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the new retail ecosystem From disrupted to disruptor - startup

the new retail ecosystem From disrupted to disruptor - startup

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the new retail ecosystem From disrupted to disruptor - startup

  1. 1. The new retail ecosystem: From disrupted to disruptor Six strategies for retailers
  2. 2. | 2 | Disruptors have succeeded in training vast swaths of consumers to view them as a reflexive default setting. Be it Amazon, Netflix, or Uber, they’ve done so by finding the ideal combination of convenience, price, speed, and variety that best appeals to consumers. With tiered options that allow room for tradeoffs and flexibility. And continually expanding service offerings well beyond their original value propositions. Rather than responding to consumer preferences, they actually shape consumer behavior. The results speak for themselves: Uber chalked up its first billion global rides in a six-year time span; its second billion rides took a scant six months.1 Netflix streams 125 million hours of content worldwide each day, some of it original.2 And 90% of US respondents to our Total Retail survey told us they are Amazon shoppers.3 The magnitude of this disruption is unprecedented; retail is among a wide array of industry sectors fighting the onslaught. In fact, the retail store of the past may well be dead, as evidenced by the ongoing trend of thousands of store closures over the last decades — capped by several new rapid-fire rounds of closure announcements in early 2017 after a lackluster in-store holiday shopping season for some eclipsed by record-breaking online sales.4 Expect more of these announcements as the pace of digital change continues to accelerate, necessitating reinvention with an urgency
  3. 3. | 3 | that upends decades of complacence. In fact, more than 10% of retail space — nearly 1 billion square feet — might well need to be shuttered, repurposed, or renegotiated for lower rent.5 While the store of the past may be dead, retailers are already adapting to a new retail ecosystem. In this retail ecosystem of the future — a combination of physical, digital, and complementary service offerings — stores tailored by location and demographics become part of the consumer’s broader shopping experience. The physical store is a key component of the new retail ecosystem. It has to provide a reason for the consumer to leave the comfort of home to shop — an experience within its four walls that not only competes with the convenience and ease of online shopping but also offers other options consumers might choose to spend their time on, such as movies, sporting events, or dining out. From sporting goods retailers encouraging customers to shoot hoops — or join running clubs to foster a sense of community — to department stores with fully stocked bars for those who’d rather grab a drink while a friend or significant other is shopping, retailers have no choice but to step up their game — to provide experiences that engage shoppers and entice them to linger. In our analysis, we examine six closely intertwined strategies retailers are using to stave off disruption and better attract and retain today’s mercurial shoppers. The underlying theme of these bold strategies: To create an immersive, seamless, brand-defining experience for consumers across all channels, one that will keep them coming back. Pricing Fulfillment Platform Loyalty Assortment Innovation
  4. 4. | 4 | Pricing Dynamic pricing allows real-time adjustments While Amazon’s origin story — like those of many disruptors — is closely tied to low price, it has moved beyond that early model, instead competing now on speed, variety, and convenience. In fact, shoppers told us their motivation for shopping online isn’t always dictated by price; almost 45% selected convenience as the main reason for shopping online. Across all channels, however, our survey of 1,010 US consumers found that low price continues to dominate shopping decisions for some two thirds of shoppers.
