Another Record-setting Singles’ Day

This year was the 10th annual Singles’ Day, and set records across the globe. Alibaba reported strong Singles’ Day results:

• A record $30.8 billion in gross marketplace value (GMV) on 11/11, up 27% from a record $25.3 billion last year
• More than 1 billion orders were processed by its logistics subsidiary, Cainiao
• 237 brands exceeded USD$14.4 million (RMB 100 million) in GMV
• More than 40% of purchases were international brands: The top sources of imported products were Japan, the US, South Korea, Australia and Germany
• Lazada, a majority-owned Alibaba subsidiary, reached customers in Southeast Asia, including Indonesia, Malaysia, the Philippines, Singapore Thailand and Vietnam

JD.com also reported healthy results:

• GMV was $23 billion for its shopping event, held during November 1–11, up 26% from the prior year
• Products from the US, Japan, Germany, the Netherlands and South Korea were popular
• Popular brands included Apple, Dell, Dyson, L’Oréal, SK-II, Pampers and others
• The marketplace sold more than 29,500 tons of fresh food – twice last year’s volume
• The company’s fast-moving consumer goods FMCG) and foods divisions sold more than 400 million items
• 90% of the goods ordered from the company’s fulfilment centers were delivered the same or the next day

Singles’ Day in the US

Our team spotted offers in New York physical stores, though Singles’ Day is not yet well-known in the US.

Physical Stores

Estée Lauder
Source: Coresight Research

Aldo
Source: Coresight Research

Estée Lauder
Source: Coresight Research

Online Stores

There far more online examples of online sales for US shoppers.

Source: Barneys New York

Source: Calvin Klein

Source: Giorgio Armani

Source: Puma

Source: Panasonic

Source: Timbuktu

Singles’ Day in Hong Kong

Many of the Singles’ Day promotions at physical stores in Hong Kong drew lines of customers waiting to take advantage of the bargains.

Physical Stores

Estée Lauder
Source: Coresight Research

Gap
Source: Coresight Research

Twist
Source: Coresight Research

Online Stores

Source: Zalora

Singles’ Day Elsewhere in Asia

Malaysia

Source: Lazada

Singapore

Source: Sephora

Taiwan

Source: PCHome

Singles’ Day in Europe

Physical Singles’ Day retail promotions in Europe were likely subdued due to the commemoration of Remembrance Day (Veteran’s Day in the US), representing the 100th anniversary of the end of World War I.

Germany

Source: MediaMarkt

Source: Hunkemöller

Netherlands

Source: Singles-day.online

UK

Source: Boohoo.com

Source: NewChic

Singles’ Day Shatters Records Again in 2018

The tenth annual one-day 11.11 Global Shopping Festival, also known as Singles’ Day or Double 11, concluded with remarkable results. This year’s Singles’ Day continued to break records:

• Total gross merchandise volume (GMV) reached ¥213.5 billion ($30.8 billion), 27% higher than last year.
• Alibaba’s Cainiao Network processed a record high of over 1 billion delivery orders, up almost 24% from last year’s 812 million orders.
• Tmall Global exceeded last year’s day total GMV in just 6 hours and 29 minutes.
• Over 180,000 brands participated, up from last year’s 140,000.
• 237 of those brands achieved over ¥1 billion (US$14.4 million) GMV.
• More than 40% of consumers purchased from international brands.
• Japan, United States, South Korea, Australia and Germany were the top five sources of imported products.

Sales records were smashed at an even faster pace. It took just two minutes and five seconds to reach ¥10 billion (US$1.46 billion) while last year it took three minutes and one second to reach the amount; and just 15 hours and 49 minutes to reach last year’s total GMV of ¥168.2 billion (US$25.3 billion).

Source: Ebrun.com /Coresight Research

The unprecedented scale of the Singles’ Day this year, in terms of the number of Alibaba units, brick-and-mortar stores and brands participating, contributed to this year’s record-high sales.

