Today’s varied Clear Digital Digest round-up includes:

• The launch of major Christmas campaigns is imminent, but it is predicted that advertising spend will be down 10% this year.
• An update on the latest ecommerce sales figures, plus Black Friday getting earlier every year.
• The latest in customer channel shift from brands as diverse as TikTok, Shopify, Royal Mail, AO, Sky and John Lewis.
• And finally...the great Woolworths hoax.

HERE COMES CHRISTMAS: BUT AD SPEND FORECAST TO BE £724M LESS THAN LAST YEAR

With half term coming to a close this week and Christmas products all over the high street, November is typically when the large retail brand campaigns come to life, with large TV spend supported by a variety of other media.  Of course 2020 is not a typical year, so there will certainly be all kinds of challenges creatively this year, as well as with regards to available budgets.

• The Advertising Association (AA) and Warc forecast final quarter spend will be £724m less than last year, a decline of 10.5% on last year to a total of £6.2bn.  This would be the biggest drop in the “golden quarter” since figures started to be compiled in 1982.
• Marks & Spencer are a prime example of a retailer that will likely be drastically changing its advertising strategy this Christmas, with rumours that its TV advertising will be purely focused on food this year, with clothing only supported online.
• TV is actually forecast to be fairly resilient this Christmas, with a decline of just 2.7% on last year.  Instead - and very understandably – it is external sectors such as cinema and outdoor/posters that will be seeing especially significant declines.

• Digital spend across search and online display is also forecast to fall in the fourth quarter, by almost £300m to £3.57bn in total.  However, this still equates to a dominant 57% share of the total ad spend of £6.2bn.

 

• Of course, ad spend shifts this year vary greatly by product category, as is shown by some recent eMarketer research demonstrating that the travel and automative sectors have been hit particularly badly.
• Looking at just digital advertising in the UK, it is forecast that travel spend will decline by 37% this year, as the table below shows.  Other sectors have been less adversely affected by the pandemic, led by technology products as we spend more time at home for both leisure and work reasons.

ECOMMERCE: SALES UPDATE - AND BLACK FRIDAY IS GETTING EARLIER EVERY YEAR

Despite all this year’s uncertainty, one trend that can be confidently predicted for Christmas 2020 is that ecommerce sales will take a significant larger share of total retail sales, but how much larger exactly?

• The ONS released their latest online sales tracker on Friday, showing that ecommerce accounted for 26.1% of all retail sales in September, up 8% on the 18.1% recorded in September 2019. 
• This 26.1% was a slight decline of 0.6% on the previous month August’s 26.7%, but the pandemic driven medium term shift to increased online shopping remains.
• Overall retail sales for September grew by 3.4% on September 2019 and edged forward by 1.5% month on month.

CHANNEL SHIFT: SHOPIFY, TIK TOK, ROYAL MAIL, AO, SKY, JOHN LEWIS

Here are a few recent stories that caught my eye regarding channel purchasing shifts, including developments from AO and Sky which demonstrate how digital first brands continue to consider the ways that a physical presence can help them engage further with customers…

AND FINALLY…

​One brand that won’t be returning to the high street – despite a flurry of excitement earlier this week – is the old childhood favourite Woolworths.  

One of the most talked about developments for both ecommerce and general retail in recent years has been the rise of “Direct To Consumer” (DTC), whereby brands are bypassing traditional retail outlets/websites and selling direct to customers.

2020’s unfortunate events have led to a well documented large increase in home deliveries, including DTC brands generating record sales across sectors as diverse as food kits, mattresses and sportswear.

The rise in marketplace sites (especially Amazon and eBay) has certainly played a part in increasing DTC sales, and Clear Digital recently explored this in the deep dive “The UK marketplace sector – and the role of community”.   However, DTC websites are also rapidly expanding, particularly on the Shopify ecommerce platform.

This blog explores further the size and dynamics of the UK DTC sector, as well as examining Shopify (and similar ecommerce solutions) in order to understand more about DTC winners and their growth drivers, including expanding onto other channels...

• We can split Direct To Consumer operators into 3 distinct categories: subscription box services, DTC pure and DTC hybrid.

 

• Subscription box revenue was estimated by Royal Mail at £700m in 2017 and is likely to surpass the £1bn mark this year.  Such services are especially popular with a younger and more urban demographic.
• Male grooming has been forecast as the largest growing subscription category to 2022, and some originally DTC only brands such as Harrys are now available through more traditional outlets such as Boots and Sainsburys.

