Nordstrom a digital ‘genius’, but who are the department store dunces?
Department Stores are in structural decline. Hit from below by discounters that offer value, from above by specialty retailers with deft merchandising and, most recently, sideways by e-commerce players that offer a mix, the sector’s share of retail has been halved in the last 10 years. It’s more important than ever before, then, to push digital strategies to a market relying increasingly on online platforms.
According to L2’s Digital Index Department Stores, retailer Nordstrom is leading the way in this area, displaying an impressive ‘genius’ level of digital IQ. We’ve seen recently the store’s clever online/offline strategies with Pinterest, so this is no surprise.
However, other seemingly strong contenders, such as Harvey Nichols and Ogilvy don’t fare so well, with scores of 82 (‘challenged’) and 42 (‘feeble’) respectively . Even strong brands such as Selfridges and Liberty come in at ‘average’. Why is this?
Perhaps some have not yet realised the power of search, which accounts for 45.1% of all traffic to department websites, or even email marketing which accounts for 6.3%. Social, meanwhile, drives just 1.9%.
Most (98%) department store brands are on Facebook, which dominates in average community size but trails in engagement. Those on Instagram register almost five times the engagement rate of other platforms, yet only 60% of department store brands have a presence here.
Then of course mobile plays an important role. While mobile influence on in-store sales is projected to grow from $158 billion in 2012 to $689 billion by 2016,8 only half of department stores provide basic store locator links through their mobile experience, and only 58% of sites are mobile optimized.
As the report notes, many of these brand names rely on exactly that – their brand name – for continued success. As long as Prada continues to remain a definitive luxury brand, it doesn’t matter that it’s doing a mediocre job online, right? Wrong. Department store turnover is flat, and economic issues pose a constant challenge. Says the report: “For department stores, a robust online strategy is not an opportunity, but a necessity.”
View L2’s Digital index Department Store index here.