Soft Goods Propel Hard Drives

WOMEN ARE DRIVING the growth of online shopping. Last year, women accounted for 52% of online buyers — 18.9 million of the total 36.5 million U.S. shoppers online, according to Forrester Research. Thirteen percent of women shop online in a given week, compared to 9% who shop in a drugstore, reports WSL Strategic Retail, a New York City consultancy. Even among teens, girls tend to get down to business online more quickly than boys.

Girls go online at a younger age and are slightly more influential in household spending than boys. Girls are more active online at 14 than boys are at 17, according to Jupiter-Research, which surveyed 1,800 teens online. Teen girls spend about 22% more time online than boys — but teen boys spend 150% more time playing games online (see sidebar).

Category growth points to the increasing influence of women online. U.S. online retail sales topped $100 billion in 2003, up 38% from the year before, Forrester reports, citing strong sales in new categories such as apparel, home décor, sporting goods and health and beauty. In a separate study, Boston-based Forrester projects online music sales will grow dramatically over the next four years (see sidebar on p. 21).

Jupiter predicts that home improvement, grocery, over-the-counter drugs and other home and personal-care categories will see steep online sales growth (30% or more a year). Mature segments including books, PCs and software, will grow less than 10% annually, and heavy-volume categories such as apparel and consumer electronics will grow steadily between 10% and 30% a year.

Jupiter calculates U.S. online retail much lower that Forrester — projected at $65 billion for 2004, up 24% — and figures that sales will top $117 billion by 2008. But Jupiter also projects that online research will influence 30% of offline purchases by 2008 as consumers increasingly research items online before heading to the store.

Soft-goods retailers have catered to women shoppers by improving their product display tools. Color swatches, for example, are now common for apparel (90% of sites use them) and home décor (43% of sites have swatches, up from 10% in 2002), per Forrester.

Flash technology has become an important tool for retailers selling customized goods. Forty-seven percent of online shoppers want to be able to buy customized goods online, Forrester found. Flash, now ubiquitous on home computers, lets shoppers see their customized goods before ordering.

Online retailers also are capitalizing on the growing popularity of search engines, especially Google. Last year, 38% of online consumers used Google at least once a week, according to Forrester. Marketers have shifted online marketing dollars to search-engine marketing and spiffed up their keyword tools and ads on search engines.

Meanwhile, low-tech tools cater to mainstream consumers who are less comfortable shopping online. Bricks-and-mortar retailers post their ad circulars and catalogs on their sites for shoppers to page through.

Still, most sites aren’t doing enough to make shopping easy. On average, retailers convert only 3.2% of browsers into shoppers, according to Forrester, which blames poor content, especially product descriptions and visuals.

Where the Girls Are

TEEN GIRLS USE digital music more than boys, but boys download and burn CDs more. Half of teen girls online spend more than $100 a year on music, about 15% more than boys, according to a Jupiter Research survey of 1,800 teens online. Teen girls rely on the Internet to research music. Half of girls online read about bands, listen to song samples and watch videos online. There will be 22 million teens online by 2008, up from 18 million in 2003, Jupiter projects. Among these, a select group of “teen influencers” — the 17% of teens who average eight hours per week online — will have increasingly more say about household spending. These kids undertake the broadest array of online activities and tend to be older and wealthier than average. Fully 53% of influencers are girls, reports Darien, CT-based Jupiter. Girls also make up the bulk of the 26% of online teens who influence their friends’ choice in music. These teens spend an average of 28% more on music, burn and download more songs, and are more likely to use instant-messaging and Weblogs.

Turn Up the Volume

MUSIC DOWNLOADS will generate $200 million in sales this year, a mere 1.8% of the $11.3 billion in total music sales, according to Forrester Research. But downloads will top $1 billion by 2006 and hit $3.2 billion by 2008 — 23% of total music sales by then, Forrester projects.

Online music subscriptions should hit $107 million this year, then $434 million by 2006 and $1.4 billion by 2008.

Those projections are based in part on 2003 sales of $36 million for music downloads and $47 million for subscriptions to online music services. Apple accounts for about 70% of downloads. This year may see a number of consumers shift to monthly subscriptions from per-song fees as their consumption increases, per Forrester.

Wardrobe!

Kmart dresses WB stars for back to school

Kmart Corp. spoke with three TV networks before casting The WB Television Network in its $30 million back-to-school campaign, its biggest ever. Then Kmart cast itself as wardrobe manager, outfitting 20 stars from various WB shows to appear in Kmart P-O-P and ads, and wear Kmart apparel on their shows.

Kmart is aggressively marketing private-label brands as part of an apparel upgrade that began in March and hits store racks this month. Kmart will follow up the July-August WB promo with a September-October launch of Small Wonders baby clothes and the relaunch of its Jaclyn Smith Collection for women over 35 and Sesame Street Collection for kids. A holiday campaign will launch Attention career wear.

“This is clothing you’ve never seen at Kmart before — specialty-store style at a Kmart price,” says Chief Marketing Officer Paul Guyardo. Kmart opened an in-house design studio in March under Chief Creative Officer Lisa Schultz. The strategy: Make high-margin private-label apparel a bigger portion of overall sales. It’s already “a disproportionate amount of profit than percentage of sales,” says Guyardo, who declined to say how much of Kmart’s estimated $22.7 billion in sales comes from clothing.

“This is our first real statement that Kmart is in the fashion business in a real and important way,” he adds.

The joint promo gives Kmart cachet with younger consumers, and gives The WB promotional reach beyond its own airwaves. The July 25-to-mid-September effort matches five apparel lines to WB shows. Each participating star will wear Kmart gear in two episodes.

WB gets exposure for its fall lineup in 1,500 stores via P-O-P including reels playing WB program highlights; in-store radio playing WB songs; and WB logos on about 200 million shopping bags. Kmart’s agency of record, New York City-based Grey Worldwide, handles the campaign.

An in-store contest, dubbed Look the Part, Get the Part, lets shoppers submit photos of themselves in clothes worn by WB stars for a chance to win a walk-on role in a WB show this fall. “That brings people into the store twice — to get an entry form, and to deliver it,” Guyardo says. Ventura Associates, New York City, handles the sweeps.

Kmart approached three networks that draw 12- to 24-year-olds. The WB had the most youth-friendly shows. “The whole network skews younger, and it’s a well-recognized brand,” says Guyardo, who joined Kmart in March.

The campaign also shows Kmart’s new effort to coordinate ads (including circulars) with in-store branding. “We want to create a synergy in all customer touchpoints,” Guyardo says.

Kmart spent $35 million on measured media for third-quarter 2003, and $180.5 million for all of 2003, per TNS Media Intelligence/CMR.
— Betsy Spethmann