First-of-its-Kind Study Ranks Online Competence of 82 Prestige Specialty Retail Brands; Reveals Relationship Between Social Media Acumen and Revenue Growth

--REI, Ikea, Threadless and Coach Claim Top Spots--

NEW YORK--(BUSINESS WIRE)--Despite the greatest economic crisis since the Depression, retailers saw revenues from e-commerce increase in 2009, signaling a shift from bricks to clicks. By 2014 U.S. online retail sales are forecasted to increase to $250 billion and the web influences 46 percent of offline purchases. In a new study, the first and largest of its kind, NYU Stern Professor of Marketing Scott Galloway and a team of experts from L2, a think tank for digital innovation, evaluated and ranked 82 prestige specialty retail brands’ Digital IQ®. The study measures site and e-commerce strength, digital marketing and mobile capabilities, social media savvy and search engine marketing and optimization. The results reveal a relationship between a firm’s Digital IQ® and its year-on-year revenue growth, suggesting digital competence may be a forward-looking indicator for sales.

“The relationship between Digital IQ and sales growth suggest leadership and investment in the online channel is critical to driving shareholder value. It also appears that Social Media Optimization (SMO) could supplant SEO as the primary driver of traffic and sales.”

Key findings of the Digital IQ Index® include:

• Web (2.0) and social media adoption is anemic given their power to drive traffic and sales. Less than half incorporate video on their sites, only 32 percent offer ratings and reviews, and only 23 percent offer online chat, all shown to boost sales and conversion;
• Social media acumen is the strongest predictor of high Digital IQ®. While most brands maintain a presence on Facebook, YouTube and Twitter, the size of communities and robustness of social media programs varies greatly;
• Only 25 percent of brands maintain mobile sites and 35 percent have iPhone applications. Only six brands have iPad-specific applications;
• The 17 percent of retailers that incorporate the Facebook “like” button on their site demonstrate 80 percent higher average traffic growth. Incorporation of the “like” button has grown 75 percent month-on-month; and
• Flash sale brands including Gilt Groupe, Rue La La and Haute Look demonstrate the highest category three month traffic growth (38 percent); however, their sites and marketing lack differentiation resulting in an average category Digital IQ® of 91.

Top 10 Brands in the Digital IQ® Index for Prestige Specialty Retail:

1. REI

2. Ikea

3. Threadless

4. Coach

5. A|X Armani Exchange

6. Sephora

7. Urban Outfitters

8. Crate & Barrel

9. Pottery Barn

10. Nordstrom

“Despite a great deal of rhetoric from retail CEOs regarding the importance of digital, many brands approach e-commerce with tools and tactics from the last century,” said Professor Scott Galloway. “The relationship between Digital IQ and sales growth suggest leadership and investment in the online channel is critical to driving shareholder value. It also appears that Social Media Optimization (SMO) could supplant SEO as the primary driver of traffic and sales.”

To view the full report, go to: http://www.l2thinktank.com/specialtyretaildigitaliq/

To speak with Professor Scott Galloway, please contact him directly at 917-567-2841, [e-mail]; or contact Rika Nazem in NYU Stern’s Office of Public Affairs, 212-998-0678, [e-mail].

About L2--L2 is a think tank for digital innovation. L2 helps brands navigate the changing marketing landscape through events, research and advisory services. The capstone research offering, the Digital IQ Index®, was created and developed by NYU Stern Professor Scott Galloway and measures and ranks a firm’s digital competence on metrics including search engine optimization, brand translation, ability to leverage technology and use of social media. L2 has measured the Digital IQ of global luxury brands, prestige brands, automobile brands, pharmaceuticals and the retail sector, among others. www.l2thinktank.com

About New York University Leonard N. Stern School of Business --New York University Stern School of Business, located in the heart of Greenwich Village, is one of the nation’s premier management education schools and research centers. NYU Stern offers a broad portfolio of academic programs at the graduate and undergraduate levels, all of them informed and enriched by the dynamism, energy and deep resources of the world’s business capital.