  5. 5. | 5 | For omnichannel retailers such as Walmart — now the second largest online retailer by traffic after Amazon — this dichotomy provides the perfect opportunity to fine-tune pricing. With its $3 billion Jet.com acquisition, Walmart can take advantage of its new acquisition’s sophisticated software for dynamic pricing options, which allow real- time adjustments based on a variety of factors including customer loyalty, shipping costs, and inventory updates. In fact, dynamic pricing was a key component of promotional offerings during the 2016 holiday season, with several retailers adjusting in-store prices to better compete with online offerings.6 For Walmart, Jet’s volume discounts complement its own growing online offerings — 15 million items with 1 million more being added each month, up from 7 million earlier in 2016, with several new warehouses dedicated to online order fulfillment and a two-day free shipping option.7, 8 Amazon is the indisputable leader in volume (6.1 billion items shipped globally) and assortment (350 million plus items). However, the universality of Walmart’s physical stores — 90% of Americans live within 20 minutes of a Walmart location — offers clear advantages both for in store pickup and shipping from the store (for more, see page 13).9 64% 43% 39% Low price wins across all channels... ...but convenience rules online Good prices Items in stock Trusted brand More convenient Better prices Better product selection 45% 26% 23% Q: Thinking of your favorite retailer, why do you shop there? Base: 1,010 US consumers (2016), 1,000 (2015). Note: Respondents asked to select UP TO FIVE options. Q: What has been your main motivation for buying online? Base: 1,010. Note: Respondents were asked to select the statement that best reflects the majority of their purchases. Source: PwC, 2017 Total Retail Survey, February 2017
  6. 6. | 6 | Meanwhile, retailers are finding innovative ways to modify their business models to deal with showrooming — the practice of browsing and testing products in store, then buying them online for less. Some are offering competitive prices in store while others are ramping up the ongoing practice of having vendors create customized Universal Product Codes that prevent comparison shopping. Others — especially retailers of “differentiated” items such as furniture or branded fashion apparel — are embracing showrooming by paring down inventory for smaller physical footprints and encouraging consumers to browse and test, then order in store for home delivery at competitive prices.
  7. 7. | 7 | Loyalty Keep ’em coming back Brand loyalty, while hard-won, is not easy to shake. More than 70% of our survey respondents are staunch brand-loyal shoppers; less than a third are willing to try new offerings. While shopping online, more than two-thirds use only credible web sites and companies they trust with their financial information.
  8. 8. | 8 | That’s good news for retailers who have cultivated close ties with shoppers over many years with individualized coupons, marketing, and pricing. It also reinforces the power of one-to-one connections with customers via personalization, which new entrants online cultivate rigorously. Amazon continues to build out an ecosystem of physical and digital products — powered by Prime — that makes it a reflexive default setting for online shoppers: 90% of consumers told us they are Amazon shoppers, accustomed to frictionless, one-click checkout. So much so that almost 40% of them shop less often at retail stores and 25% shop less often at other retailers online. Amazon’s Prime members meanwhile spend more than double what nonmembers do. Industry analysts estimate that almost half of all US households are Prime members.10 PwC analysis indicates that Prime members account for more than two-third of sales. Retailers like Best Buy are bolstering customer loyalty with a combination of robust digital offerings and white-glove delivery and set-up for electronics and appliances. Among the retailer’s multi-pronged approach to building customer relationships, Best Buy offers premier-customer-only shopping days, advanced ordering on limited allocation products, an exclusive concierge service beyond general customer service, and discounts via private-label and loyalty cards. The retailer recently added an in-home service for select customers in which trained technicians can provide advice on setting up home-technology projects such as a multi-zone home theater with 90% of consumers are Amazon shoppers, accustomed to frictionless, one-click checkout. So much so that almost 40% of them shop less often at retail stores and 25% shop less often at other retailers online.
