Stores Increase Advertising, Especially Social Media

In its latest survey of CFOs of some of the country’s largest retailers, BDO says 62% are increasing marketing and ad budgets this year, especially in social media. And 38% intend to spend more on developing mobile.

When asked which promotional methods worked best last year, free shipping was the biggest winner at 39%, followed by social media and email promotions, named by 24%. The worst? Print and TV promotional discounts, cited by just 7%, followed by price matching, at 14%.

As a result, Natalie Kotlyar, leader of BDO’s consumer business practice, predicts more advertising bucks will flow through social-media channels. “It’s just the best way to reach Millennials and Gen Z,” she tells Marketing Daily. “Social influencers and peer reviews are critical to this age group.”



Equally expected, she says, are the CFOs’ continued investments in e-commerce and mobile, even as the industry goes through a period of slow sales, widespread store closures and bankruptcies. “Those represent a rightsizing of the marketplace, with growth in e-commerce offsetting the slowing in bricks and mortar stores. Increasingly, stores are focused on how to handle the ‘Amazon Effect,’” she says. “Everybody expects a seamless shopping experience now, and retailers know they have to provide it.”

The professional services firm’s study also finds that while they’re investing more in e-commerce capabilities to provide that seamlessness, they’re also aware that they need to spend to make physical stores more appealing to shoppers. Target, for example, just offered a peek on a sweeping redesign plan that is scheduled to begin in a single store in Houston in the fall.)

In the BDO survey, 52% of CFOs say they are investing more in remodeling and redesigning stores this year than last.

But perhaps most surprisingly, especially given the disappointing fourth-quarter performance of many large chains, the execs are upbeat about the year ahead and expect sales to climb 4.9% this year, compared to the 3.4% they projected in last year’s survey. (According to the U.S. Census Bureau, that prediction was close: Sales actually gained 3.3% last year.) And they anticipate online sales will grow by 10.9%. While they expressed uncertainty over President Trump and the impact border taxes might have on results, the CFOs say they base their optimism on strong levels of consumer confidence.

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