Getting here! The Changing Retail Landscape Jaideep Thyagarajan Senior Market Analyst – IDC Retail Insights April 2018 Agenda
Retail Is Technology Changing The What are the Differentiator winners Digitally doing? Transforming Experiences
Industry Trends Redefining Achieving Retail Business Models Omni-Channel Digital Excellence Transformation
2 Everything is Changing in Retail
Store The store is changing
64% Showroom/ experience center
53% Value-added fulfillment services
27% Fulfillment center for online orders
Source: IDC Omni-Channel Survey, 2017 (n = 707) 3 Everything is Changing in Retail
eCommerce
>$2.3 trillion Global ecommerce revenue by 2018 3rd generation of ecommerce
38% AP retailers investing in ecommerce platforms in 2017
4 Everything is Changing in Retail
AP Retailers
>50% investing in logistics and fulfillment management in 2017
Micro-merchandising 5% in revenue Omni-channel +20% in stock turns fulfillment and new merchandise planning
5 Everything is Changing in Retail
AP Consumers
51% want next-day delivery for online orders
Consumers are 39% increasingly search online and buy demanding in-store
6 Everything is Changing in Retail
DX Initiatives
Digital Transformation (DX) 34% IoT for supply chain & customer experience
36% Advanced analytics/ artificial intelligence
7 Top Business Priorities for A/P Small-Format-Retailers
Improving customer service 47% Introducing/improving products or services 43% Cost Cutting / Cost Containment 40% Selling more to existing customers 40% Increasing brand equity 33% Productivity improvement 23% Selling into new geographies 17% Moving operations to lower cost geographies 17% Attracting and retaining a skilled workforce 17% CanadaAll Industries (All Selling to new industry sectors 10% Industries) Working more closely with business partners 3% Resolving compliance issues RetailRetail 3% Other 0% 0% 10% 20% 30% 40% 50%
Sample Size: 347 (All Industries), 30 (Small-Format-Retail) Source: IDC Retail Insights 2017 8 Question: Which business or organizational issues will take priority for your organization over the next 12 months? Did you know: Amazon & Alibaba are betting big on brick and mortar?
Reinventing the in-store experience
Social media and rewards
Omni-channel retail strategy
Improve online delivery times
1. Patents 6. At Home Smaller store format 2. Fulfillment 7. Service
3. Transportation 8. Bots 9 4. Products 9. Replenishment 5. Physical Retail 10. Store Automation © IDC Visit us at IDC.com and9 follow us on 9 Twitter: @IDC What are the winners doing?
1 Digital-TechnologyLed Customer Focus
2 Bigger Dreams - Smaller Stores
3 Reimagining Brands
10 1. Digital Technology Led Customer Focus
Consumer Facing Innovation
Core Data Accuracy and Insights
Outside-In Process Integration
Everywhere Everywhere Everywhere Commerce Customers Employees 11 11 2. Converging Models | Bigger Dreams – Smaller Stores
• Simply no longer the need for large showroom floors where traditionally a wide range of products and brands were displayed.
• Small shops can be located in many more areas, offering customers convenience & accessibility for quick shopping trips.
• Higher sales per square metre, lower real-estate costs. Higher staff ratios and opportunity for hyper-personalization.
1212 3. Reimagining Brands
1313 How can YOU be a winner?
Customer Experiences in the Stream of Life
Omnichannel Platform
Business Customer-centric Side-car approach Innovation model approach
Isolated touchpoints Islands of innovation
© IDC 14 Innovation models in the ecosystem
Q. Could you please indicate, from the following list, the top 3 innovation models in terms of priority for your company? Top 3 Innovation Models Platform extension marketplaces
Startups / Emerging technology vendors
Co-innovation with large IT vendors
n = 400 Source: IDC’s 2017 Retail Innovation Survey © IDC 15 Biggest retail innovation challenges / opportunity: Piloting and scaling innovation programs at speed
Q. What are the top challenges that your organization is facing today to drive innovation?
Top 3 Innovation Challenges Discovery & Selection Pilot, Implement and Scale
Implementing at scale 9% 31%
Defining the right 9% 30% innovation model
• Innovation discovery and selection are Building a platform 11% 25% already at a more mature level. • Retailers' abilities to pilot, implement and 0% 10% 20% 30% 40% scale innovation are at a low level of maturity. Extremely challenging Very challenging
n = 400 Source: IDC’s 2017 Retail Innovation Survey © IDC 16 Don’t lose sight of what the customer wants!
Source: IDC Retail Insights Survey 2017, n=60
1717 Addressing Four Important Questions
WHO WHAT WHEN HOW
Intelligence Personalization Automation Channels
• Life-cycle • Personalized • Timely triggers • Email segmentation browsing • Analysis • Web • Predictive • Web • Content • Mobile/SMS analytics recommender optimization • Social • Performance • Email • insights recommender Loyalty app • Store recommender
18 Noise is real: Differentiating Technologies
mPayment system Mobility & Digital Apps
Digital Cloud Commerce
Marketing Analytics automation
© IDC Visit us at IDC.com and follow us on 19 Twitter: @IDC How 3rd Platform Technologies enable Transformation?
• Inventory • Service • Processes • Interfaces • Customer • Responsiveness • Interactions • Processes • Products • Product Introductions • Execution • Interactions
Visible Fast Automated Intuitive
• Demand • Product development • Orders • Collective intelligence • Offers • Social networking
Anticipatory Participatory
20 Emerging Technologies Drive New IT Priorities
© IDC Visit us at IDC.com and follow us on 21 © IDC Visit us at IDC.com and follow us on Twitter: @IDC Twitter: @IDC Competing on Experience Achieving Individualized Marketing Personalization
48% Differentiate
36%
13%
3%
Static Dynamic Personas Real-time Segments Segments Contextual
N=400 Source: IDC Global Retail Innovation Survey 2017 © IDC 22 Competing on Experience Winning the «Passive» Customer / Buyer
Beyond “Traditional” Always Connected Self Educating Service Customers Customers
Social Networks “Trusted Source” “Things” as Massive Growth customers in Customer Data © IDC 23 What matters? – Doing it right!
Employee Performance Optimization Value
. Automated Decision Processes . Streamlined Communication Customer . Continuous Planning | Feedback Satisfaction . Self-Learning/Training Sweetspot
. Innovative Customer Experience Performance Disruption ValueWorkforce of
Management Mastery Management . Contextualized Personalized Interaction . Consumer/Product Life-Cycle Interaction . Engagement Transcends Place and Time Customer Experience Performance Optimization Value Value of Customer Intimacy
24 Executive Summary
Most retailers consider innovation as an opportunistic initiative (52%), 1 focusing innovation projects on delivering short-term results.
The biggest retail innovation challenge – and the largest opportunity – is driving effectiveness in piloting and scaling innovation programs at 2 speed.
The adoption of a platform is considered essential for innovation by the majority of retailers. 46% of retailers are planning to invest in a 3 retail omni-channel commerce platform over next 12 months.
Customer experience is the core of digital transformation, but the retail market is at low maturity, with only 3% of retailers adopting a 4 real-time hyper micro autonomic approach for personalization.
© IDC 25 Conclusion
Observation Yes No
Physical-Digital Convergence
Need for Omni-Channel Strategy
Store Strategy in Place
Roadmap to Omni-channel established
Omni-channel Work Complete
26 Change is Not Optional
© IDC 27 For More Information
Jaideep Thyagarajan [email protected] +61-451788655
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© IDC 28