Screen shot 2013-07-11 at 5.37.09 PMWith more specialty brands opening up direct to consumer channels (i.e., stand-alone boutiques and e-commerce enabled sites) and relying less on Department Stores to sell their merchandise, this long-held retail relationship has changed dramatically. And in some ways, as we discuss at length in our new Digital IQ Index: Department Stores report, these changes have caused the dynamic to become increasingly complicated. While department stores still spend approximately $50 billion globally on brand-specific advertising, the majority of this goes toward traditional media, leaving digital efforts nascent at best. The store-within-a-store strategy seen at high-end retailers like Bergdorf Goodman and Barneys NY, has been extremely effective at affording luxury brands more control and visibility. More modestly-priced stores, however, still tend to intermingle brands, placing primacy on the category, not the label. Online, differentiation is more difficult for retailers of all price-points. While half of the Department Stores included in our research provide distinct branded sections on their sites, they are often templatized, only providing links to product lines.

Screen shot 2013-07-11 at 5.48.58 PMFor brands to have visibility on Department Stores’ most valuable real estate–their home pages and site navigation pages–the cost is, for most, prohibitively expensive. E-commerce giant Ralph Lauren is not surprisingly the most featured brand in both places, appearing on a fifth of Department Store home pages and almost a quarter (23 percent) of Women’s Category main navigation pages. Digital darling Michael Kors is also highly visible, with ads on eight percent of home pages, 20 percent of Women’s Category navigation and 18 percent of Women’s Category pages. Bobbi Brown dominated in Beauty, landing 28 percent of all Beauty Category navigation structures, followed by Lancôme, which appeared on 20 percent of Beauty Category pages. One of the biggest challenges now that individual brands sell on multiple platforms is price transparency. For Gucci, Burberry, Michael Kors, and Ralph Lauren, sale items appear as the very first search result on 17 percent of Department Store sites and on the first page of search results for more than a third.


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