Achieving i total t retail

Transcription

1 Achieving i total t retail Consumer expectations driving the next retail business model January, 2014 Jeff Holmes PwC Retail & Consumer Managing Director

2 Contents Hypothetical case study discussion 2013 Survey introduction and methodology Thinking beyond the channel: Total Retail Total retail and customer expectations: Summary Key customer expectations discussed A compelling brand story that promises a distinctive experience Customer data is airtight yet accessible and personalized ed - throughout a global retail network Real-time transparency into a retailer s inventory Control over the purchase journey Summary PwC

3 A hypothetical case study: What matters to the 2025 consumer, manufacturer and retailer The consumer: Jane Likes brands that reflect values and lifestyles Wants the same secure, personalized experience anywhere Likes to research products, availability and to easily find new options The manufacturer and retailer Wants to know the values and lifestyles of consumers Wants to know how consumers purchase in store and online Wants brand to be an experience across the purchase journey Wants to ensure product availability and facilitate new product discovery PwC Slide 3

4 The purchase journey in 2025: Pre purchase The consumer Researches products online to ensure availability Purchases non-food items online; food products in-store Expects product availability for in store Will try new products but wants to easily find information The manufacturer and retailer Ensures Jane easily finds product information online Leverages analytics to introduce new products fitting Jane s tastes Online product availability information and key in-store information Website syncs shopping lists to the grocer s mobile app providing targeted coupons Better knowledge shopping patterns improves demand d signal to the manufacturer PwC Slide 4

5 The purchase journey in 2025: Purchase The consumer Re-orders non food items online Shops at location with availability and least customer traffic Uses apps to find information and location of new products Looks for coupons pushed via the mobile app Uses the pre-scan utility in her app that enables quick check out The manufacturer and retailer In-store sensors provide rapid information on store traffic to consumers and managers Sensors inform on Jane s in-store location to enhance her experience Pushes coupons digitally for new products Monitors store traffic real-time, product sales, and staff accessibility across locations Uses predictive analytics to hedge for unexpected customer rushes and potential stock outs PwC Slide 5

6 The purchase journey in 2025: Post purchase The consumer Wants to easily return products if needed Uses the store app to send picture of damaged food store immediately gives her a digital store credit She writes a review on a new product that did not meet her expectations The manufacturer and retailer Grocer analyzes picture of damaged products and uses point of sales data to determine if it is a one time or recurring problem Mines social sites for reviews to ascertain consumer sentiment Sends a manufacturer coupon to Jane to mitigate poor experience Continues to highlight promotions and coupons of products that might interest Jane Supports online communities of interest that align with Jane s values and life styles PwC Slide 6

7 2013 Survey introduction, methodology, findings and detailed discussion PwC

8 PwC conducted a global survey to understand and compare consumer shopping behaviors across 15 countries world wide Global l research Methodology Significant (15,080) number of responses received from 15 different countries In order to survey the most appropriate demographics the following factors were taken in account: Age Gender Survey was conducted d across Employment status 15 countries Region PwC Slide 8

9 Survey results show that today s consumer expects a total retail experience regardless of the channel Are today s retailers and their partners ready to deliver on that expectation? Changing consumer expectations Consumers expect a unified channel agnostic experience Consumers are becoming more digitally savvy and expect technology enabled services 41% of the survey respondents bought products on tablets 46% of the respondents would like to view in-store inventory on their phones Can retailers adapt their business model to this change? Business model implications for retailers and manufacturers Retailers still see and measure channels differently and their internal processes are also very channel dependent Retailers have an opportunity to embrace Total Retail i.e.: Unified brand story across all channels Integrated back office operating model with agile and innovative technology PwC Slide 9

10 Survey results: Summary of nine key customer expectations PwC

11 Nine key customer expectations emerged from the survey Survey says Implications 1 A compelling brand story that promises a distinctive experience #1 reason people shop at their favorite retailers: I trust the brand. #2 reason (81%) for customers to select a retailer is the store, location and staff Engage in consistent conversations with customers Instill the brand message to employees through hiring and training Customer data is airtight yet accessible 2 and personalized - throughout a global retail network Customers want personalized offerings and be able to interact with retailers 24/7 67% used a coupon received via smartphone Enable personalized offerings, payments, and loyalty programs in all channels Protect against potential cyber-attacks by increasing defenses on customer databases 3 An enhanced and consistent experience across all devices Customers are multi-device users PC is still the preferred method of online purchasing, but not by much Customer information must travel with each device and still be secure Experience across devices does not need to be identical Circled customer expectations will be discussed in following slides PwC 11

