CEO Viewpoint 2017:
The Transformation
Of Retail
JDA Executive Luncheon at NRF
January 17, 2017
Copyright © 2017 JDA Software Group, Inc. Confidential
Respondent profile
351 responses across a range of markets, retaile...
Copyright © 2017 JDA Software Group, Inc. Confidential
Confidence in overall revenue & profit growth
Online is the biggest...
Copyright © 2017 JDA Software Group, Inc. Confidential
Omni Channel competencies
Compared to 2014, there has been a marked...
Copyright © 2017 JDA Software Group, Inc. Confidential
Investment Priorities
Copyright © 2017 JDA Software Group, Inc. Confidential
Digital transformation strategy
Digital Transformation becomes the ...
Copyright © 2017 JDA Software Group, Inc. Confidential
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Copyright © 2017 JDA Software Group, Inc. Confidential
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Copyright © 2017 JDA Software Group, Inc. Confidential
Customer Order Fulfilment Investment
Collecting orders in-store is ...
Copyright © 2017 JDA Software Group, Inc. Confidential
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22%
Store Expansion Investment
The majority of retailers don’t ...
Copyright © 2017 JDA Software Group, Inc. Confidential
Profitability
Copyright © 2017 JDA Software Group, Inc. Confidential
Growth of online operating costs
Three quarters of retailers believ...
Copyright © 2017 JDA Software Group, Inc. Confidential
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Other
Capacity to support online growth
Store i...
Copyright © 2017 JDA Software Group, Inc. Confidential
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for your customer order fulfillment
for your ...
Copyright © 2017 JDA Software Group, Inc. Confidential
Changes in order fulfilment
While increased customer charges for on...
Copyright © 2017 JDA Software Group, Inc. Confidential
15 59 23
To what extent is the cost
of customer returns eroding pro...
Copyright © 2017 JDA Software Group, Inc. Confidential
Key performance indicators
62% of retailers stated their online bus...
Ceo viewpoint 2017 the transformation of retail
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Ceo viewpoint 2017 the transformation of retail

  1. 1. CEO Viewpoint 2017: The Transformation Of Retail JDA Executive Luncheon at NRF January 17, 2017
  2. 2. Copyright © 2017 JDA Software Group, Inc. Confidential Respondent profile 351 responses across a range of markets, retailer tiers and business types Base:351 1 9 12 24 27 27 Other (Retail & Consumer) CPG eCommerce Grocery Soft Lines Hard Goods % Breakdownof business type Top 250 retailers = revenue $5 billion + Top 251- 1000 retailers= revenue between $250 million- $5 billion Outside the top 1000 retailers= revenue less than $250million Retailertiers 32% 53% 15% Top 250 retailers Top 251 - 1000 retailers Outside top 1000 retailers Geographicalmarkets United States28% (100) Mexico10% (33) United Kingdom17% (60) Germany15% (51) China 16% (55) Japan14% (50)
  3. 3. Copyright © 2017 JDA Software Group, Inc. Confidential Confidence in overall revenue & profit growth Online is the biggest area of confidence both in terms of revenue and profit Q32. How confident areyou about yourorganization’sprospects forprofit growth during thenext 12months in thefollowing channels: Q27. How confident areyou about yourorganization’sprospects forrevenuegrowthduringthenext 12months? 41335124 16 5 812 11 6 10 16 36 4134 3734 3931 31 43 5151 44485254 47 Total business 2016 Total business 2017 OnlineStoresTotal business 2016 Total business 2017 OnlineStores % Very confident Somewhat confident Not very confident Not at all confident Revenue Profit Base:351 Pleasenote:‘Don’tknow’and ‘Prefer notto say’responsesarenotincluded. Mexico:74% Japan:26% US: 54% Denotes sig.difference Denotes US for info only
  4. 4. Copyright © 2017 JDA Software Group, Inc. Confidential Omni Channel competencies Compared to 2014, there has been a marked deterioration in retailers ability to handle omni channel execution Base:351 Q10.Which ofthe followingbest describesyour organization in relation to omni-channelfulfilment? 2017 2014 We provide a seamless shopping experience andoffer completeomni-channel fulfillment.However, the offeringis too complex/expensiveandwe are lookingto scale back ourdelivery options 12% 19% We have the ability to offer ourcustomers a seamless shoppingexperience but we struggle to meet customer’s omni-channel fulfillment demands 38% 31% We have distinct channels operatingas silos to meet customer demand 37% 30% We have refinedour omni-channel offeringto a point where we are now able to make a profit while fulfilling our omni-channel demand 10% 16% US: 26% Don’t know: 4%