  9. 9. | 9 | Staunchly brand-loyal Eager to try new items 29% 71% Brand loyalty runs deep surround sound. Similar to the retailer’s well-known Geek Squad for tech installation and repair, this service is open to new customers for a price while loyal customers gain preferred access.11 The loyalty program at Starbucks, closely tied to its mobile app, offers free food and drink to loyal customers — as well as recommendations based on past orders. In turn these customers spend more money more often, tracked by average transaction and order size. They can also customize mobile orders in advance, then pick them up at a nearby location without waiting in line.12 Starbucks also make it easy for customers to linger, with expanded menu offerings, easily accessible WiFi, and an ambience that invokes a friendly neighbor’s inviting digs. Thus, the term “third place,” where consumers spend time with colleagues and friends away from work or home.13 Hallmark, the greeting card retailer, has created a sense of community for customers that translates into a remarkable level of loyalty. Neighborhood Hallmark stores organize local chapters of the Hallmark Keepsake Ornament Club (KOC), with more than 400 chapters nationwide to nurture a sense of community among their customers. Not unlike a civic group, chapter members socialize both via social media and in person to connect with other collectors and trade ornaments. Sometimes they meet the artists who design the ornaments. These local chapters of KOC offer a case in point for customer engagement in reinforcing brand loyalty.14 They also confirm what our survey respondents told us: That positive interactions on social media make them more loyal to the brand. Q: Which of the following statements most accurately describes how you like to shop? Base: 1010. Note: Respondents asked to select ONE only. Source: PwC, 2017 Total Retail Survey, February 2017
  10. 10. | 10 | Fulfillment Hurry, hurry, hurry! Cost-prohibitive last-mile delivery issues continue to challenge retailers who are experimenting with a combination of options in response to customer preferences for speedy delivery. Trained to expect two-day or next-day delivery, customers have decided they quite like that option for home delivery or in-store pickup.
  11. 11. | 11 | While home delivery is by far the most popular option with some 70% of shoppers — urban, suburban, or rural — they are also open to ordering online and picking up in store, often browsing and buying more items once they arrive. In fact, almost 50% have tried that option occasionally. Alternatively, shoppers told us they are open to using curbside pickup (33%) as well as pickup at a third-party location (28%).15 Collectively referred to as click-and-collect, these models are expected to grow as retailers and consumers trade off speed, cost, and convenience to achieve the most value at the lowest cost. More generally, retailers are experimenting with a combination of supply-chain and distribution approaches to best accommodate customer needs — from insourcing to crowdsourcing to large and small external shippers — recognizing that what works best in a particular location might not translate well elsewhere. Seamless transparency across traditional and digital offerings is essential for low-cost overnight nationwide delivery to reach its full potential. As are transparent inventory systems across the board to ensure the most judicious shipping decisions that consider all relevant variables. Sales staff might well be required to fulfill online orders in addition to their traditional roles. The physical proximity to customers offers retail stores an advantage over online competitors, especially if they partner with logistics companies who can pick up orders the night before for regional next-day delivery.16 Same-day delivery, for example — fairly commonplace in large urban centers — is not always feasible across less densely populated regions, despite the increasing prevalence of regional and local distribution hubs. PwC analysis has found that consumers who opt for curbside pickup instead could shave a few days off delivery and I want it . . . now! Whether shipped from store or in-store pickup, speed is of the essence. 46% Same day/ next day 24% Same day/ next day Ship from store In-store pickup Q: How fast would you expect a delivery if requesting a ‘ship from store’ option (item is sent to customers location) or a ‘ship to store’ option (customer picks up item from store)? Base: 1,006; 999. Note: Respondents asked to select ONE in each row. Source: PwC, 2017 Total Retail Survey, February 2017
  12. 12. | 12 | save shipping fees — especially since such orders are ready for pickup in 24 hours almost 90% of the time. Similarly, in-store pickup items ordered online are sometimes ready within a speedy two-hour window. Our analysis found that some 45% of retailers offered in-store pickup during the 2016 holiday season. In the wake of the spate of store closings in early 2017, retailers are grappling with new questions about how many physical stores are appropriate. Especially in light of the massive amount of retail real estate in the US, which leads the world at 24 square feet per capita, compared to 16 square feet per capita in Canada, 5 in the UK, and 4 in France.17 They’re also analyzing where their stores should be located for ideal customer proximity. Stores that serve as fulfillment centers allow retailers to compete with low-cost ecommerce fulfillment centers. But should all stores serve as fulfillment centers? Or only a few? And which few? Since no particular economies of scale come into play, would it be best for stores with lower sales volumes to serve as regional fulfillment centers? At Best Buy, half of all online orders are picked up at — or shipped from — a store. Since 70% of consumers live within 15 minutes of a store, most online purchases arrive within two days, similar to Amazon Prime’s speed but without the annual fee. By using its stores as distribution centers, Best Buy was able to compete with Amazon on speed while offering a lower price for delivery.18
