Andrew Mantis

About Andrew Mantis

Andrew Mantis leads the MasterCard Advisors Information Solutions/Merchant practice. He can be reached at Andrew_Mantis@mastercard.com.

Meet the Millennials

polaroid_1Multi-Faceted, But Not Beyond Understanding

Retailers need to tune into the 18-to-30 crowd that comprises almost a third of all Americans – a bigger population segment than Baby Boomers. The Millennial generation numbered 79 million in 2011, with an outlook to stay at 78 million by 2030. Meanwhile, Baby Boomers will be retracting from their current 76 million to 56 million by 2030. This enormous segment of the population tends to make more transactions, but spend less per transaction. They have discretionary income and are willing to spend it… but the question is how, and where? The answers can be contradictory.

At MasterCard, we have seen data pointing to some varied behaviors within the Millennials category, as well as how they like to shop and how they’ve started to change the nature of shopping itself. Not surprisingly, a comfort level with technology has a lot to do with their ease in navigating the multichannel retail landscape – after all, they’re the ones who’ve made social media into the retail marketing tool it currently is. MasterCard has data from 80 billion anonymous credit card transactions to help better understand the needs of the Millennial consumer segment. [Read more...]

Not Too Big to Fail?

Consumer Insights From MasterCard Advisors

The Emergence of the Small Store Format

Robin_Report_Sep2013_stock6We’ve heard much talk about the waning era of the “big box.” In 2012, we saw many headlines relating to planned store closures by Best Buy, with similar stories for Sears and Office Depot, among others. More recently, of course, J.C. Penney made mega headlines. In all, from the announcements of just five Big Box retailers, anything from 1100 to 1350 big boxes could be shuttered over the next year or so.

Maybe this is not necessarily a bad thing. In some cases, we are seeing some of that big box space being reincarnated as two smaller stores instead of one. And from this, a pattern seems to be emerging, with growing retail buzz around how to make stores smaller, more selective, highly curated – in short, create a better customer experience.

Jonathon Graub, a principal in the Philadelphia office of A&G Realty Partners, specialists in the strategic consolidation and reassignment of store leases, confirms the smaller store trend. He attributes it in part to the lack of availability of large spaces in prime areas and the speed with which a chain can get to market when it enters with a smaller store format. But we must also factor in the continued growth of online commerce – Internet pureplays which desire a brick-and-mortar presence, while current brick-and-mortar chains may find there’s less need for larger spaces as their online businesses expand. [Read more...]

Getting a Return on Post-Holiday Returns

As a merchant, you’ve watched holiday shopping seasons come and go, and you’re well aware that in the last few years, consumer spending behavior has been through radical changes. It’s been a slow recovery since the precipitous drop in holiday spending in 2008. The excessive pre-holiday stocking of inventory and concomitant mad spending seem to be bygones.

Savvy retailer that you are, you’ve become very smart at balancing inventory with sales, and you’ve planned inventory very carefully this season. You’ve made well-informed estimates of consumers demand for the upcoming holiday season. According to industry analysts, this year’s second quarter saw the slowest inventory growth in the U.S. since 2009, and in light of that, you probably don’t have huge concerns about overstocking. Nevertheless, when you placed those orders into your suppliers’ line months ago, the world was a different place.

Which gets us to this point  one thing that hasn’t changed, and it’s almost as certain as death and taxes, is that there will still be a flurry of post-holiday returns and exchanges coming back through your doors come December 26th. How will you handle them?

As you’ve kept your stock lean and mean this year, there’s already a much more highly specialized collection of merchandise coming back than in previous years. While in prior years, these returns have always stretched your customer service goodwill to its limits, this year, and in this uncertain economy, you’re a little concerned about how to handle returned merchandise. [Read more...]

Multichannel Breakthrough: Segmentation Powers Insights into the Empowered Shopper

The Robin ReportAs with all new approaches, the best innovations in the digital marketplace occur not as a result of reinventing the wheel, but by integrating and retooling existing assets. Things become truly exciting for the merchant in the combination of insights derived from spending behavior with insights derived from transaction analysis—in time as well as virtual space. By including the insights from real-time transaction data, behavioral models of different segments of e-shoppers can help to extrapolate that a device that has clicked on these specific links is likely to make purchases in certain market sectors within a specified period of time. At MasterCard, we are creating a breakthrough for merchants in segmentation by bringing our own enormous anonymized data set to bear on the task of identifying shopper segment behaviors. By applying insights on spending behavior to our partners’ online populations using common geo-demographics, our partners are able to identify online shoppers with a high propensity to spend in a given industry in the next 30 days. [Read more...]

How Analytics Can Help A Stores-Within-A-Store Strategy Succeed

The Robin Report - big boxThe past several years have been rough on most retailers across all categories and levels. Some of the savviest merchants have responded to the challenging environment with a “stores-within-the-store” strategy, in which individual brands lease space and bring their own boutiques within the walls of a larger store, helping to turn that large space into a sort of mini-mall.

There has been increasing excitement about this model, and it is starting to be deployed widely in range of stores. The model is usually a specialty brand leasing space within a department store. Though primarily seen in department stores like Macy’s and JC Penney, big-box retailers – both general, like Walmart and Target, and specialty, like Best Buy – have been using it as well.

The increasing popularity of stores-within-stores strategy isn’t hard to understand; the hope is that the outside brand will both drive traffic into the store and provide revenue through the rent they pay for the otherwise under-utilized floor space they occupy. Yet the model is not a panacea, and merchants need to approach it with a dose of caution and an even larger measure of analysis of purchase behaviors.