  5. 5. Copyright © 2017 JDA Software Group, Inc. Confidential Investment Priorities
  6. 6. Copyright © 2017 JDA Software Group, Inc. Confidential Digital transformation strategy Digital Transformation becomes the highest investmentpriority But more than half of retailers have not startedimplementationof a digital transformationstrategy 5%No plans to developa digital transformation strategy We are struggling to define a digital transformation strategy 9% Digital Transformation strategy is being developedbut implementation has not yet started 38% Digital Transformation strategy is well definedand is being implemented 49% 40 20 60 80 100 48% increase 45% remain the same 5% decrease Core supply chain capabilities China:73% % Mexico:86% US: 60% 40 20 60 80 100 % 69% increase 28% remain the same 1% decrease Digital transformation 40 20 60 80 100 51% increase 42% remain the same 3% decrease Omni-channel fulfillment % Denotes sig.difference Denotes US for info only
  7. 7. Copyright © 2017 JDA Software Group, Inc. Confidential 26 28 31 39 40 46 36 44 53 53 55 31 31 30 37 36 33 40 37 32 33 30 43 40 39 24 25 21 24 19 15 14 16 In-store virtual changing rooms Robotics and automation In-store augmented reality In-store clienteling Personalizedmobile ‘pushoffers’instore (Beacons) Smart Mobile device for staff in stores Integration of IOT devices and data Collaboration across supply chain partners Use of social media data Big Data availability and analytics Mobile enabled applications Have implemented Plan to implement in next 12 months No plans to implement in next 12 months Digital transformation strategy Digital capabilities outside of the store feature in the top 3, ahead of all in-store capabilities, with mobile applications in 1st Base:351 Q18. Please indicate the level of implementation for each of the following digital capabilities: Outside of store In-store
  8. 8. Copyright © 2017 JDA Software Group, Inc. Confidential 27 32 33 33 34 38 42 38 41 40 38 37 19 20 16 17 20 17 9 8 6 6 5 5 3 1 3 3 3 2 Capturing unstructured data about your customer (social, reviews) Having a single view of the customer across all channels and touchpoints ...in the personalization of the customer experience in your physical channels (stores) ...in the personalization of the customer experience in your digital channels …to gain insight into customer preferences and shopping behaviors via data science techniques ...in the planning and development of your customer offers Significantly Moderately Minimally Not at all Don't know Leveraging customer data Retailers say they are currently best at using their customer data for planning and developing offers Base:351 Q21. Thinking about customer data, please indicate the level to which your organization performs the following. Using customer segmentation insight…
  9. 9. Copyright © 2017 JDA Software Group, Inc. Confidential Customer Order Fulfilment Investment Collecting orders in-store is the top collection offering but more challenging options are being scaled back 26 26 48 25 43 44 47 21 23 27 28 33 43 44 48 51 Click & collect as a drive through in your car park Same day click & collect Specific delivery time slots Use third party retailers as collection points for online orders Same day delivery Next day delivery Buy online, return to store Buy online, ship to store Click & collect in-store % 2017 2016 Softlines:64% Base:351 Q11. Do you offer, or plan to offer any of the following customer collection or delivery options in the next 12 months? Don’t know: 1%
  10. 10. Copyright © 2017 JDA Software Group, Inc. Confidential 20% 22% Store Expansion Investment The majority of retailers don’t plan to reduce store investment, regardless of online growth Accelerate No change Reduce 58% 28 42 24 Complimentary (some Halo effect across the channels) Online are net additional sales (no cannibalisation) Cannibalising store sales % China:45% Mexico:34% US: 18% US: 60% US: 22% Denotes sig.difference Denotes US for info only Base:351 Q9.Do you plan to reduce your store investmentdue to onlinegrowth? Not sure: 1% Base:351 Q25.How are online salesimpactingstoresales? Don’t know: 7% Denotes sig.difference Denotes US for info only