  13. 13. | 13 | Hidden in plain sight: Store as distribution center Amazon’s sustained long-term growth over the course of more than two decades is driving its current proliferation of e-commerce fulfillment centers (eFCs) nationwide. This network allows Amazon to capture both scale and proximity to the consumer. The typical Amazon eFC is now one million square feet or more; it processes at least 75 million units annually. The resulting economies of scale offer the lowest pick and pack costs in the industry while proximity reduces shipping distance and cost, according to PwC analysis. Proximity also allows Amazon to offer faster delivery, with overnight soon to be the de facto standard. Traditional retailers’ comparatively nascent e-commerce businesses are much smaller. Walmart’s, for example, the second largest online retailer by traffic, represents less than 20% of Amazon’s. Consequently, retailers struggle to compete on both cost and speed of delivery. According to PwC analysis commissioned by Google, for a typical, sizable, big box retailer, the lowest-cost e-commerce fulfillment network would require between one and three fairly large, geographically dispersed fulfillment centers, the efficiency of their operations more than offsetting higher shipping costs. However, this minimal network can reach only some 85% of the population in two days and barely 20% overnight (without costly air freight). Amazon’s faster, more responsive network meanwhile still maintains a cost advantage—combined across picking, packing, and shipping—of between $2 and $2.50 per unit shipped. As customer expectations for delivery speed continue to rise—to overnight or better—competing retailers could build out their eFC networks to reach more consumers faster. However, they would be sacrificing all-important eFC economies of scale, which means overall costs rise despite lower shipping costs, further undermining their ability to compete. The most promising solution is hidden in plain sight—existing stores. Already located in close proximity to customers, shipping from the store can speed delivery and reduce shipping costs. While a physical store might not come close to an eFC for efficiency in picking and packing, the existing fixed-cost base contributes to lower overall costs, well below the cost of building a new ecommerce fulfillment center. In fact, on a marginal-cost basis, shipping from the store could be comparable with Amazon’s overall cost. Undoubtedly, a ship-from-store option cannot offer the seemingly endless assortment of items many e-commerce sites. For retailers who want to compete on breadth of assortment, long tail items—the vast majority of which sell in much smaller quantities—can be held at a dedicated eFC and offered at incremental additional cost, although with slower fulfillment of approximately three to five days. Shipping from the store, however, will cover the vast majority of volume. In fact, retailers are well advised to consider boosting their capabilities to ship from their stores, not just for surge capacity but as a primary means of e-commerce fulfillment since it offers the perfect balance of lower cost and delivery speed. The added bonus—once robust technological and logistical components of a mature ship-from-store capability are in place—retailers can easily add in-store or curbside pickup based on consumer demand.
  14. 14. | 14 | Reach = 85% of population in 2 days $3.50 $1.10 $5.10 per additional item added $2.20 $2.90 Ship from store ~$3.70Marginal costs $5.80 $1.70 Store as secret fulfillment weapon Shipping cost per unit (club store example) Amazon leads in shipping costs and delivery speed. However, existing stores with wider reach allow traditional retailers to ship from store for speedy delivery at lower cost.† For traditional retailers, the cost of additional new eFCs quickly adds up. 60+ e-commerce fulfillment centers (eFCs) Mode of distribution Mode of distribution 2 days or less ~99% 1 day or less ~95% Amazon ~85% <20% Retailer direct *includes inventory financing, capital, direct and indirect labor, and indirect-non labor Source: PwC analysis Population reached Population reached 2 eFCs $2.20 $6.00 Reach = 95% of population in 2 days ~95% ~50% 5 eFCs $6.60 $3.50 Reach = 95% of population in 1 day 100% ~95% 19 eFCs ~100% ~99% 2 days or less 1 day or less 480 stores nationwide TransportHandling* $2.40 $4.10 $3.80 $3.10 Source: PwC analysis, commissioned by Google † slightly more than Amazon’s cost of $3.50
  15. 15. | 15 | Assortment The right mix of offerings The ideal mix of physical and digital product availability is essential, as so many former pure plays have recognized. The abundance of an online universe of products ultimately cannot match the very real need to interact with them, especially for “differentiated” items such as furniture or branded fashion apparel.