Alibaba’s Ecosystem All-In

Businesses across the Alibaba ecosystem were all in for this year’s Singles’ Day with 29 Alibaba units participating. Local service companies Ele.me and Koubei (which mergedin October) also contributed to the success of this year’s Singles’ Day:Ele.me offered 24-hour delivery services and provided delivery for select Starbucks stores in 11 Chinese cities. Around 150,000 merchants on Koubei offered 50% off on catering, beauty and hair salons and karaoke bars. Ele.me exceeded last year’s total orders in the first nine hours of this year’s event.

Alibaba also took the occasion to help Chinese merchants reach overseas consumers through AliExpress, which upped its game by extending Singles’ Day to a two-day event ending 23:59 (Sydney time) on November 12. AliExpress also worked with Cainiao Network, Alibaba’s logistics arm,to open more overseas warehouses and e-commerce-dedicated intercontinental cargo flights to ensure 72-hour delivery to Europe.

Lazada, an Alibaba-controlled e-commerce platform operator, also helped raise awareness of Singles’ Day in six Southeast Asian countries by participating in the event for the first time this year. Lazada reported over 20 million consumers browsed and shopped on its websites and apps.

New Retail Upgraded the Consumer Experience

Alibaba continued to expand New Retail to brick-and-mortar partners. This year, around 200,000 smart stores participated, up from last year’s 100,000. Around 100 Hema supermarkets and 400 RT-Mart supermarkets were converted to 11.11-themed stores offering one-hour delivery to customers within a three kilometer radius (1.8 miles). 222 EasyHome stores (China’s second largest home-furnishing chain) also participated in the festival for the first time.

Increased Brand Participation

More brands participated this year than ever before, more than 180,000 domestic and overseas brands. 237 brands achieved a total GMV of over ¥1 billion (US$14.4 million), up from last year’s 167, including international brands such as Apple, Dyson, Kindle, Estée Lauder, L’Oréal, Nestlé, Gap, Nike and Adidas.

Japan and the US remained the top two sources of imported products.

Source: Alizila/Coresight Research

Key Takeaways

The tenth 11.11 Global Shopping Festival broke new records in sales and delivery orders. The scope and international reach of the Singles’ Day this year was unprecedented, supported by full participation of all Alibaba companies and more overseas merchants than ever before. New Retail played an important role in this year’s Singles’ Day event, bringing more seamless integration of online and offline retail operations.

On November 8, P&G hosted its Investor Day in Cincinnati, Ohio. At the event, the company provided an update on its business results and shared its strategies for driving value creation.

Among the senior managers who presented were David Taylor, President and CEO; Jon Moeller, CFO; Kathleen Fish, Chief Research Development and Innovation Officer; Javier Polit, CIO; Marc Pritchard, Chief Brand Officer; Shailesh Jejurikar, President of Global Fabric and Fabric and Home Care; Jennifer Davis, President of Global Feminine Care; and Alex Keith, President of Global Hair Care and Beauty Sector.

P&G Acknowledges Changing Consumer Landscape

CFO Jon Moeller noted that the market for consumer packaged goods has grown over the last 10 years along with populations and incomes. He said that while the global consumer packaged goods market is worth some $470 billion today, it is forecast to exceed $540 billion by 2022. Moeller added that the world population has grown from 6.1 billion to 7 billion over the past decade, and that it is expected to exceed 7.6 billion by 2028. He also noted that average global per-capita income grew from $5,100 in 2007 to $6,000 in 2018, an increase of about 18%, and that it is forecast to reach $7,400 by 2028. In addition, global GDP will increase from $65 trillion in 2018 to $85 trillion in 2028, Moeller said. He added that the number of middle and upper income households has increased by 65% and is forecast to increase by another 50% by 2028.

Source: P&G Investor Day 2018 presentation

Moeller also said that consumer preferences are changing, which has led to disruptive new segments and forms that are growing quickly.He explained that although top brands in most categories are maintaining share, small emerging brands have entered the market, which heightens the need for unique, differentiated offerings and better supply chain execution. Consumers of all ages have evolving needs and desires, Moeller said, noting that they are often willing to pay a premium to provide products to their families that offer natural benefits and sustainable performance.

