Omnichannel in Russian retail

Transcription

1 in Russian retail KPMG analysis kpmg.ru 208

2 2 in Russian retail in Russian retail What is omni? is a customer approach providing for a seamless customer experience, an opportunity to easily switch between the s with no loss in quality and for the maximization of customer utility. And enhanced customer satisfaction, in its turn, rises the customer lifetime value. It is worth noting that omni is not just a strategic call-toaction but rather an ideology underlying the operating model configuration. Besides, any attempt to develop omni at the customer level with the internal environment left unchanged will result in cost rising and margin reduction. We consider an operating model in terms of internal business processes, organizational structure, a set of KPIs, and, last but not least, IT systems. I want us to stop talking about digital and physical retail as if they re two separate things. The customer doesn t think of it that way, and we can t either. CEO Walmart Doug McMillon* Why omni? Development and of an omni strategy may enable additional 6,% revenues. 4 69% of customers visiting an offline store to pick up their online order make additional shopping in case of active sales 2. Internal perspective Customer perspective Single- The only customercompany A traditional organizational structure with a focus on the single customer *Buy online, pick up in store 2 Multi- One more sales and customer It has specific development tasks which generally vary from those of the single- Each has its own functional silo Experts have a focused specialization fixed on the Cross- The customer is able to get informed on any sales Availability of Click and Collect* programs Availability of postsales support Integration of the company s processes by s, in terms of sales and support, starts (front office) Merger of organizational structures at a high level. Focused specialization of experts Seamless customer experience with personalized offerings Full integration of the company s sales s and auxiliary processes Single global systems/ platforms for all s are implemented Staff is responsible for the process result with no fixing to the The lifetime value of the companies who actively use omni is 56% higher than that of those using traditional strategies. The use of omni helps reduce costs per customer contact by а 7,%. Profit of retailers who have implemented an omni strategy is 0% higher than that of those using only one sales. * () The average annual revenue growth for companies developing omni amounts to 9.5%. The same for other companies is.4%. Source: Customer Care: Empowered Customers Demand a Seamless Experience, Aberdeen Group survey, 20. (2) Source: International Council of Shopping Centers () Source: Aberdeen Group survey. 208 KPMG. All rights reserved. 208 KPMG. All rights reserved.

3 4 Группа по корпоративному управлению, устойчивому развитию и управлению рисками 4 in Russian retail Группа по корпоративному управлению, устойчивому развитию и управлению in Russian retail рисками 5 5 Results of KPMG analysis KPMG analyzed the extent of adoption of omni elements by 70 major online stores that have at least two sales s, according to E-Commerce Index TOP * rating. The results of our analysis will help companies compare to their key competitors and form an understanding of the customer experience elements that need further development. Easiness of order placement * Data Insight, datainsight.ru/top00/ Convenience of delivery and use of information elements % companies satisfying the criterion Criteria-sorted customer feedback Key challenges during omni elements % companies satisfying the criterion Criteria-sorted customer feedback Key challenges during omni Easiness of order placement 2 Information on goods in stock at offline stores is available when customers use the application or website An endless aisle in offline stores (opportunity to conveniently purchase online in an offline store, use of POS terminals) 7% % Information on goods in stock is available via all sales s Information on goods in stock can be obtained via a call center Information on goods in stock is unavailable 8% 7% 70% There is a POS terminal offline No POS terminal offline Ordered a toy for my child online, with the order pickup at this very store. Got a delivery confirmation for tomorrow. When in the store next day, I was told my order had been c anceled as the product was out of stock. I was unable to check online whether the product was in stock at the moment... I was asked to arrange my order via the POS terminal. Well, the shop assistant who was dealing with me did not have the slightest idea how to operate a POS terminal and turned for help to her colleague. For 5 minutes the two of them were unsuccessfully looking for a pair of shoes and turned for help to two more colleagues of theirs. Seemingly, the order was generated [via the POS terminal]. A MONTH passed since, but no letter, no call, no delivery. Online and offline stores use different systems for stock-on-hand accounting purposes. Use of different systems results in regular problems with info synchronization online and stock-in-hand offline. POS terminal sales are not considered as a standalone sales, i.e. are not singled out within the assortment matrix or taken into account in the course of pricing and promotion planning. Lack of inter in the company. Employee scripts do not provide for answers to questions on other sales s. Convenience of delivery 4 5 Irrespective of a sales, the delivery time is the same Opportunity to order online and pick up offline 5% Irrespective of sales s, logistics provide for the same delivery time Various delivery timing, depending on sales s 9% 46% 49% 5% Goods can be reserved and picked up the same day Goods can be reserved. Home/ offline delivery timing is the same No reservation of goods is available Ordered perfume for my wife as early as 2 November 207, with the delivery set for 9 December 207. Needless to say, the order was not delivered. I contacted the shipping company manager to specify the delivery date. Surprisingly enough, the delivery date was 25 December 207, so I chose a self-pickup. That s the mess I was in. Yes, online discounts are great, but are they worth your waiting time?. Got an sms with a selfpickup time and arranged my trip for I live uptown. Later received another sms notifying on the arrival of goods. I was in the store as planned. The manager, however, said he had already broken up my order and I cannot get it, although I saw the goods on the desk. My trip was all in vain. Online reservation of goods (order generation using stock at the store) is unavailable. Different order processing techniques. Lack of dedicated click and collect counters. Store employees are not trained and have no motivation to early assemble orders made online. Origination of overstock from buyers refusing to pick up their orders (particularly if there is a difference between online and offline product mix). Prices both offline and online are the same or a reason for price differences by sales s is provided 55% 45% Universal pricing logics No price negotiation by sales s...prices in offline stores and online may differ. And I have no idea why. Most goods have the same price, however prices for some may differ. At the moment, prices vary significantly. Online prices are nothing but a siren s call to visit a store. And everything is so expensive there. Lack of walk-through logic and a uniform approach to pricing by s, no single pricing model that helps optimize the totals. Use of different pricing mechanisms. Inconsistent online and offline promotion. Use of information 6 Order/purchase history by all s is stored, loyalty card purchases are tracked 59% 7% % Order/purchase history by all s is stored Only online order history is stored No order/purchase history is stored Your online account does not show any prior order history, none at all, as if it were your first order. The order tracking procedure is not clear either as the system requests your Customer and Reference Nos.. Customer data is managed by various divisions who use different systems (individual systems for online accounts and loyalty card management). Sales are not linked to customer personal data stored in the systems. Lack of processes to manage customer experience. 208 KPMG. All rights reserved. 208 KPMG. All rights reserved.