Today’s Clear Digital Digest is full of tasty morsels, as we look at:

• “Bagel cities” – and how customer footfall continues to cluster at the edges.
• The latest online grocery news, particularly from Ocado.
• Notable digital dates: happy birthday Instagram and here comes Amazon Prime Day.
• A different type of Hotel Chocolat.

LONDON: A BAGEL CITY, NOT JUST FOR BRICK LANE

​Javelin Group have recently published some insightful research regarding the impact of Covid19 on footfall within 5 key global cities: New York, Sydney, Tokyo, Berlin and London. 

• The graph below looks at footfall within a variety of different London shopping destinations: e.g. central, suburban, transport etc. 
• This shows how the suburban Wood Green shopping centre has nearly recovered in terms of customers visting since Covid struck but it is a very different story for the office workers starved Cheapside as well as the prestige shopping destination of Regent Street.  

AND FINALLY…

After coming across this tweet, it appears that yes you can book a chocolate orange themed room in a ski hotel in the Alps.  The Christmas tree in the picture really is something.

Today’s Clear Digital Digest reviews a recent Ofcom report about our changing TV and video viewing habits since lockdown.  We also take a look at changes in the ecommerce world, covering both shopper attitudes plus news from Amazon, Aldi and the mooted return of a familiar old retail brand, Comet… 

CHANGING VIEWING HABITS
Ofcom have just released their latest annual Media Nations research report, examining how we consume TV, video, radio and audio content.  This year’s events have unsurprisingly seen quite significant changes since March, so Ofcom have added two chapters to their report examining Covid-19 related trends.   Some key highlights from this are:

• Total amount time spent using a screen (for TV/online video/gaming etc) jumped by an hour and a half from an average of just under five hours during 2019 to just under six and a half hours in April 2019. 
• This increase was driven by more traditional live/broadcast TV well as Streaming Video on Demand (Netflix, Amazon etc) as we turned to familiar trusted sources such as the BBC and C4 for news updates as well as looking for Netflix escapism.

CHANGING SHOPPING HABITS
As well as changing our viewing habits, Covid19 has also fundamentally changed our shopping habits with the well documented growth in online shopping.   eMarketer have taken a look at what these shifts may mean in the longer term.

• A McKinsey report has found that more UK adults expected their digital shopping habits for grocery and non-grocery to either increase or stay the same post-pandemic, compared with those who anticipated declines. 

​Looking at other ecommerce stories, a week never seems to go by without some significant Amazon news and the last seven days are no exception.

• It has been reported that Amazon are planning to open 10 of their check-out free Amazon Go stores in the UK, with talks also advancing for a further 20 after that.  The first site is thought to be opening in London later this year, with Notting Hill a likely location.
• And the concept of check-out free stores in the UK may become increasingly familiar, as Aldi has also announced that it is developing its own cashier free rival to Amazon Go.
• Some final ecommerce news is that Comet is set to make an unlikely comeback as an online only brand, nearly a decade after falling into administration.  As well as this possibly unexpected news, what was really surprising to me was that Comet disappeared in 2012, it certainly doesn’t seem that long ago…!

​AND FINALLY…
I did like the latest Marketoonist cartoon from the ever excellent Tom Fishburne…

Today’s Clear Digital Digest starts with a look back at the beloved Argos catalogue before looking forward to the growing impact of another Argos innovation in Click & Collect, as well as other retail partnerships.  Then we turn our attentions Stateside to review Q2 updates from Amazon, Facebook and Google plus the latest digital innovation in sports watching…

END OF AN ERA – GOODBYE ARGOS CATALOGUE
So RIP the Argos catalogue – as one wag noted, much easier to say than to actually do.  As was widely reported on Thursday, Argos have stopped producing their twice yearly catalogue, meaning that January’s Spring/Summer 2020 edition will be its final print version.  Argos now say that online shopping offers “greater convenience” than flicking through a catalogue, part of the continuing wider shift to ecommerce sales. 
Having previously spent 8 years in various roles within Argos’ ecommerce operation, during which time the catalogue’s ubiquity (estimated to have been in approx. 75% of British homes at one time) certainly helped to mutually drive web sales, there’s definitely a sense of nostalgic regret to see the “laminated book of dreams” bid farewell.  

