Future of Retail Shopping - Delivering a “Smarter Shopping Experience”

1. Future of Retail Shopping
Delivering a “Smarter Shopping Experience”
Piotr Pietrzak
T: @piotrpietrzak
Chief Technologist, IBM PL
16 October 2012
E: piotr.pietrzak@pl.ibm.com
© 2012 IBM Corporation

2. AGENDA
Topic
The Smarter Consumer is Redefining Shopping
Delivering a Smarter Shopping Experience
The Path Forward
© 2012 IBM Corporation

3. The biggest challenge in Retail today is what’s happening on the
other side of the counter. Consumers are becoming Smarter!
Customer
Instrumented Informed
Deals
Brand
Pricing Product Details Preference
Reviews Product Comparisons
Product Availability
Interconnected
Empowered
Influencing
Buying
Decisions
Intelligent Engaged
© 2012 IBM Corporation

4. Consumers are redefining the shopping experience to fit their unique
needs and timeframes
§ Shopping becomes engrained in all aspects of our lives due to
1 Shopping Becomes
Omnipresent
persistent connectivity and ubiquitous access
§ Consumer touch points continue to proliferate increasing availability
2 Shopping Becomes
Deconstructed
§ Consumers can start/stop and switch channels seamlessly
§ New competitors arise; disintermediating consumers from retailers
3 Shopping Becomes
Collaborative
§ Retailers engage consumers in retail decisions (e.g. assortment, etc.)
§ Consumer-to-community interactions become commonplace
§ Consumers demand relevancy and personalized service
4 Shopping Becomes
Contextual § Availability of consumer information combined with real-time analytics
enables superior experience
5 Shopping Becomes
Real-time Aware
§ Device and communication technology converge
§ Consumer interactions become timely and proactive
§ Physical and digital worlds converge to provide an enhance experience
6 Shopping Becomes
Experiential § Shopping becomes all about the experience; availability and fulfillment
times are greatly reduced
Source: IBM Global Retail Industry
© 2012 IBM Corporation

5. 1 Shopping Becomes
Omnipresent
The majority of consumers want to leverage an increasing number
of technologies during their shopping process
% of Consumers willing to use the following Mobile is quickly growing in importance
technologies to research and make purchases During the in-store shopping process
§ Website § TV (using a remote
§ Mobile technology control) Research In-Store Service In-Store
§ Social Network § Social videos 42% Proactively 32% Help me find the
§ Retailer website to (YouTube, YouKu) communicate promotions customer service desk
co-create products § Electronic games to me based on what I or associate
scan
31% Allow me to order
40%
out-of-stock items
35% 29%
41% Allow me to check
30%
prices from other 29% identify myself in
24% physical and virtual store or mobile for help
25% locations
18%
20% 27% Provide the most
15% efficient route through
store
10%
5% 27% Allow me to take
0%
a picture/text to get
1 2 3 product information
Technology Technologies Technologies
© 2012 IBM Corporation

6. 2 Shopping Becomes
Deconstructed
Consumers are obtaining different value from each touch point
and consequently are deconstructing the shopping process
Consumer Customer
Shopping Continuum
Browse Service
Awareness & Purchase Receive &
Research Support
© 2012 IBM Corporation

7. 3 Shopping Becomes
Collaborative
33% of consumers who did not have enough information to purchase,
the lacking information is within the retailer’s control
Consumer Customer
Shopping Continuum
Browse Service
Awareness & Purchase Receive &
Research Support
1. Wanted to touch, see and experience the item
2. Wanted to price compare to determine best price
3. Product information was missing (quality and
product attributes)
4. Missing independent product review information
5. Could not tell if the product was in stock
Source: IBM Institute for Business Value Analysis, Retail 2012, n = 28,527, PM05 If you can’t make a purchase after you researched in (research method) what information was missing?
© 2012 IBM Corporation

8. 3 Shopping Becomes
Collaborative
Consumers now have the ability to influence others far beyond their
own network, while their trust in information sources is constantly
changing
83% of shoppers
influenced by online
Haul Video customer reviews
2010 2011
Consumer Trust Ranking - China Consumer Trust Ranking - China
17% 16% 15% 12% Product 14%
31%
Customer Reviews 9%
Product Experts 25% 10%
Customer Reviews Experts Manufacturer
Customer Reviews Manufacturer 9%
Product Experts Customer Reviews Product 20%
53% 11% Mfg 12%
Experts ManufacturerRetailer
43% 48%
Family/Friends 4% Retailer Family/Friends
38%
Family/Friends 6% 7% Retailer
Retailer Family/Friends
© 2012 IBM Corporation
Product
Experts Manufacturer Retailer Family
/
Friends Customer
Reviews