  16. 16. | 16 | Showrooms may offer an ideal balance of cost and experience for differentiated products — an opportunity for consumers to experience the merchandise, then place an order for home delivery. The retailer benefits from stocking less inventory at the store, thus condensing the physical footprint. Showrooms also eliminate the need for parallel logistics systems, one for stores and one for home deliveries. These inventory management efficiencies can dramatically reduce stranded inventory that necessitates deep discounts. Bonobos, a former online pure play focused on men’s clothing, has about 30 “guideshops” with knowledgeable sales staff who can help walk-in shoppers sort styles and sizes, offer advice, and recommend accessories. Thanks to its alternative format, Bonobos can keep costs down with a small retail footprint. Since the smaller stores are less expensive to operate, Bonobos can invest in a more personalized experience, offering all the advantages of a high-end, high-touch retail store. Once shoppers have made their choices, they can order products for shipment to their homes; items are not available for purchase at the store itself. Customer data is available for shoppers to access online at home for future orders, thus building loyalty and avoiding returns. The process of discovery in a physical store — “Oh, look, here’s the perfect gift for hard-to-buy-for Uncle Bob!” — remains unmatched online. As does an environment in which shoppers are encouraged to interact and enjoy the products just as they would at home. Rather than merely looking at sporting equipment, for example,
  17. 17. | 17 | shoppers want to test it out — running on a treadmill at the Nike store, for example. Or curling up on a couch to find out for themselves how comfortable it is, as furniture retailer RH invites shoppers to do with a glass of wine from the bar. Nordstrom already partners with several specialty apparel lines for its store-within-the-store offerings. More recently, the retailer has developed a luxury-boutique concept in its stores titled Space. At 500 square feet, it is intimate and set apart within the store by design. Space features up-and-coming high-end designers’ seasonal collections of apparel, shoes, handbags, and accessories. Like its Pop-In stores, highlighting a buzzy not-really-department- store vibe by featuring rotating designers, Space creates a beyond- the-department-store sensibility within the four walls of the department store.19 Big box stores might consider an outdoor sculpture garden or dog park next door to appeal to shoppers as part of an overall experience. Or, as Walmart does, consolidate one-stop shopping with a hair salon, pharmacy, medical clinic, bank, optometrist, and restaurant — thus evoking a sense of community as did main streets of yesteryear, but all under one roof. Office products retailer Staples meanwhile has partnered with Workbar, a company that offers flexible workspaces for professionals who don’t work in a traditional office setting but need a space away from home. Located within Staples, Workbar offers private offices, open seating, lounges, meeting rooms, conference technology, interactive whiteboards, and a kitchen area — on pay-per-visit or membership plans.20, 21 Importance 76% Satisfaction 56% 64% 52% Shoppers prefer knowledgeable sales associates over ambience at stores Knowledgeable sales associate Ability to check stock 41% 39% Inviting ambience Q: Please rate how important the following attributes are in relation to your in-store shopping experience. Base: 1,010. Note: Respondents were asked to select ONE option only. Q: Please rate how satisfied you are in relation to your in-store shopping experience for the following attributes Base: 1,010. Note: Respondents were asked to select ONE option only. Source: PwC, 2017 Total Retail Survey, February 2017
  18. 18. | 18 | As for product assortment online, Amazon’s agreements with third-party sellers — including warehousing their products for a fee if they choose via a program titled Fulfilled by Amazon (FBA) — allowed those sellers to sell more than two billion items worldwide in 2016. Meanwhile, FBA items experienced global growth of 50% during the 2016 holiday.22 Some retailers are using both their physical and digital channels to promote exclusive products and their own private-label offerings. For example, a particular designer brand might be available either only online or only in store, and sometimes only by special invitation in store. That sense of being part of a select customer group further cements customer loyalty over the long term. Ultimately, retailers need to entice customers to interact with them — whether online or in store — and keep coming back. At physical stores, they can do so by providing a convenient, frictionless in- store experience, not unlike what Amazon offers online. With the added advantage of knowledgeable sales staff who can explain product offerings, the number-one preference of 76% of in-store shoppers, even ahead of ambience. In fact, a skilled sales associate can transform the oft-dreaded returns process into a pleasant customer-service encounter by offering alternative options. Rather than being a minder of merchandise, the sales associate serves as a brand ambassador with deep product knowledge to engage shoppers, a feature unavailable online and especially relevant for products such as appliances and furniture.
