LONG-TERM OUTLOOK FOR U.S. ECONOMY
Berkshire Hathaway CEO Warren Buffet told Bloomberg that he is still bullish about the U.S. economy, even if GDP growth hovers around 2% as expected. He said that with population growth of less than 1%, even 2% GDP growth means that in one generation the U.S. would add $18,000 or $20,000 of GDP per person, which Buffet says means that people will be living far better 20 years from now. The Atlanta Fed issued a forecast for the first half of 2017 that anticipates GDP growth of 2.7%, with falling unemployment and growing wages.
HISPANIC BUYING POWER RISING
Hispanic buying power increased 5.7% in 2015 to $1.3 trillion, accounting for just under 10% of total U.S. buying power, and is expected to reach $1.7 trillion by 2020, according to Nielsen. Hispanics’ younger, larger families are accounting for a larger share of some retailers’ business, including Target, Sears and J.C. Penney. Last year Target spent about $9.1 million on Spanish-language television ads out of about $100 million in total on television advertising, according to Kantar Media. This year Target is integrating Hispanic marketing into their general marketing strategy, and has boosted overall television spending by 21%. They are also adjusting some merchandise to appeal to Hispanic shoppers.
Amazon, Zappos and Ralph Lauren were the top loyalty leaders in the retail segment of the 20th annual Brand Keys Loyalty Leaders List. The ranking, which is 100% consumer-driven, examined 72 categories and 635 brands. Across all categories, Google took the #1 spot, followed by Amazon, Apple, Netflix and Facebook. Of the top 100 brands that make up the ranking, 17 were retail companies.
The Department of Homeland Security and the FBI are investigating a massive cyberattack that stopped or slowed access to Twitter, Spotify, Amazon, PayPal and other sites by targeting Dyn, a firm responsible for routing internet traffic. Hackers used a method known as distributed denial of service, or DDoS, a tactic that is on the rise. A DDoS attack blocks users by overloading the site with traffic. Companies like Dyn are prime targets, because so many sites and services rely on them. The Internet security world has been on high alert since the Dyn attack, which is believed to be one of the largest DDoS attacks ever.
FIRST U.S. MULTISTORY WAREHOUSE
Prologis Inc., the world’s biggest warehouse owner, will start construction next year on a three-floor 580,000-square-foot warehouse just outside downtown Seattle. It will be the first multistory warehouse in the U.S. Prologis is attempting to create more capacity in urban markets where land is getting very hard to come by. As ecommerce sales grow, many retailers are bringing warehouse operations closer to their customers, who expect speedy delivery. Construction is expected to be completed in 2018.
Google has introduced a stand-alone home assistant to compete with Amazon Echo. The cloud-based, voice-activated digital assistant is admittedly behind Amazon Echo in terms of current skills, but Google has a vast knowledge base waiting to be tapped. Google Home is also meant to be displayed; it has a curved touch surface, hidden LED lights and the base can be replaced with one of a different color or texture. Both Echo and Google Home respond to voice commands. Amazon Echo has more than 4,000 skills already in place, and there are reportedly tens of thousands of developers working on new skills. Google will kick off the developer platform for the Google Assistant in December. Google Home still does not handle some of the basics that Alexa does, such as setting reminders or adding entries to Google Calendar, but it can remind you about things already on your calendar. Both Alexa and Google can adjust a Nest thermostat, turn Phillips Hue lights on or off, arrange a ride through Uber, suggest local restaurants, convert currency to dollars, solve math problems and deliver news, weather and sports. They even tell jokes. Google could eventually get the upper hand based on the immense reservoir of knowledge that is Google. As of USA Today’s test, Amazon Echo did a better job of answering “Who will win the presidential election,” offering results from RealClear Politics polling averages.