9. 4 Shopping Becomes
Contextual
Consumer demand personalized interactions and timely service
no matter if the interaction is self-service or assisted-service
“Serve me”
Personalize Promotions Customer Service: Top area for
(#1 influence of purchase decision) retailer innovation
– Most likely to increase my spend
– Key consideration when determining Customer Service: Most important
where to shop loyalty drivers
– The area retailers need to improve most – Allow me to return products without hassle
or questions asked
Personalize Shopping – Make it feel like a pleasure to help me
(Most important factors) – Have knowledgeable employees about
– Recognize me in the store or online products/services
– Remember preferred payment method – Easy way to order items not in stock
– Provide preferred receipt type
Convenience: Top Priorities
Personalize Assortments (Most – Prior in-stock knowledge before going to
important loyalty drivers) store
– High quality/low price private label – Providing the right products and
products appropriate variety of brands
– New and unique products – Education on additional items to purchase
– Broad range of products regardless of with primary item
store/online
© 2012 IBM Corporation

10. 5 Shopping Becomes
Real-time Aware
Identifying presence and location will become essential in enabling
timely and relevant consumer interactions
§ Identify shoppers presence as
they enter or leave the store
§ Identify proximity to a retail store
§ Identify what aisle or department
the shopper is located
§ Ability to interact with store
personnel, systems and devices
Source: IBM Global Retail Industry
© 2012 IBM Corporation

11. 6 Shopping Becomes
Experiential
The convergence of the physical and digital worlds will enable shopping
to become more experiential
© 2012 IBM Corporation

12. AGENDA
Topic
The Smarter Consumer is Redefining Shopping
Delivering a Smarter Shopping Experience
The Path Forward
© 2012 IBM Corporation

13. Delivering a Smarter Shopping Experience will enable retailers
to achieve differentiated customer relationships.
Deliver a
Continuous Smarter
dialogue Shopping
Relevant Experience
value
experience
Precision Achieve differentiated lifetime customer
marketing relationships by consistently delivering
on the brand promise
Provide timely, tailored and seamless shopping
Prescriptive experiences that can span multiple interactions
insight within and across touch points
Integrated Optimize marketing by channel and
information medium to deliver targeted consumer
messages and offers
Understand consumer and customer preferences,
interaction history and motivations to determine
the next best action
Capture and consolidate product, inventory, order,
market, and interaction data to provide a trusted
view of consumer-relevant information
Source: “Smarter Shopping Value Quantification.” IBM Center for Applied Insights, and IBM Global Retail Industry, October 2011 maturity
© 2012 IBM Corporation

14. Investment in capabilities to fully develop each Smarter Shopping
competency will drive economic value and benefit.
Annual economic benefits by competency $388M in annual benefits by financial
Illustrative $25B soft-line Retailer* benefit type
21% 21%
Reduced
Increase in profit
$80M $388M marketing
from incremental
expense
$99M revenue
$51M 9%
$131M Increased
SG&A
efficiency
$27M
Integrated
Information
Prescriptive
Insight
Precision
Marketing
Relevant
Experience
Continuous
Dialogue
Potential
Economic 9% 40%
Return Reduced Improved
inventory margins
7% improvement 5% improvement 1% improvement
in customer satisfaction in brand image in employee satisfaction
*Source: IBM Center For Applied Insights. October 2011. The potential benefits above are modeled using publically and privately available data. These potential
benefits reflect a relative result based on a specific set of data and assumptions. Therefore, potential benefits will vary by enterprise and are not guaranteed.
© 2012 IBM Corporation

15. Retailers must allow consumers the choice to shop any touch-point
while providing a seamless, consistent and relevant experience
1. AWARENESS 2. RESEARCH 3. PURCHASE 4. RETRIEVAL / DELIVERY 5. SERVICE / SUPPORT
Social media
Customers have the Advertising Retailer sites
freedom to achieve their
goals throughout the
shopping process…
Signage Email
Kiosks Mobile apps
Checkouts Mobile browse
Employees SMS/MMS
Catalogs Call centers
…using whichever
channels and touch
Direct mail Texting points they prefer.
Source: IBM Global Retail Industry
© 2012 IBM Corporation