  11. 11. Copyright © 2017 JDA Software Group, Inc. Confidential Profitability
  12. 12. Copyright © 2017 JDA Software Group, Inc. Confidential Growth of online operating costs Three quarters of retailers believe that their online operating costs have increased as a percentage to sales in the last 12 months 23% Cost reduction No change Some increase (0-9%) Significantincrease (10% or more) 4% 19% 52% Distinct channels:35% Base:351 Q28. How have your organization’s online operating costs changed as a percentage to sales in the last 12 months? Denotes sig.difference Denotes US for info only US: 18% Don’t know: 3% US: 50%
  13. 13. Copyright © 2017 JDA Software Group, Inc. Confidential 1 10 12 15 17 20 25 Other Capacity to support online growth Store inventory accuracy Failing customer service in order fulfillment (e.g. delivering incorrect orders, delivering orders outside of the agreed… Rising supply chain costs Rising inventory levels Rising out of stock levels Supply chain issues impacting profitability Rising inventory levels, rising out of stock levels and rising supply chain costs constituted 62% of the responses Ranked number 1 Mexico – 26% Ranked#1 for Grocery & US $10B+ (23%) vs $5-$10B (9%) $10B+ (14%) vs $5-$10B (24%) Base:351 Q15. Please rank the following issues within your supply chain in order of concern where #1 is the most important to your organization: Ranked#1 for Softlines,HardGoods, China & UK Most frequently ranked in the top 3
  14. 14. Copyright © 2017 JDA Software Group, Inc. Confidential 3 4 32 25 46 48 14 19 for your customer order fulfillment for your in-store customer experience % Cost reduction No increase Some increase Significant increase Impact of omni-channel on cost of labor… Labor costs are increasing, particularly in enabling omni-channel capabilities for the in-store customer experience 4% 4% Mexico:40% Mexico:31% China:27% US: 7% Base:351 Q13. To what extent is the cost of labor affected by enabling omni-channel capabilities… Denotes sig.difference Denotes US for info only Don’t know
  15. 15. Copyright © 2017 JDA Software Group, Inc. Confidential Changes in order fulfilment While increased customer charges for online orders is currently the most implemented change, the next 12 months will see a rise in the minimum order value for free standard home delivery 22 25 27 27 29 35 28 27 28 31 33 22 50 48 45 42 38 43 Charge for customer returns Apply limits on returns (e.g. max items in a time period) Raise the minimum order value for free buy online pick up in store Decrease customer charges for online orders Raise the minimum order value for free standard home delivery Increase customer charges for online orders % Have implemented Plan to implement within next 12 months No plans to implement within next 12 months China: 56% Mexico: 54% US: 56% US: 66%Hard goods: 33% Base:351 Q12. Have you implemented or do you plan to implement any of the following changes in relation to fulfilling ordersacross channels?
  16. 16. Copyright © 2017 JDA Software Group, Inc. Confidential 15 59 23 To what extent is the cost of customer returns eroding profit % To a great extent To some extent Not at all The cost of customer returns is eroding profits Almost three quarters of retailers believe that the cost of customer returns is eroding profits to at least some extent US: 36% Profitable omni-channel operation:41% Base:351 Q29. Please indicate to what extent the cost of customer returns is eroding profit: 3% Don’t know
  17. 17. Copyright © 2017 JDA Software Group, Inc. Confidential Key performance indicators 62% of retailers stated their online business is making a profit – up 7% on last year (10) 26 62% Breakingeven Making a profit Making a loss Mexico:40% Profitability Those who have a higher percentage of online revenues are more confident about their prospects for total business profit growth over the next 12 months. US: 68% Base:351 Q26. Isyour total online business: Don’t know: 3% Denotes sig.difference Denotes US for info only

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