However, it appears that less and less were being printed, with 3.9m of the last edition down from a peak of over 10m a decade ago.  And with each catalogue costing roughly £3 to produce back when I was working there, changing shopping habits will have made ceasing production an increasingly attractive option for the huge potential cost savings; something that has been frequently reviewed over the years. 
Nostalgia for kids being able to choose their favoured Christmas presents will be partly assuaged by the news that Argos plans to continue to print its Christmas Gift Guide, still generally a sturdy 300 pages or so, albeit well down on the 1800 page behemoth that was the main catalogue.  
Before then, for anyone after a quick nostalgic fix, the Guardian pulled together a selection of vintage covers and catalogue pages, count me in for 1976’s Home Stereo Disco Unit (item 7 below…)

CLICK AND COLLECT/RETAIL PARTNERSHIPS
Of course, there are other retail channels that Argos pioneered which remain highly relevant and continue to grow in popularity, none more so than Click & Collect.  In line with all ecommerce sales, Click & Collect orders have been growing rapidly since the start of lockdown, with more and more brands partnering together for mutual benefit. 
​Argos have offered a collection service for selected eBay customers since 2014, while the introduction of Argos collection points into many Sainsburys stores since being bought by the grocer in 2016 meant that Argos was able to continue offering C&C services throughout lockdown.

​Amazon entered into a similar partnership with Next last year with their Amazon Counter initiative, while John Lewis have recently announced plans to extend their C&C tie-up with the Co-op to over 500 stores. 
John Lewis have also just stated that they expect 60% of their sales to be online, up from 40% pre-Covid.  In an update to all John Lewis partners, chair Sharon White said “We have two of the best loved and trusted brands in the UK, rated highly for our personal service and expert, impartial advice. Customers are, however, shopping in very different ways – younger people especially – with the pandemic accelerating the importance of digital. We expect John Lewis to be a 60% online retailer, from 40% pre-Covid-19, and Waitrose to rise above 20%, from 5%.”
Such uncertain times do certainly seem to be leading to a much wider array of complementary brands working together, with another recent example seeing Sainsburys starting to provide a range of 3000 products to the garden centre retailer Dobbies.

Q2 UPDATES: AMAZON, FACEBOOK, GOOGLE
Three of the tech giants have provided their latest global Q2 updates in the last few days, with varying results.  Of course, Q2 2020 is the first quarter since the world has been in lockdown, so one would certainly not expect standard trends from these updates.

• Amazon leads the way, with global sales growing by 40% to $88.9bn (£68.2bn) in what Jeff Bezos described as a “highly unusual quarter”.   Operating income increased to $5.8bn (£4.5bn) during the three months to 30 June, up from $3.1bn (£2.4bn) in 2019.  Interestingly, third-party sales grew faster during the quarter than Amazon’s first-party sales as Amazon Marketplace continues to stamps its dominance; something I explored in further depth recently in my “The UK marketplace sector” deeper dive.

 

• Perhaps more surprisingly, Facebook ad revenue grew by 10% to $18.3bn (£14bn) in the second quarter of 2020, defying the impact of the global coronavirus pandemic.  During the three months to 30 June, the social media company grew its total revenue by 11% to $18.7bn (£14.4bn), increasing its daily active user base by 12% to 1.79 billion and monthly active users to 2.7 billion, also up 12%.

 

• Facebook’s growth is even more notable when compared with Google’s Q2 update.  Revenues at the search giant fell by 2% during the second quarter of 2020 to $38.3bn (£29.4bn), the first year-on-year decline in quarterly revenue since Google became a publicly-listed company in 2004.  Revenue generated by Google Search fell to $21.3bn (£16.4bn) during the three months to 30 June, from $23.6bn (£18.1bn) in the same period last year.   Overall, Google ad revenue declined from £32.5bn (£24.9bn) in the second quarter of 2019, to $29.9bn (£23bn), although YouTube ad revenue rose to $3.8bn (£2.9bn) from $3.6bn (£2.8bn).

AND FINALLY…
In a week when it was announced at the last minute that planned pilot sporting events were not allowed to admit limited spectators as originally planned, technology continues to serve up increasingly sinister options instead.  After previously highlighting Japanese robotic baseball fans last month, MLS in the US have now seemingly opened applications for the world’s next supervillain…