16. An enterprise “Customer Interaction Platform” provides a common
set of services and business processes across all touch points
Web Site Mobile Contact Center Kiosk Point-of-Sale
Web
User Mobile Interface
User User Interface
CSR User Interface
Kiosk User Interface
POS
Interface
Interface Interface Interface Interface Interface
Order Taking Order Taking Order Taking Order Taking Order Taking
X-Sell / Up- X-Sell / Up- X-Sell / Up- X-Sell / Up- X-Sell / Up-
Sell Sell Sell Sell Sell
Registration Registration Registration Registration Registration
Offers / Offers / Offers / Offers / Offers /
Promo Promo Promo Promo Promo
Customer Profile Customer Profile
Customer Profile Customer Profile Customer Profile
Customer Interaction Platform
Tools Configurable Business Processes
Registration
Business Merchandize Catalog & Order
Marketing Collaboration
& Sell Content Management
Business Context Engine
Admin
Product Info
Relationships &
Personalization Globalization Order Capture
Analytics
Agreements
X-SellCustomer Profile
/ Up-
Sell
Developer
IBM Middleware Platform
© 2012 IBM Corporation

17. Leading retailers also believe that an enterprise “Customer Interaction
Platform” will provide the path to success
Source: “ e-Commerce 2012: Back to the Future”, RSR Research, Jan 2012
© 2012 IBM Corporation

18. Please change images to your client’s web site and logos
Retailers usually deploy a Customer Interaction Platform on the Web
first, and then leverage it as the foundation to power other channels
Web
Site
Social
Mobile
Devices
The
Customer
Interac0on
Pla3orm
allows
you
to
extend
your
brand
seamlessly
and
consistently
in
the
most
cost-­‐effec0ve
manner
In-­‐Store
Kiosks
POS
and
Mobile
POS
18 © 2012 IBM Corporation

19. Delivering a consistent brand promise has become more difficult
as consumers demand similar services across all touch-points
Which of the following methods would you prefer to obtain the item?
Health/Beauty.. 69%
60%
Purchase at Store and Leave Store with Item Apparel ……… 65%
Purchase Online and deliver on the date you specify 13% Grocery …….... 64%
Décor/DIY….... 51%
Purchase at store and deliver to home the same day 12%
Luxury….......... 47%
Purchase online or in-store and delivery next day 10% Electronics....... 45%
Purchase online and pick up in the store 6%
Suppliers
Store 3 Distributors
Catalog
DCs
Store 1 û Manual or point-to-point processes
Warehouses û Brand, Channel, Product Proliferation
û Information & Inventory Silos
û Limited fulfillment options for customers
Carriers/
Call
Center 3PL û No single ownership of order processes
Web Customs
Customers Store 2
Retailer Banks
© 2012 IBM Corporation

20. Cross-Channel Order Management streamlines order and fulfillment
processes across all channels and the extended supplier network
Stores
Kiosk
DCs
Special
Order
Cross-Channel
Order Management
Customers
Call
Center
Web
Sales
Catalog
Sales
Customers
þ Order configuration – substitutions, pre-order, split þ Management of supply locations with demand
shipments, drop shipments locations
þ Order aggregation, optimized source of supply, þ Schedule, sequence, and execute service requests
prioritization þ Fulfillment cost analysis, recommendation, and
þ Order visibility, monitoring, status, and exception alerts orchestration
þ Global inventory visibility and available-to-promise þ Product returns management
© 2012 IBM Corporation

21. Cross-Channel Delivery & Service Scheduling
Stores
Credit
Support
Service
Partners Service
Installation
Delivery
þ Event scheduling, monitoring, and reporting
þ Exception-based rescheduling and re-sequencing
þ Cross-partner coordination/ management
© 2012 IBM Corporation

22. Holistic Inventory Visibility
Track Inventory Anywhere
Suppliers Stores
þ In-Store
DCs
þ In DC
þ At Distributors
þ At Suppliers
þ In Transit
Distributors
C Sourcing customer orders from in-transit inventory can save 3 or more days’
inventory for those item involved
C Sourcing customer orders from slow turning store stock can reduce
markdowns and improve margins
© 2012 IBM Corporation

23. Cross-Channel Returns Management
Stock Room
Sales Floor Store Catalog
Sales
Records
Retu Customers
rn T
o Sa
Return To S les
tock Floo
r
Return To Supplier, Auth. Center, etc.
Customer
Shipping rns
Stage Retu rns Service
roy Retu Returns
Dest
Returns
Staging Web
Sales
Destroy Records
þ Global visibility into purchase transactions
þ Routing rules for returned items (per item, per supplier,
per item condition)
þ Historical records
þ Cross-channel / cross-enterprise status visibility
© 2012 IBM Corporation

24. Retailers also need to make sure consumer interactions are timely
and relevant with real-time offers and personalized communications
COLLECT MANAGE
RELEVANT OFFERS
REAL-TIME
COMMUNICATIONS
PERSONALIZED SERVICE
EXECUTE ANALYZE
Data Insights
Using data generated by customer interactions across channels, the retailer can produce
insights about particular consumers and segments. Based on these insights, the retailer can
tailor the shopping experience to the consumers and segments identified.
© 2012 IBM Corporation
Source: IBM Global Retail Industry