  19. 19. | 19 | Platform Effortless digital interaction A secure, always-accessible, easy-to- use technology platform is the price of entry in a world of consumers now accustomed to the almost effortless digital interaction they encounter with Amazon — be it mobile, voice- activated with a device such as Echo, or one-touch with a Dash button.
  20. 20. | 20 | Retailers have been shoring up their tech platforms for a few years now. And not a minute too soon: online Cyber Monday sales hit $3.45 billion in 2016, a 12% increase over 2015.23 For a technology platform to succeed, it has to be part of an overarching digital strategy that encompasses the entire organization — rather than an ad hoc point-in-time initiative — which often results in internal realignment evidenced by shifting spending patterns, new digital roles, and previously undefined working relationships.24 At Target for example, after the retailer observed that 98% of its shoppers were using digital platforms, with 75% on mobile, it reorganized its business to address consumers across all channels. Target already knew that customers who shop across three or more channels are three times more valuable than those who shop via one or two channels. Beginning with its patio division, Target built a digital-first team of its digital, mobile, and store-merchandising employees organized around a single profit and loss statement. The digital team analyzed Google’s Store Visits data to deconstruct searches in the patio category. Based on the data, the team rearranged the physical store to fit the expectations and desires of online shoppers. In the test rollout, the new store layout improved customer satisfaction and increased gross margins.25 Shoppers embrace mobile payment 29% 46% 2015 2016 Consumers are increasingly more willing to use mobile payment. Q: How do you use social media as part of your shopping experience? Base: 1,010. Note: Respondents were asked to select ALL that apply. Source: PwC, 2017 Total Retail Survey, February 2017
  21. 21. | 21 | A robust tech platform enhances customer engagement: 50% of our survey respondents said they browse retailer websites as their main search option for items to buy. The tech platform also serves to make inventory visible across the board at all retail and distribution centers. That way, products can be shipped to customers from the location closest to them, drastically reducing prohibitive last-mile shipping costs. In the physical store, the in-store payment platform can pose a challenge to frictionless checkout, especially for retailers still transitioning to chip technology — known as EMV — intended to reduce fraud. To circumvent the more arduous chip-technology process, some consumers use fingerprint- enabled mobile payment instead, a process that parallels one-click technology online for ease of use. In fact, far more respondents to our survey were open to using mobile payment via smartphone this year (46%) than they were last year (29%). Meanwhile, actual mobile payment use more than doubled between 2015 and 2017.26 A tech industry group estimates it has the potential to surpass cash and credit card transactions by 2030.27
  22. 22. | 22 | Innovation Accelerated pace of digital change Continual experimentation and ongoing course correction is at the core of disruptors’ success — even when they are ahead of the game. Amazon recently unveiled sensor- powered physical stores, coming on the heels of its digital devices. The digital devices proved to be runaway hits during the 2016 holiday season. Not least because Amazon promoted the devices assiduously via television (76%+ year-on-year) and digital (224%+ year-on-year) advertising.28