To avoid falling victim to such disruptive changes in the consumer environment, P&G has adopted strategies to cater to consumers’ evolving needs, provide differentiated offerings and reduce cost to improve supply chain operations, Moeller said.

P&G Reduces Costs to Strengthen Portfolio and Drive Productivity

Moeller also said that P&G has become simpler, more focused and more profitable. He noted that the company has employed a number of strategies to achieve this, including:

• Reducing manufacturing sites by 20% and manufacturing platforms by 50%.
• Reducing job roles by 23%. Along with cost reductions, this has resulted in a 50% increase in core profit per employee.
• Reducing the number of office buildings and research and development centers by 65% and 30%, respectively.
• Reducing the company’s number of legal entities by 60%.
• Planning to simplify and strengthen the company’s 10 remaining categories, which will lead to fewer SKUs, more cost-efficient manufacturing platforms and fewer packaging formats.

Source: P&G Investor Day 2018 presentation

P&G’s Superiority Strategy

CIO Javier Polit defined “Superiority” as something easy for the consumer to recognize in P&G products, which prompts them to no longer use competing brands. Chief Research Development and Innovation Officer Kathleen Fish added that the superiority concept was manifested in retail execution—or how easily shoppers can shop products in retail stores—as well as in product packaging.

President of Global Fabric and Fabric and Home Care Shailesh Jejurikar stated that, in the Fabric sector, Tide “bag in a box” delivered better packaging that improves safety in shipping and also offers great retail execution, with different product ranges stocked under the same shelf.

Source: P&G Investor Day2018 presentation

President of Global Feminine Care Jennifer Davis stated that, in the Feminine Care sector, Always Discreet offers strong protection and good odor control in a thinner and more discreet design, and that it made women feel good when buying the product. In terms of retail execution, Davis noted that products are put on shelves to allow shoppers to touch and feel them.

Alex Keith, President of Global Hair Care and Beauty Sector,mentioned that Olay Skin Care grew by double digits in P&G’s fiscal 2018 year and that the brand’s packaging has been upgraded to prestige-like quality and attractiveness, with simple and elegant cartons that easily grab consumers’ attention. Regarding retail execution, Keith said that Olay had closed unproductive counters in China and designed shelf architecture in the US to guide shoppers to the brand’s best-selling items and new launches.

Source: P&G Investor Day2018 presentation

Chief Brand Officer Marc Pritchard added that SK-II, which represents the prestige market for P&G, leveraged P&G’s packaging decoration technology, which led to eye-catching limited editions in key consumption periods such as Christmas, Chinese New Year and the cherry blossom season in Japan. In terms of retail execution, Pritchard said that each SK-II high-end retail beauty counter offers a beauty consultant who utilizes a state-of-the-art analysis tool to measure different aspects of shoppers’ skin.

Source: P&G Investor Day 2018 presentation

P&G Is Accelerating Its Approach to Ensure Innovation Success

Fish added that P&G leverages a “lean innovation” approach to improve the speed and success of innovation initiatives to create new revenue streams. She stated that the objective of lean innovation is to act with agility to create the future. The first step is for staff to have a sound understanding of a problem that P&G wants to solve for the consumer, Fish said, and the second step is to explore multiple possible solutions to it. The process is lean in the sense that small but dedicated teams are assigned to a problem to ensure that the innovation cycle moves swiftly and that at least 10 prototypes are tested for real-life feasibility.

Source: P&G Investor Day 2018presentation

P&G Is Adopting a Different Organizational Structure

P&G’s existing organizational structure has three dimensions—10 Global Business Units, Corporate Functions, and Sales and Market Operations. President and CEO David Taylor said that the company will be adopting a new organizational structure that combines all three dimensions into one. The structure will have six sector business units: Fabric and Home Care, Baby and Feminine Care, Family Care and Ventures, Beauty, Grooming, and Health Care. The change will take effect July 1, 2019. Taylor said that the goals are to provide simplicity and greater clarity in terms of responsibilities and reporting lines and to strengthen leadership accountability, which together will enable P&G to accelerate growth and value creation.