An effective stores-within-a-store strategy depends on synergy – both between the outside brand (or brands) and the host merchant, first of all, and also among the various boutiques collectively. The goal is for the various outlets to work together to create a compelling and unified shopping experience for the consumer, thus creating the kind of overall brand experience that results in more customers, and more purchases per customer. [Read more...]

How to Get a Bigger Share of Foreign Visitors’ Wallets

The current economy poses challenges for all merchants, but stresses on brick and mortar stores are particularly heightened. The wave of closures that accompanied the Great Recession was only the start of a protracted move for chains to reduce their excess amounts of retail square footage; according to many retail analysts, America remains significantly “over-stored.” At the same time, the rapid and steady rise of e-commerce makes for greater displacement, with increasing numbers of Americans preferring to do their shopping from their homes or offices, or even from their phones. Brick and mortar stores, it seems, are left to duke it out for their share of an at-best limited domestic pie.

Fortunately, that domestic pie is not all there is. Foreign tourists and business travelers have been finding America to be the Golden Land — of shopping, anyway — and overwhelmingly they are not doing that shopping online but in person, in brick and mortar stores. What this means is that merchants can leverage cross-border spending to drive U.S. domestic sales as well as share growth, if they can find a way to target and keep those foreign customers. Key to building a cross-border strategy is an understanding of where to focus merchant efforts. That is, merchants must now put the same kind of effort into identifying and understanding their foreign customers as they do their shoppers here at home. [Read more...]

Furniture Sales: Going Virtual Might Be Its second Life

With SpendingPulse retail and online sales data going back to 2005, we have been able to spot clear trends in the growth of ecommerce by sector. It has been well observed that books and consumer electronics were the first products consumers were prepared to buy online. During those early days, online women’s apparel seemed a hard sell in the absence of fitting rooms, not to mention the lack of ability to see and feel the fabric. But gradually, women began to buy some of their apparel online, eventually with less trepidation and more anticipation.

Eventually, it became the norm to buy children’s and teen apparel online, as return policies and procedures eased. During that time, few people ever believed that customers would ever buy jewelry online. Nevertheless, that changed too, and now hundreds of millions of dollars of jewelry at all ends of the spectrum gets sold that way.

Click to See Full-Sized

We can also see that during the recession, ecommerce spending on apparel was in positive territory even while total spending was in the red.
So with furniture, the thought of buying it online, untouched and unseen at scale in real space, on the face of it seems unlikely to catch on in any pervasive way. Yet, the year-over- year sales stats are beginning to show that more and more furniture sales are happening via the online channel. [Read more...]

What Do You Get When You Cross Luxury Spend with Discount Buying? Affinity Plays!

It’s commonly assumed that the creeping social stratification that’s widely written about crosses over to the retail sector, with the higher-end consumer shopping exclusively at luxury retail outlets and the lower-income buyer shopping at discount stores.

In fact, our analysis of anonymized transaction data at an aggregated level is painting quite a different picture. This aggregated data consists of segments of anonymized transactions with similar spending patterns, matched against categories of retailers.

Not only do high-end shoppers tend to “cross the street,” buying designer clothing at a luxury department store, but spending on school supplies and household goods at a low-end department store or eating at a quick-serve restaurant; but over a six-month period in 2011, in our analysis of aggregated transactions at 20 high-end brands, we found that a remarkably consistent portion of spend by regular shoppers at high-end stores was at discounters. A number of factors may be driving this. [Read more...]

As The Housing Recession Winds Down, Furniture Pureplays Can Benefit from New Analytical Tools

Consumer Insights From MasterCard Advisors

Despite the sluggishness of the so-called recovery, industry experts are predicting a pickup in the housing market early next year. This will have broad implications for retailers of furniture, furnishings, and other home items. How retailers can prepare for this opportunity is a favorite topic for the data collectors and analysts at MasterCard Advisors, the merchant services arm of MasterCard. Here are some ways in which furniture retailers, who’ve gotten pummeled in this recession, can capitalize when the upswing occurs.

While sluggishness in the housing market and changes in the retail environment are leaving furniture merchants feeling besieged, one development is showing great promise as a powerful tool for remaining competitive.  The increased use of cards and electronic payment has led to an explosion in the amount of data now available that that can be analyzed to better understand consumer preferences.  A recent study by MasterCard Worldwide showed that the data warehouses at the cutting edge of this development are managing over 100 terabytes of information, and are seeing those numbers grow by 20 billion transactions, every year. [Read more...]

Now You See It, Now You Don’t

The Increasing Allure of the Pop-Up Store

Consumer Insights from Mastercard Advisors

Last November, Hermes did it in West London. This spring, Apple (AAPL) did it in Austin. And in October, Brides did it in downtown Manhattan. That’s right, they opened pop-up stores, the temporary retail settings that once were almost synonymous with cheap Halloween costumes.

The Robin Report - Now you see it...In fact, pop-up stores are a growing phenomenon across the spectrum, from eBay (EBAY) to Liberty of London, and from mass-market retailers like Target (TGT) to fashion labels such as Kate Spade. Last holiday season Toys ‘R’ Us (TYJ) had over six times as many pop-up stores as in 2009; their holiday pop-up stores alone required 10,000 hires. And their popularity isn’t limited to the big name chains. They can be as important to small independent businesses without the capital for a site of their own as to major retailers, looking to explore a new market or meet the demands of a seasonal rush.

[Read more...]