4 6 Группа по корпоративному управлению, устойчивому развитию и управлению рисками 6 in Russian retail Группа по корпоративному управлению, устойчивому развитию и управлению in Russian retail рисками 7 7 Comprehensive approach to omni Customer perspective Areas of concern Internal perspective Best practices Ways for improvement Processes Category management Sales and customer processes Assortment matrices are missing or do not take account of part of the product mix/sales s No walk-through logic and a uniform approach to pricing by s Promo activities by s are siloed Lack of single standards of customer work by all sales s Each holds supplier negotiations on its own Active cannibalization of s with reports to management on achieving the targets Lack of information exchange between divisions operating different sales s Category management implemented in all sales s: a single assortment matrix; a pricing approach by s secured to maximize gross margin; purchases centralized, automatic ordering implemented; centralized promotion planning. Single customer work standards and approved corporate identity Easy communication platforms for employees of various functions and business units Optimization of walk-through business processes, with a focus shifted to customer experience Implementation of advanced analytics, product mix creation, and promotion and pricing optimization systems Operating model transformation according to an initially specified requirement to support omni Design of an ideal customer journey map and internal processes to support it Personnel Organizational structure Performance indicators and motivation Ping-ponging of orders and responsibility between offline store, call center, online store, delivery service, etc. Personnel is unaware of specific features of other s (price, product mix, etc.) Functional silos by s (stand-alone divisions responsible for development, with such divisions duplicating part of functionality) Lack of employee motivation for cross-selling Management is designed by processes, not functional silos The organizational structure aims to support cross-functional and inter communication Personnel KPIs depend on sales within the entire category, irrespective of sales s Enhanced employee motivation for organizing cross-sales Optimization of the organizational structure with a focus on the customer Linking of performance indicators and motivation to strategic goals and a customer Simplification of metrics, alignment of authorities and responsibilities Systems Lack of a single database of customer purchases by all sales s Use of incomplete information while creating personalized promo offerings Systems are labor-intensive in terms of data collection and analysis The customer and its digital copy are not interrelated Systems integrated, a single info space created Active work with customers digital copies Implementation of an IT architecture to support single global databases used for customer and corporate data storing and processing purposes Development of requirements based on customer experience, including that of internal customers 208 KPMG. All rights reserved. 208 KPMG. All rights reserved.

5 8 Группа по корпоративному управлению, устойчивому развитию и управлению рисками 8 in Russian retail Contacts Elena Ustyugova Management Consulting Partner T: +7 (495) E: eustyugova@kpmg.ru Aleksey Nesterenko Management Consulting Director T: +7 (495) E: avnesterenko@kpmg.ru The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. 208 JSC KPMG, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International Cooperative. 208 KPMG. All rights reserved.