12 Nine key customer expectations cont d Survey says Implications 4 Transparency, realtime, into a retailer s inventory 46% of respondents want the ability to check other store or online stock quickly. Inventory tracking tool can fulfill this customer desire and also enable faster decision making across the supply chain 5 My favorite retailers are everywhere Customers want an always-on experience Customer loyalty is at risk when a familiar channel closes Customer loyalty is subject to change when encountering subpar experience in any sales channel 6 To maximize the value of mobile shopping, apps must improve Growing enthusiasm for mobile shopping Many retailers have not invested heavily into apps Mobile apps is an attractive investment, as it is a tool to improve customer experience Circled customer expectations will be discussed in following slides PwC 12

13 Nine key customer expectations cont d Survey says Implications 7 Social media engagement Retailers should be active online, ready to interact at any hour 59% follow favorite brands or retailers via social media Investments in social media is a journey toward increasing internal capability and true consumer engagement Brands act like 8 retailers, and we'll treat them that way Few distinctions between manufacturers and retailers when purchasing \ 70% of U.S. participants made purchases directly from manufacturing brands Increase partnership between retailers and manufacturers, such as private label 9 Control over the purchase journey PwC Consumers select the purchasing channel depending on the product category. 37% made half of clothing and footwear purchases online, vs. 28% for toys Tweak the physical/online purchase mix for particular categories in the desired manner Circled customer expectations will be discussed in following slides 13

14 Key customer expectations PwC

15 Customer expectation 1: A compelling brand story that promises a distinctive experience Brand narrative is a significant factor in retail success Percentage of retailers shopped with over the last 12 months Global customers prefer to shop with a particular set of retailers What does telling a compelling brand story mean for a retailer or a manufacturer? Survey outcome: Purchase decision is highly correlated to Brand The trend is increasing in favor of loyalty enjoyed by brands worldwide Implications for the manufacturers and retailers: Manufacturers will need to differentiate their brand and communicate that differentiation Brand s emotional connection with consumers will be critical Retailers will need to collaborate with manufacturers to market their brand promise PwC Slide 15

16 Customer expectation 2: Customer data is airtight yet accessible and personalized - throughout a global retail network Online shoppers want personalization Survey response to the question: why don t you buy products online? What does personalization mean to a retailer or a manufacturers? Survey outcome: Increasing percentage of respondents interact with their favorite brand through social media Majority (67%) of the respondents used on-line coupons Online and in-store shoppers like be recognized at their favorite retailers Implications for the manufacturers and retailers: Retailers and manufacturers have a huge opportunity to use big data to: Personalize promotions and coupons While ensuring cyber data security and trust PwC Slide 16

17 Customer expectation 4: Transparency, real-time, into a retailer s inventory Consumers want to benefit from retailer s big data capabilities Capabilities that survey respondents value the most How does a manufacturer or a retailer share real-time information and be more transparent? Survey outcome: Most consumers want inventory visibility Consumers in developing countries are more drawn to in-store technologies Implications for the manufacturers and retailers: Retailers will need to revamp in-store technology and improve in-stock 43% of the respondents would prefer to have visibility of in-store inventory Consumers using this technology can provide valuable pointers for real time marketing Manufacturers can benefit from real-time product movement to optimize supply chains PwC Slide 17

18 Customer expectation 9: Control over the purchase journey Technology is a key component of the purchase journey Respondents preference of important delivery options while making an online purchase What incentives should retailers and manufacturers offer to control the purchase journey? Survey outcome: Online research ahead of making a purchase is preferred across every product category More than 70% of respondents researched online before making an in-store purchase Implications for the manufacturers and retailers: Retailers and manufacturers can use incentives to optimize physical/online inv. Online groceries is a hard sell still, 17% of the respondents made an online purchase Exclusive branded contents through social media, and promotions can drive online purchases Using local demographics can help drive in- store purchase and improve assortments PwC Slide 18

19 In summary The dynamics of Total Retail will drive the experience for the new generation of consumers. Manufacturers and retailers must collaborate on interaction with their target consumers and communicate the differentiated value of their Brands, and formats irrespective of traditional channels. Analytics, data, communications, demographic analysis, dynamic and precise assortments are the future and require insight driven supply chain and merchandising execution. PwC Slide 19

20 Thank you PwC Slide 20