Source: P&G Investor Day 2018 presentation

Under the new organizational structure, the sector business unit CEOs will report directly to Taylor, as will branding functions and legal, HR and finance. Each sector CEO will have more focus on innovation, commercialization and value creation opportunities in P&G’s most important markets, which account for more than 80% of total value creation. Taylor explained that the organizational redesign will enable P&G to better deal with business challenges and leverage growth and value creation opportunities more quickly.

P&G Will Continue to Build Strong Citizenship

Taylor also said that P&G wants to be a force for good and a force for growth. He noted that the company will continue to constructively lead in each of the four areas of citizenship it has defined—community impact, diversity and inclusion, gender equality, and environmental sustainability—and execute within these areas with a strong focus on ethics and corporate responsibility. Taylor added that P&G’s leading brands, given their wide reach, are well positioned to impact these areas in a way that is good for growth.

Source: P&G Investor Day 2018 presentation

Highlights from the Inaugural Retail Bonfire Event

The Coresight Research team cohosted the inaugural Retail Bonfire event with Salesforce in New York City last week. Nearly 200 people attended the event, which offered inspiration, insights and fireside chats with industry leaders. Coresight Research CEO and Founder Deborah Weinswig and Salesforce VP of Industry Strategy and Insights Rob Garf kicked off the event with brief presentations. Weinswig discussed the current state of retail and Garf summarized a recent research report by Salesforce and its research partner, Publicis.Sapient, called Shopper-First Retailing, which lays out three mandates for retailers, from the point of view of shoppers: “make it fresh,” “be where I am” and “give it meaning.”

Rob Garf, VP of Industry Strategy and Insights, Salesforce, and Deborah Weinswig, CEO and Founder, Coresight Research
Source: Coresight Research

Retail is growing, yet it remains challenged, with retailers being squeezed between brands and marketplaces and valued based on their customer service.

Deborah Weinswig kicked off the event with a presentation on the current state of retail, noting that:

•  Retail is growing: Total US retail sales grew at a healthy 5.7% clip during the second quarter of this year, according to US Department of Commerce data, and e-commerce sales grew at an even healthier 15%. In-store sales grew at a slower 4.8%. Garf commented that the current environment doesn’t feel like a “retail apocalypse,” even though so many have characterized it as that.
• Retail is challenged: Despite this growth, there have been 5,006 US store closures announced thus far this year, compared with more than 8,000 in all of 2017. At the same time, Amazon accounts for more than 80% of e-commerce growth. Weinswig commented that at the recent ICSC RECon conference, landlords were jokingly observing that covered boxes had better rents and foot traffic. Garf mentioned that one former pure-play retailer had seen its physical store perform strongly and drive customer affinity.
• Retailers are squeezed: Consumers highly value customer service, and retailers are being squeezed between brands (which consumers value in terms of product quality, innovation and uniqueness) and marketplaces (which they value in terms of price, variety, availability and inspiration).

According to Salesforce’s Shopper-First Retailing report, consumers have given retailers three mandates: “make it fresh,” “be where I am” and “give it meaning.”

Rob Garf described how Salesforce and its research partner, Publicis.Sapient, produced the Shopper-First Retailing report in an effort to find the “true story of shopping.” The report was based on three main sources of information:

• Shopper activity: The Salesforce Commerce Cloud handles 500 million shoppers monthly, and its Service Cloud handles more than 200 million service cases.
• Consumer survey: Salesforce conducted a survey of 6,000 shoppers, 1,000 each in the US, Canada, the UK, France, Germany and Australia.
• Mystery shopping: The Salesforce team visited 70 physical stores in New York City, London and San Francisco and rated them on store details, mobile features and loyalty program mentions.

