1 2010
Compared to Q1 2009
DALLAS, TX - According to Epsilon Targeting, the leading provider of consumer information for targeted marketing solutions, consumer purchase behavior shifted due to economic conditions and social trends. Epsilon Targeting’s Annual Multichannel Trend Report, which is based on aggregated merchandise purchase data from the Abacus Cooperative database, will be released in two parts. The first report will focus on retail, business-to-consumer and business-to-business.
“Transactional data is a powerful tool to enable targeted marketing and can also provide deep insights into consumers’ buying behavior and trends. By analyzing the behavior of consumers and recognizing these key shifts and trends, marketers can develop successful strategies and improve their campaign performance while delivering relevant customer interactions,” said Brian Rainey, president of Epsilon Targeting. “The Multichannel Trend Report serves as a valuable resource for marketers to understand channels, preferences, buying behaviors, opportunities and so much more.”
Weathering the Storm
The study showed that the economic downturn impacted the buying behavior of consumers, decreasing both sales and profitability of many multichannel merchants. Across the Abacus Cooperative, there was a 7% decline for business-to-consumer merchants and a 9% decline for business-to-business offers.
While the decline was particularly evident in the first quarter of 2009, with a 12% decrease in total sales compared to the first quarter of 2008, this decline slowed in subsequent quarters. The fourth quarter saw only a 2% decline over the same period in 2008. The outlook improved in early 2010, with a 6% increase in Q1 2010 compared to Q1 2009.
Business-to-consumer marketers also cut circulation and focused on more deeply mining their housefile, in an effort to compensate for the lack of demand. This shift impacted customer response rates, average sales and other key metrics.
The Winners and the Losers
Certain merchandise categories were hardest hit by the tough economic climate. Home Décor and Furnishings posted an 11% decline over the prior year. Apparel and Accessories faced a 10% decline compared to 2008. Other merchandise categories that experienced declines included Children’s Products, Men’s Products, Gifts, and Senior Products.
At the product category level, sales trends were extremely varied, ranging from increases of 38% to declines of 35%. Large growth product categories were Large-Size Female Apparel (38%), Auto Parts & Accessories (21%), Specialty Foods & Spices (19%), and Hunting & Fishing (18%). Declines were seen in product categories such as High-Ticket Male Apparel (-35%), Electronic Gifts & Gadgets (-31%), Theme Gifts & Merchandise (-27%), Travel Packages, Apparel & Accessories (-26%), and Patio/Yard Décor & Furniture (-26%).
The growth of particular product categories reflects major social trends such as the obesity epidemic (Large-Size Female Apparel) and a shift towards value-based activities (Auto Parts & Accessories and Hunting & Fishing).
The Trend Report looked at consumer behavior by channel and found that online purchasing continues to grown steadily while sales from the retail channel are decreasing year-over-year. From 2008 to 2009, sales taking place online grew by 4%. Business-to-business saw a more modest increase of just 2% in online purchases. The direct channel remains the primary purchase channel for business-to-business with 55% of sales.
The multichannel consumers continue to play an integral role in business-to-consumer as well as business-to-business marketing. These consumers represent 51% of the total repeat buyers and have the highest spend and number of transactions per household or business. Multichannel households spend an average of $736, compared to $333 by online only purchases.
Two main data sources were used to compile the 2010 Multichannel Trend Report. These sources leverage the combined technology and data assets of Epsilon’s Abacus Cooperative database and comprise a wealth of transactional data. The analysis also looked at the “Multichannel Benchmark Group,” a subset of the Abacus Cooperative members consisting of multichannel merchants. For a sneak peek at 2010 trends, the analysis identified a separate comparative group of multichannel merchants with full activity from January 1, 2009 through March 31, 2010.
Note: Due to methodology changes between Multichannel Trend Reports, it is recommended that year-over-year activity be examined within a single Multichannel Trend Report, as opposed to comparing prior versions that may include different merchants.
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