The Resurgence of the Outlet Malls

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Outlet malls were oncShopping Bagse the final destinations for clothing cast-offs, where deal seekers went to find designs a season behind for less. However, they have been growing in popularity since consumers formed penny-pinching habits during the recession. Big-box retailers have lost their footing and these discount mega-shopping centers have stepped up in their place.

Jeff Moore, retail market leader in Southern California for commercial real estate agency CBRE states, “It’s one of the hottest categories in retail today. Ten, 15 years ago, it was a small tertiary market. Now it’s moving into very successful, infill markets with closer spaVIP Loungecing to retail brands.”

Not only are these outlet malls popular amongst bargain hunters in the U.S., foreign tourists will often plan trips centered around shopping, with outlets such as the Citadel as one of their key destinations. In an effort to cater to the booming tourist crowd, the Citadel has added mall signage in Chinese and built a VIP lounge for guests who have downtime before flying home or want to rest during their marathon shopping trips. The shopping center is planning to add a shipping center to allow international shoppers to mail purchased goods overseas. The Citadel has identified that international shoppers constitute a large percent of their sales, and have therefore adapted their strategy to cater to the foreign consumers.

This may all sound like great news for retailers who want to get a piece of the $12 billion dollar total outlet apparel sales industry. They also get to bypass certain steps in their distribution such as Macy’s or Nordstrom, but the growing popularity of the outlet malls could lead to their demise. As more brands flock to the off-price model, they have been driving up rents and increasing competition within outlet malls. Wells Fargo analyst Paul Lejeuz states, “As we reflect on the past year, we believe there is further evidence that the economics of factory outlets are under pressure. As new retail center construction hit an all-time low in 2014, demand for outlet locations increased. The increased demand has caused rents for factory stores to shoot up, at almost twice what they wereOutlet Rent a decade ago.

However, even with the higher rents, many retailers feel that outlets are a highly profitable channel; their only concern is that it could get less profitable. Even though it is a relatively young channel with growth ahead, the rise of e-commerce and flash sales pose a significant threat to factory outlets. However, Forrester analyst Sucharita Mulpuru, Forrester analyst states, that the outlet shoppers differ from those visiting flash-sale sites, as they are more interested in the experience of going to a physical store and browsing what’s on sale, versus flash-sale shoppers, who are more like spear fishers. Also, compared to traditional retailers such as Macy’s, who carry some of the same labels as factory stores, shoppers for the most part cannot get items there for the same prices as they would at an outlet.

Barclays analyst Joan Payson states, “Since 2008, there has been a noticeable shift in North America towards premium but accessibly priced luxury, as the spending habits of the domestic customer have transitioned away form the ultra-high-end purchasing. Making these products even more accessible has been the strategic roll out of off-price, both in the expansion of brand-operated outlets and high-end department stores expanding their own off-price formats.” Brands such as Kate Spade and Ralph Lauren have employed methods to fit into the sweet spot of affordability and availability, but have upheld their premium positioning and kept their brand equity intact.

While the distance and overcrowded nature often deters me from making a trip to an outlet mall, I do manage to visit a few times a year. However, outlet shopping has not replaced any trips I make to traditional retailers; it has only increased my spending! After all, how can I pass up a 75% off sale at the Kate Spade Factory store?

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“The Volvo Way To Market”

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Recently, Volvo Cars has introduced an overhaul of their global marketing strategy. In the ever competitive automobile market, they hope that this strategy will realign their brand with Volvo’s Scandinavian and Swedish heritage. Volvo’s Marketing, Sales, and Customer Service senior vice president, Alain Visser, described what he thought of the automobile industry and how Volvo is changing it’s pace, “The car industry is one of the most conservative, least evolutionary marketing clusters in global business. For decades, car marketing has been following a certain pattern which is followed by the entire car industry. Now, Volvo Cars chooses to defy that logic and implement a strategy that is geared towards its own needs”. So, what does this new strategy mean for the Volvo brand and for consumers alike?

The Volvo Way To Market changes a large portion of who Volvo is and how they operate. Marketing plays a huge role in this change. Volvo seems to be following in the footsteps of the Burberry overhaul in 1998. The new global marketing strategy will remove Volvo from many of the automobile shows throughout the year, and focus on three key international shows, one in Europe, the U.S., and in Asia. The hope with this strategy is that marketing becomes more aligned with the individual customer, as opposed to a mass market advertisement.

Tesla has shown us the success of online car buying. It has become increasingly popular and tremendously easier for customers to find, compare, and shop for their future vehicles on the internet. Volvo hopes to get ahead of this trend by rolling out a strategy to sell their cars online. Volvo is keeping close ties with dealerships who understand this customer based approach, and who complement the buying experience.