The research revealed three mandates for retailers from the point of view of shoppers:

• “Make it fresh”: Some 69% of shoppers expect to see new products when visiting a website or store. Consumers want to see fresh products and have new experiences every time they enter a store.
• “Be where I am”: Some 83% of shoppers ages 18–44 use their phone when they are in a store. Retailers need to promote their brand wherever the consumer is, whether that is on a marketplace site or an app.
• “Give it meaning”: Artificial intelligence-powered personalization influences 37% of all digital revenue. Technologies such as augmented reality can help a retailer build a special connection with customers, and customers are willing to pay a premium for this connection.

Rick Kenney, Head of Consumer Insights, Salesforce
Source: Coresight Research

“Make it fresh” involves constantly renewing products, acting with urgency and developing unique products.

Rick Kenney, Head of Consumer Insights at Salesforce, presented on the meaning of the “make it fresh” mandate:

• Constantly renewing products: Despite the emergence of fast fashion, shoppers remain eager for constant newness. Some 69% of shoppers expect to see new merchandise on each visit, whether they are in a store or on an e-commerce site, and not just in fashion categories, but across retail brands. This is “fresh retail.” The top 5% of the product catalog generates 48% of revenue, yet 59% of this top 5% of products changes monthly, according to Salesforce.
• Acting with urgency: As with the news cycle and consumers’ constant craving for content, shopping cycles are accelerating and shoppers are constantly seeking newness. Due to marketplace migration, many shoppers who make their first purchase at a retailer are more likely to make repeat purchases on a marketplace. This affects retailers’ calculation of the customer acquisition cost, since it is based on the customer’s lifetime value and the possibility that the customer may go to a marketplace and never return. Moreover, half of repeat buyers make their second purchase within 16 days of their initial purchase.
• Developing unique products: Brands and retailers that can deliver unique products are positioned to survive the chaos and turmoil of a hypercompetitive market. Shoppers demand unique, exclusive offerings and are more likely to buy if brands offer collaborations with influencers or other brands, limited-edition products, or customized products.

Left to right: Phil Wahba, Senior Writer, Retail, Fortune; Tami Fersko, Group President, Private Label, LF Americas; Joseph Ferrara, Co-founder and CEO, Resonance
Source: Coresight Research

Panel Discussion

Moderator: Phil Wahba, Senior Writer, Retail, Fortune

Panelists: Tami Fersko, Group President, Private Label, LF Americas, and Joseph Ferrara, Co-founder and CEO, Resonance

Joe Ferrara discussed how his company, Resonance, invests in brands. Each brand in Resonance’s $200 million portfolio has less than $10 million in sales. His company is “keeping it fresh” via constant new product introductions and collaborations with celebrities. Tami Fersko of LF Americas discussed the challenges of navigating the digital economy, noting that apparel brands aim to create experiences, but still keep apparel affordable. She discussed the concept of offering 52 new collections a year (i.e., weekly collections), and said that new digital tools have unleashed designers’ creativity and that designers have found these tools liberating. Fersko also spoke about how Li & Fung has used digital design tools to reduce development cycle time by 30%–50%, although the length of the production cycle remains essentially the same.

Heike Young, Senior Manager of Industry Strategy & Insights, Salesforce
Source: Coresight Research

“Be where I am” means leveraging mobile to communicate with consumers both outside and inside stores.

Heike Young, Senior Manager of Industry Strategy & Insights at Salesforce, presented on the “be where I am” mandate. She began by sharing a graph that showed that mobile e-commerce traffic first eclipsed desktop traffic in 2015 and that it accounted for 63% of traffic in the third quarter of 2018. She noted that mobile traffic has grown to 4% of order share, whereas tablets’ share has remained under 20%. Looking at demographic groups, Young said that baby boomers, Gen Xers and millennials all generally favor making purchases in a physical store, but that millennials vastly dominate in terms of phone usage, and that all three groups use PCs and laptops. Some 71% of consumers surveyed use a mobile device when shopping in a store, Young said. She also noted that voice-powered shopping has been the subject of much hype, and that 70% of smart speaker owners had used voice for at least one shopping activity within the past three months.