  23. 23. | 23 | As the proliferation of new entrants with their innovative approaches continues to accelerate, traditional retailers have less and less time within the window of opportunity to take the necessary risks. Smaller, quicker tests are now commonplace rather than full-on rollouts. From self-checkout devices that help circumvent long check-out lines to touchscreen fitting- room mirrors that offer immediate help from sales associates, retailers are experimenting with a raft of options to make the shopping experience simple, convenient, personal, and engaging. Some retailers are partnering with tech accelerators to expedite digital offerings. Several are turning to crowdsourcing for new product development and selection. Traditional retailers like Macy’s are conducting test-and- learn experiments of their own. Backstage discount stores at Macy’s first opened as standalones but now sometimes reside within an actual department store, part of the retailer’s overall reinvention with additional focus on discount and digital offerings.29 Similarly, the retailer’s Bluemercury specialty cosmetics stores also combine freestanding and in-store options; some include a fully functioning spa.30 Retailers experiment with innovative technology for a simple, convenient, personal, engaging shopping experience.
  24. 24. | 24 | Luxury retailer Saks Fifth Avenue meanwhile has pared down and modified the layout at one of its newer New York City stores. With a smaller footprint, the store combines the best physical and digital elements for a superior shopping experience. Lower display racks with items grouped by brand better reflect what a shopper would see online. After shoppers leave the store, Saks’ sales staff connect with them online to respond to questions and recommend items. Fitting rooms with plush carpet and communal seating encourage shoppers to browse and stay awhile. Personal shoppers create custom looks for their clients via digital tools on the retailer’s web site. Saks shoppers who engage with sales associates via digital tools have recorded a 50% increase in average purchase size.31 The data from Saks confirms our own findings: 44% of shoppers told us positive interactions with their favorite brands on social media had led them to spend more with those brands. Large retailers such as Walmart and Target continue to refine different store formats — from suburban megastores to city-friendly quick-stops — in step with location and demographics. Meanwhile, Amazon’s more recent foray into physical stores underscores the importance of an omnichannel presence — being available when and where customers want.
  25. 25. | 25 | Shoppers told us they want a seamless shopping experience, both online and in store. In fact, many use several different channels as part of their broader shopping experience. When they shop in store, they are looking for value. And knowledgeable sales staff who can explain and demonstrate product offerings. Online, they care more about convenience. All in all, however, positive, omnichannel experiences typically lead to larger overall purchases and long-term customer loyalty. As the spate of store closings in early 2017 illustrate, only the nimble will survive. Traditional retailers don’t have the luxury of starting with a clean slate as new entrants do; however, they are able to leverage their strengths — a loyal customer base, the proximity of store locations, and long-term vendor relationships — to complement online offerings.
