Cross-channel retail, David Hogg, IBM

Smarter Retailing For The Smarter Consumer

27 September 2011
David Hogg

© 20112011 Corporation
© IBM IBM Corporation

Agenda

 Retail Trends

 Cross-channel Retail Best Practice

 Recommendations To Maximise Growth

2 © 20112011 Corporation

E-commerce outlook
Where we’ve come from

Average annual growth rate for online retail spending, 2000 to 2009

36.0%

28.9%

21.2%

Source Verdict Research


E-commerce outlook
Customer acquisition and loyalty

Percentage of consumers regularly shopping online

2003 2009 2013

17.0% 59.4% 66.2%



Methodology

No e-commerce / web site for less than 3 years

Your grade = Stupid / Remedial


Methodology

15% yoy growth

You have a web site, maybe mobile enabled

Your grade = C / rather average


Methodology

85% yoy growth
 You have a mature web site, may mobile enabled
 You have cross-channel integration to store, call centre and CRM
applications
 You have s single view of inventory
 You have cross-channel marketing processes
 You are piloting social networking
 You are piloting complex mobile applications

Your grade = A+/ very “Smart”


Methodology

The future?
 You have a business strategy encapsulating e-commerce in the core

 Your IT delivery is flexible and can execute tactical business requests


E-commerce outlook
Consumers are “smarter” and have higher expectations

2000s 2010s

Is the website fully transactional? Finalising a transaction is fast

Can I search for it? Tell me what I should buy

Will it be delivered soon? I want it tomorrow

How much is delivery? Delivery is included

Is it possible to return a purchase? Return postage is included

How much extra discount can I get /
Is this the cheapest I can get it?
what extra value is offered



Who is the 'smarter' consumer?

+ +
Instrumented: Interconnected: Intelligent:

They have They use They have
instantaneous access clearly defined
multiple
to information about expectations of
technologies to
retailers, products what they want
and other consumers’ interact with
other consumers from their
experiences through
technology and with retailers retailer now and
in the future
13

Consumer’s expect a seamless cross-channel experience and it pays for
Retailers to deliver

Research Schedule Check Status Initiate/Track
Store Create Order Change Order Delivery Cancel Order Pickup
Product Return

Research Schedule Delivery Check Status Schedule Initiate/Track
Call Center Create Order Change Order or Pickup Cancel Order
Product Store Pickup Return

Web Product Create Order Change Order or Pickup Cancel Order Store Pickup Return

Mobile Product Create Order Change Order or Pickup Cancel Order Store Pickup Return

85% of consumers “expect a seamless experience across all channels for a
retailer”1

Multi-channel shoppers spend 30% to 50% more than their single-channel
counterparts, forcing traditional merchandising activities to deliver a truly
transparent connection between all customer touchpoints. 2
1 Source: “Cross-Channel Brand Interaction: 2010 Consumer Preferences,” Sterling Commerce,
2 Source: Gartner, The 2010 Retail Handbook for Becoming Demand Driven


IBM’s integrated portfolio for Smarter Commerce
VALUE CHAIN STRATEGY AND SERVICES
Innovation and business value Market and customer mgmt Operating and Organization Models
Innovating and aligning business models to Aligning sales, marketing and operations Designing operations, supply chain and the
drive value to the customer to engage with customers organization model to deliver customer value

CORE BUSINESS SOLUTIONS
Core Business Processes

Buy Market Sell Service
• Trading Partner Mgmt • Predictive Analytics/Modeling • B2B & B2C Cross-channel • Delivery & Service
• Supplier Management • Behavioral Segmentation commerce Scheduling
• Supply Chain Visibility • Cross-channel Campaign Mgmt • Distributed Order Orchestration • Customer Self Service
• Logistics Management • Search Optimization, Ad • Fulfillment and Supply Chain Enablement
• Inventory Optimization Targeting Optimization • Reverse Logistics
• Marketing Resource Mgmt • Mobile Commerce • Case Management
• Retail Store

Advanced Analytics
Store analytics | Purchase analytics | Consumer loyalty | Predictive and prescriptive | Social analytics | Web analytics | Master data mgt

Workload Optimized Systems
Systems, Storage and Software focused on agility, integration and automation to drive relevant business outcomes


Agenda

 Retail Trends




Head Consultancy – Paul Jervis-Heath “opportunities for growth in the
retail industry”

Sales Growth (2007-10) from integrated customer experience (ICS)


Extending multi-channel commerce to the Store addresses some of the
most challenging problems faced today…

Lost sales due to stock-outs

Expand assortment without expanding physical store footprint

Deliver on customer expectation for seamless cross-channel experience

Expand fulfillment options and sell higher-margin services

Increase inventory turns and reduce markdowns


When questioned about social networks, 33% of consumers said that they
are likely to ‘follow’ a retailer …
…but there is a value exchange required for those willing to follow a
retailer

Most important reasons for ‘following’ a retailer
Rank Reason
1 Being able to trial new products (free samples)

2 Receiving preferred consumer status*

3 Influencing product development or changes

4 Providing feedback to retailer on customer service or store experience

5 Learning news or industry trends

6 Interacting with other consumers

7 Sharing feedback and reviews with people in my social network
Note: *’preferred status’ referred to things such as access to special promotions or advance sales notices

Source: IBM Institute for Business Value Analysis, Retail 2010, n=32,087

26

Agenda

 Retail Trends




Recommendations To Maximise Growth

 To achieve above average growth – cross channel retail is your near term objective

 Establish a business strategy that encompasses all aspects of e-commerce
 Buying
 Marketing
 Selling
 Servicing

 IT must select flexible “e-commerce platforms” to support tactical business
requirements

 Embrace Social Media - it will become the most important personalised consumer touch
point for cross channel marketing and promotions

 Develop Mobile applications to assist consumers shopping (not simply an order capture
platform)


Cross-channel retail, David Hogg, IBM

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