PROMOTIONS SHOW GENDER BIAS
The Women in the Workplace 2015 report by McKinsey and LeanIn.org found that men are 30% more likely than women to be promoted from entry level to manager. This results in a workforce with an equal number of men and women at the entry level, but a widening gap as workers climb the ladder. At entry level, 54% are men and 46% are women. At the manager level, 63% are men and 37% are women and at the vice president level 71% are men and 29% are women. By the time they reach the C-suite (CFO, COO, CMO, etc.) 81% are men and 19% are women. LeanIn.org says that women hit the glass ceiling and plateau out sooner than men do. However, 80% of men and 74% of women want to get promoted to the next level, and 56% of men and 40% of women want to become a top executive. Interestingly, of those who don’t want to be a top executive, 42% of both men and women say they would be unable to balance work and family; 32% of women and 21% of men don’t want the pressure. Several factors contributed to women’s lagging behind, including uneven distribution of responsibilities at home and less access to senior leaders.
THE PRICE OF POOR CUSTOMER SERVICE
More than 80% of consumers surveyed in the U.S., Australia, Europe and New Zealand said they have stopped doing business with a company following a bad customer experience, according to a survey by Ovum for live-chat software-maker BoldChat. Six in 10 consumers said that easier access to support channels on the web, whether live chat, social media or communities, was one of the top two improvements they’d like to see. More than 50% also said that agents responding more quickly would definitely improve service. 29% were looking for a consistent experience across channels, and 19% wanted better mobile service. Of those surveyed, 83% used mobile apps for customer service, up from 64% two years earlier. Use of live chat on mobile app was up 11% in the same two years. Additional research has shown that someone who has a bad customer service experience will tell an additional ten people about it.
REFERRED CUSTOMERS ARE PRIZED
According to Chain Store Age, referred customers have 20% higher Average Order Values, have 25% higher Lifetime Values and are 25% more profitable than customers from any other channel. Analysts say that is because they feel more connected and trust the brand at a higher level than others because they trust the person who referred them.
According to date from Rubicon Project and Penn, Schoen & Berland Associates, nearly two-thirds of internet users plan to research online this holiday season, with 78% planning to do at least some of their shopping in stores. Shoppers are checking costs, but they are also researching product features and checking availability. More than 50% of shoppers begin their product searches on Amazon’s website or smile app, and search engines such as Google and Yahoo are losing ground. Search engines were the starting point for 28% of those surveyed, down from 34% a year earlier. Specific retailers were the starting point for 16%, down from 21% last year. Amazon has become the reference point for shoppers. EMarketer expects ecommerce sales to increase 13% to $385 billion this year.
DIGITAL AD SPENDING TO SURPASS TV THIS YEAR
According to eMarketer’s latest survey, by the end of this year U.S. Digital ad spending will reach $72.09 billion, with TV spending growing to $71.29 billion. That means digital will represent 36.8% of U.S. total media ad spending while TV will represent 36.4%. Digital advertising is not only pulling dollars from traditional media, it’s also creating new advertising opportunities at both the local and national level. The strong performance of the digital ad market is being driven by several factors, including mobile and video. Mobile ad spending will grow 45% this year to reach $45.95 billion, and will grow to represent an increasing share of overall spending. EMarketer says that by 2019 mobile will account for more than a third of total media ad spending, with Google reigning supreme over mobile with 32.0% of the mobile ad market, followed by Facebook with 22.1%. Display spending will reach $34.56 billion this year, slightly ahead of search’s $33.28 billion. Facebook has the lion’s share of display spending, accounting for 34.5%.
AD AWARENESS DOWN
The YouGov BrandIndex reported that for almost half of all large retail brands, advertising awareness is significantly lower than it was a year ago. While Walmart still leads in awareness, they’re only connecting with 48% of consumers, down 9% compared to last year. Amazon, Target and J.C. Penney fared best, but nevertheless experienced drops in awareness. The index is based on daily polling, asking respondents two questions about 23 leading stores: one on good value and one asking if they’ve seen an ad for the store in the past two weeks. In terms of value perception, Amazon was the leader, with a score of 55.8%; Walmart was third at 32.5%.
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