  26. 26. | 26 | 1. Fitz Tepper, “Uber Has Completed 2 Billion Rides,” Tech Crunch, July 18, 2016. 2. Brian Barrett, “Netflix’s Grand, Daring, Maybe Crazy Plan To Conquer The World,’ Wired, March 27, 2016. 3. PwC, Total Retail, 2017. 4. Lindsey Rupp and Molly Smith, “Retail Malaise Puts Pressure on Chains to Shutter More Stores,” Bloomberg, January 23, 2017. 5. Mark Heschmeyer, “Shopping Center Owners Brace for More Downsizing as Space Rationalization Still in Early Stages,” Costar.com, January 4, 2017. 6. Katie Evans, “NRF 2017: New Report Unwraps Holiday Web Sales Insights,” Internet Retailer, January 16, 2017. 7. “Walmart Has Completed Its Acquisition Of Jet.com,” Fortune, September 20, 2016. 8. Steve Nellis, “How Walmart Can Play Amazon’s Game,” The Information, August 12, 2016. 9. Tien Tzuo, “To Compete With Amazon, Walmart Should Cut Itself In Half,” Tech Crunch, September 8, 2016. 10. Chris Isidore, “Amazon Prime Now Nearly Reaches Half Of All U.S. Households,” CNN, January 26, 2016. 11. Miriam Gottfried, “How To Fight Amazon.com, Best Buy-Style,” The Wall Street Journal, November 20, 2016. 12. Christopher De Sousa, ”The Amazon Effect: Store Closures Everywhere,” Seeking Alpha, January 16, 2017. 13. Panos Mourdoukoutas, “Starbucks: From a Third Place to Another First Place,” Forbes, October 26, 2014. 14. Nir Eyal, “How Two Companies Hooked Customers On Projects They Rarely Use,” The Observer, September 22, 2016. 15. PwC, Holiday Outlook, 2016. 16. Curt Mueller, Andrew Schmahl, and Andrew Tipping, “Same Day Delivery? Not So Fast,” strategy+business, Winter 2013. 17. GCP, Investor Presentation, September 7, 2016. 18. Miriam Gottfried, “How To Fight Amazon.com, Best Buy-Style,” The Wall Street Journal, November 20, 2016. 19. Alex Golden, “Four Things to Know About Space,” The Los Angeles Times, August 25, 2016. 20. Amazon Press Release, “Sellers on Amazon are Thriving: Fulfillment by Amazon Delivered More than 2 Billion Items for Sellers Worldwide in 2016,” January 4, 2017. 21. Janelle Nanos, “Inside Staples, a Sunny Co-Working Workbar Space,” The Boston Globe, September 13, 2016. 22. Ethan Hartley, “Work’s on Tap: Workbar Opens Inside Staples, Wicked Local Danvers, November 2, 2016. 23. Adobe Conversation Team, “Cyber Monday 2016 Smashes Online Shopping Records,” Adobe Conversations, November 30, 2016. 24. PwC, Lessons from Digital Leaders, September 2015. 25. Matt Lawson, “Rethink Measurement for Growth, Association of National Advertisers, September 15, 2016. 26. “Why Retailers Could Pay A Price For Not Accepting Mobile Payments,” Knowledge@Wharton, November 22, 2016. 27. IEEE, “It’s Not All About The Benjamins: IEEE Global Cybersecurity Survey Reveals Death Of Cash By 2030,” March 17, 2016. 28. Don Davis, “Amazon Ramps Up Its Holiday TV Ad Spending,” Internet Retailer, December 30, 2016. 29. Adam Levine-Weinberg, “I Visited a Macy’s Backstage,” The Motley Fool, January 4, 2017. 30. Brittany Burhop, “Macy’s is Closing 68 Stores but it’s not all bad News,” New Beauty, January 05, 2017. 31. Elizabeth Holmes, “Why Can’t a Store Be More Like a Website?” The Wall Street Journal, September 27, 2016. Endnotes
  27. 27. | 27 | Steven J. Barr Consumer Markets Leader 415 498 5190 steven.j.barr@pwc.com Barbra Bukovac Consumer Markets Tax Leader 312 298 2563 barbra.bukovac@pwc.com Ron Kinghorn Consumer Markets Advisory Leader 617 530 5938 ron.kinghorn@pwc.com Jonathan Sackstein Consumer Markets Assurance Leader 616 471 2460 jonathan.s.sackstein@pwc.com Scott Bauer Phil Bloodworth Byron Carlock Andrea Fishman Nick Hodson Tom Johnson Tim Laseter Drew Luca Christopher Perrigo Carrie Quinn James Russell Andy Schmahl Danielle Brisky Angela Chambliss Jaxon Cook Jaime Dirr Karen Montgomery Asha Nathan Allison Stone Krystin Weseman © 2017 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com. 250046-2017 jC. Contacts Strategic direction Project team www.pwc.com/us/retaildisruption

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