Speaking of dealerships, upgrading facilities and training employees is another large portion of The Volvo Way To Market strategy. In accordance with their aforementioned heritage, all Volvo dealerships will be redone with Scandinavian and Swedish roots in mind. These tactics range from serving customers a drink in a glass produced in Sweden, to “smell elements” that portray Scandinavian spirit. On the employee front, all dealer staff will be properly trained in these new standards and procedures. The final part of this customer driven service strategy is a Personal Service Technician for each customer. Upon buying a car, the customer will be introduced to their own personal service technician who will fill their needs after purchase.

Obviously, Volvo’s marketing budget will be increased significantly to suit all the needs associated with The Volvo Way To Market. The company plans to have this service as a standard on a global basis by 2018.

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A Marketer’s Dream- The 2014 Holiday Season

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Generating sales during the holiday season is a globally recognized feat. As consumers, we notice the increase in advertisements in our email inbox, Google searches, and TV placements. Marketers know there is a science to succeeding during the holiday season, and 2014 has no shortage of tactics and strategies to encourage purchases. Experian does yearly updates for marketers as to whether or not these tactics have proven successful in the past, and what it means for the future.

The first portion of this years Experian study showed that Facebook paid advertisements will be at the forefront of targeted marketing. In fact, Bill Lancer of Experian explained this phenomenon well with past statistics, “The focus on Facebook isn’t impulsive; it’s generating clear results for marketers. For example, during the 2013 holiday season, we found that there was a 39 percent increase in traffic to retail sites from Facebook”. If anyone reading has ever used Facebook, you know what ads he’s talking about. It seems like the far right side of your screen is actually peering into your internet activity- whether or not you find this creepy, the ads seem to be working, and it’s not hard to see why. If you’re already looking on Google for that brand new iPhone, finding it as you’re scrolling through your daily News Feed is quite convenient.

Email tactics are also a large part of this years marketing push. In fact, 91% of marketers around the world plan to use email in their 2014 holiday campaigns. According to the article, email provides a platform to seamlessly integrate marketing channels for advertising purposes. With a whopping 68% of marketers looking to use a cross-channel marketing strategy for this season, a direct link to consumers is the perfect way to integrate strategies. Falling into the category of email and internet marketing, mobile advertising is another tactic used, although differently from country to country. One of the most notable differences is in North America, where more digital coupons are used than anywhere else.

So what’s changed since 2013? According to the study, free shipping will be notably less available than it was last holiday season. 25% of marketers will use this strategy this year, as compared to 39% in 2013. This is due in large part to a growing level of trust among consumers when it comes to shipping companies. Many logistics driven companies, like UPS or FedEx, already have a strong brand reputation for being quick and delivered on time. In addition, free shipping is offered pretty regularly year round, making this marketing ploy less effective when consumers are looking for a good deal. One of the major obstacles marketers are facing in this years season is identifying their target consumer and reaching them effectively. Cross channel marketing is making it difficult to identify the “best customer”; within channels, these problems don’t exist, but when marketers deploy a multi-channel strategy, reaching this best customer in each channel is difficult to do.

It is interesting to see both sides of how retail is carried out throughout the holiday season. As a consumer, we are often inundated with emails and other forms of advertisements that may prove frustrating and even irritating if you’re not looking to purchase any gifts (or, if you’re ahead of the game and have finished up your holiday shopping). On the marketers side, historical statistics and tactics drive these types of advertisements that prove successful during this time of year. It will be interesting to see if the aforementioned strategies play out; the beauty of the holiday season for a marketer is that it comes around every year- if these strategies don’t play out, they have 365 days to make a new one.

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Getting Targeted Web Ads? Pharmaceutical Companies May Be Watching You!

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Typical Customer Purchase Journey

In today’s more measurement-focused marketing world, cross-channel attribution is a hot topic. Forrester defined it as “the science of using advanced analytics to allocated proportional credit to each marketing touch point across all online and off-line channels, leading to a desired customer action.” So, marketing jargon aside, it means “giving credit where credit is due.” The purpose of attribution is to help brands track their marketing and media efforts more accurately and show how they impact the overall business.

Increase in Analytics The pressure is on for marketing organizations to demonstrate the value of campaigns and show what worked or didn’t. According to an article in the September 2014 edition of The CMO Survey, brands are expected to increase their spending on marketing analytics 73% over the next three years. For companies with $1 billion to $10 billion in revenue, the increased is expected to be 86%!

Attribution can provide clear and accurate insights into how, when, and where marketing influences customers across devices and channels. Those insights can then be used to spend smarter and define the optimal mix of customer interactions. The marketers can understand their customers better. However, the myth that attribution is only a digital thing must be avoided. Attribution needs to account for digital as well as offline factors, such as what the competition is doing.