Jason Goldberg, SVP, Commerce & Content, Publicis.Sapient, and Chris Hardisty, Lacoste
Source: Coresight Research

Interview

Interviewer: Jason Goldberg, SVP, Commerce & Content, Publicis.Sapient

Interviewee: Chris Hardisty, Lacoste
Chris Hardisty of Lacoste discussed retail technologies and described the state of voice shopping today as being similar to where e-commerce was 20 years ago. He said that although voice shopping would not be able to replace a real human connection, it still has huge potential to do many other things. For example, voice shopping combined with a visual component could help shoppers pick the right size and color dress, he said.

Hardisty also shared how his company handles mobile usage in its stores. He said that Lacoste approaches the issue in three steps:

1) Encourage the team to embrace mobile in-store.
2) Educate customers to help them understand why products are good via premium prices.
3) Aim for customers to be happier after visiting a store.

Finally, the discussion turned to social media for retail. Hardisty talked about Lacoste’s success in leveraging the power of social media and said that it is a good place for consumers to interact with brands and that he believes there are many opportunities to leverage social media.

Jason Goldberg, SVP, Commerce & Content, Publicis.Sapient
Source: Coresight Research

Retailers can “give it meaning” by stressing values, loyalty and personalization.

Jason Goldberg then gave a presentation that offered three ways to give meaning to retail: values, loyalty and personalization. Of these three, personalization typically receives the most attention, and Goldberg told the success story of London-based Lock & Co. Hatters, the oldest retailer in the world. The retailer’s early success was built on offering custom hats that were ordered by recognizing the customer’s voice when he or she shouted out an order when passing the shop.
Goldberg also discussed the progression of marketing, from one to one (with a unique experience for each customer) to one to many (with the same experience for every customer) to segmented (offering different experiences for groups of customers). While 21% of firms surveyed stated that they have completed their digital transformation, Goldberg noted that many have not yet cracked the digital marketing code, sharing a personal example of an airline (where he is a frequent flyer) that blasts him with irrelevant offers. He noted that shoppers remain open to personalized recommendations: 55%–68% of shoppers (depending on demographic) surveyed strongly agree that they like it when a retailer provides product recommendations based on their purchasing history, Goldberg said.

In terms of values, Goldberg said that 55% of millennials surveyed agree or strongly agree that they are most likely to buy from a brand or retailer that offers a charitable donation with a purchase. Gen Xers and baby boomers responded positively to the same question, he said, with 42% and 31%, respectively, agreeing or strongly agreeing.
Looking at loyalty, Goldberg noted that a survey found that 72% of millennials, 68% of Gen Xers and 57% of baby boomers are likely or more likely to buy from a company that offers a loyalty program.

Left to right: Phil Wahba, Senior Writer, Retail, Fortune; Katy Gaul-Stigge, CEO, Goodwill Industries of Greater New York and Northern New Jersey; Susan Jones, Cofounder and COO, Care+Wear
Source: Coresight Research

Panel Discussion

Moderator: Phil Wahba, Senior Writer, Retail, Fortune

Panelists: Katy Gaul-Stigge, CEO, Goodwill Industries of Greater New York and Northern New Jersey, and Susan Jones, Cofounder and COO, Care+Wear

Goodwill’s vision is for a world with no barriers to employment and the organization endeavors to keep jobs, find jobs and create jobs in its stores. Care+Wear works with clinicians and patients to offer innovative products. In a panel with Goodwill CEO Katy Gaul-Stigge and Care+Wear COO Susan Jones, moderator Phil Wahba asked whether customers really care about companies that try to do good while offering products. Gaul-Stigge responded that Goodwill’s customers do care about the organization’s mission and understand that it does good by creating jobs, running mental health clinics and helping disabled people keep jobs with the help of a job coach. Jones responded similarly, commenting that Care+Wear works with partners and designers on a give-back plan.

Looking at demographics, the panelists noted that millennials ask more questions and are interested in sustainability. Both Gaul-Stigge and Jones discussed ways to reach customers by embracing social media, holding pop-up events and providing personal outreach to customers.