25. An Enterprise Consumer Dialogue Engine enables the ability to create
a multichannel, multi-stage process workflow that understands where
the customer is at in the customer lifecycle and/or buying process
Enterprise Consumer
Dialogue Engine Consumer Dialogues & Workflows Enables interactions
to be put into
context within an
end-to-end process
§ Identifies current and
changes in state of
Consumer Interaction Management consumer
Customer
Ability to develop a two- State § Triggers actions based
Dialogue Event Interaction
way, one-to-one Models on consumer activity/
Triggers Rules
communication flow in an inactivity
automated manner § Arbitration rules engine
Relies on an event-
based engine to identify, Consumer Insight & Action Segments
Preferred
monitor, and execute
Product
Length of
Time as
Categories Preferred
Channel
Product
Categories
Customer 1
actions based on Recency +
Participation
in Loyalty
2
3 Unique view of
Frequency + Program
n 4 $
tio nts individual consumers
Value
customer events that are
5
A c me
Response
Use of In- 6
to Media
House 7
Credit Card
g 8
relevant to the retailer-to- Time until
Repurchase in
Key Categories
Use of
Service
Se
9
10
11
Programs
customer relationship.
12
Breadth of Return /
Categories Exchange
Shopped Behavior
© 2012 IBM Corporation

26. Yves Rocher provides real-time promotions, loyalty points and
product recommendations at the POS
q Store promotion
• Mother’s Day Offer: - 30% on Eau De Toilette
• Sunshine Offer: 1 sunshine lipstick offered for
any solar cream purchase
• 1 loyalty point for $1 spent
q Offer « all boxes »
• A surprise gift for any purchase ≥ $50
q Offer Happy Hours
• +5 loyalty points from 2:00PM to 4:00PM
q Offer « radio »
• Say the “magic word” and get 5% discount
q Offers « Direct Marketing »
• 1 moisturizer offer for any day care &
night care product purchase
• 1 necklace for any purchase ≥ $35
• +3 loyalty point on any YRIA lipstick purchase
20M customers Real-time offer arbitration
85% identification rate and recommendations
© 2012 IBM Corporation

27. A high-end luxury retail plans to offer shoppers an interactive store
experience by leveraging real-time “Presence” and “Identification”
A customer enter The shop informs the
into the shop shop assistant that a
The shop detects
the customer VIP has arrived
The customer is
recognized as a
VIP
The shop asks
customer if he/she
wishes to interact
All devices in shop are
alerted that a specific Customer agrees to
customer is willing to interact interact with shop
The shop associate
is informed of
customer’s needs
or decisions
© 2012 IBM Corporation

28. AGENDA
Topic
The Smarter Consumer is Redefining Shopping
Delivering a Smarter Shopping Experience
The Path Forward
© 2012 IBM Corporation

29. Investment in capabilities to fully develop Smarter Shopping
competencies will drive economic value and benefit.
Annual economic benefits by competency $388M in annual benefits
Illustrative $25B soft-line Retailer* by financial benefit type
21% 21%
$80M $388M Reduced Increase in profit
marketing from incremental
$99M expense revenue
$51M 9%
$131M Increased
SG&A
$27M efficiency
Prescriptive
Continuous
Potential
Information
Experience
Integrated
40%
Marketing
9%
Precision
Economic
Dialogue
Relevant
Return
Insight
Reduced Improved
inventory margins
7% improvement 5% improvement 1% improvement
in customer satisfaction in brand image in employee satisfaction
*Source: IBM Center For Applied Insights. October 2011. The potential benefits above are modeled using publically and privately available data. These potential
benefits reflect a relative result based on a specific set of data and assumptions. Therefore, potential benefits will vary by enterprise and are not guaranteed.
© 2012 IBM Corporation

30. Final Thoughts
v The ‘consumerization’ of technology is changing the way consumers interact,
obtain information, and purchase items
v The proliferation of consumer touch-points will continue and increasingly allow
consumers to deconstruct the shopping process
v Consumers are obtaining different value from each touch point they interact;
providing a huge opportunity for retailers to engage shoppers across channels
v This requires retailers to provide a consistent, continuous, and relevant
shopping experience as consumers shop across multiple touch-points
v When developing the optimal shopping experience, retailers should always
consider cross-channel customer interactions
v The path to success will vary from retailer to retailer based on their target
customer’s expectations and how they’d like to execute their brand promise
v Creating a Smarter Shopping Experience is a transformational journey
© 2012 IBM Corporation

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© 2012 IBM Corporation