Pharmaceutical companiePharmaOnlineSpendings can now identify groups that use a specific medicine and send them tailored web advertisements. The days of confidential medication information are over. Drugmakers and Internet companies are joining forces to link U.S. pharmacy records with online accounts to target ads to people based on their health conditions and the prescription drugs they buy. This sneaky practice has become a part of the $1 trillion pharmaceutical industry’s digital marketing efforts. Since names are concealed, privacy laws are still technically being followed. Executive director of the Center for Digital Democracy states, “Marketers are treating our health data as if we were buying a pair of pants or a book.”

 This process represents the cutting edge of medical data analytics and is known as a matchback. How matchbacks work:

  • Data brokers have amassed hundreds of millions of prescription records.
  • The brokers use algorithms to substitute patients’ names with numerical codes.
  • They partner with websites that rely on the same software to transform their users’ data.
  • Drugmakers pay the websites to match the two sides.
  • Most consumers who have filled a prescription in recent years have been assigned a permanent code,which can be used to send them customized ads.

Patients are tracked over time anonymously. Feeling like your privacy’s been violated? Matchbacks are not a new practice. Retailers have been using this process for decades, linking customer names on their sales receipts back to lists of people who were sent promotional coupons. However, in terms of attribution, where is credit due? What kind of information can this provide?

In terms of retailers, analyses can be performed on what coupons performed well, during what season, what the check average was, and so on. However, with pharmaceuticals, can you accurately trace a medicine purchase back to a certain ad that was shown to the customer on a website? Also, haven’t we become highly desensitized to web advertisements? If the information is supposed to be anonymous, what are the big pharmaceutical companies trying to gather?

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Will Streaming Video On Demand Be the Death of Broadcast TV?

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Do you still have a pay-TV subscription? More and more people are canceling their cable TV subscriptions in favor of online content streaming services, also known as SVOD (Subscription Video on Demand). There is a very clear shift of video consumption to the Internet, and Netflix is one of the companies leading this change. Time Warner’s HBO is also exploring various routes to offer consumers a stand-alone streaming video service, including as an add-on to broadband packages or through technology partners such as Apple, Microsoft, and Amazon.

Centris-US-SVOD-Adoption-Trends-in-Q2-Aug2014Netflix, Inc. is an American provider of on-demand Internet streaming media available to viewers in North and South America, the Caribbean, and parts of Europe. Netflix entered Canada at the end of 2010 with its streaming-only service. It experienced good adoption rates in Canada and expanded to Latin America in 2011 and the U.K. and Ireland in 2012. While the international market presents huge potential, it also comes with huge obstacles such as low broadband penetration and speeds, local competition, and content licensing complications. As of September 2014, Netflix has subscribers in over 40 countries, with intentions of expanding their services in unreached countries, such as New Zealand. What’s interesting is that the selection of available titles is based on the user’s IP address, which corresponds to the user’s physical location for most users. So, a user in Canada does not see the same content available as a user in Ireland.

Netflix offers video rental service in the form of DVDs as well as online streaming to U.S. customers. In international markets, including Canada, Latin America, U.K., Ireland, and the Nordic countries, the company offers only online streaming services. DVD subscribers are expected to decline significantly in the U.S. while streaming subscribers are expected to grow. The international streaming business is likely to remain a relatively lower value contributor for several years because Netflix faces high content costs as well as local competition and resistance. Also, markets that have lower broadband penetration and per capita income, such as Latin America, make growth difficult in the region difficult for Netflix.

Content advantage was one of the key drivers of Netflix’s U.S. streaming subscriber growth in 2013. The company has been adding some original and exclusive programming to its streaming library, which seem to be paying off. TV series such as House of CNetflix Marco Poloards, Orange is the New Black, and Arrested Development are drawing lots of viewers and attracting customers to sign up. Three of its web series, Arrested Development, Hemlock Grove, and House of Cards earned a combined 14 Emmy nominations.

Just recently, a long-time SVOD holdout, Discovery Communications signed its first long-form distribution deal with Hulu, giving them exclusive rights to the Deadliest Catch. Hulu is looking to expand their offering of premium content as it battles for SVOD market share against giants such as Netflix who is soon releasing Marco Polo   and four upcoming Marvel television series beginning in 2015.


Netflix is set to enter Australia nNetflix Australiaext year, but Aussies may be in for disappointment. There is a common misconception among Australian consumers that Netflix has every movie or television show ever created available on it. Also, due to licensing agreements, Netflix also would not have the rights to run the same content in Australia that it does in the US. Will SVOT be the death of broadcast? In the U.S., it slowly appears to be trending in that direction. However, in Australia, maybe not!

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