Machine-to-Machine (M2M) Retail Insights. Vodafone Power to you

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1 Machine-to-Machine (M2M) Retail Insights Vodafone Power to you

2 to the era of omni-shopping

3 Welcome At Vodafone, we re always having conversations with our partners and customers. That s the best way to think about the future of sectors like retail and how we can apply M2M technology to improve everything from sales to operational processes and everything in between. We asked Phil Skipper, Head of M2M Business Development, Vodafone, Yatty Wu, Global Client Advisory (Retail & FMCG), Vodafone, and Jim Short, Smart Parking Ltd s Technical Sales Manager EMEA together to brainstorm the future of retail. The Machine-to-Machine Revolution is transforming the way we satisfy our retail desires by making anything and everything available. You might find their insights and views both useful and provocative. They are definitely food for thought. And thinking in new ways about big issues is of vital importance at a time of rapid change. Enjoy.

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5 Introduction Abstract Shopping behaviour is changing. Analyst predictions pinned bricks and mortar shops as becoming a thing of the past, and that we d all be buying what we wanted online. The prediction was wrong. New digital technologies are making physical shops more relevant to the consumer. It s fast becoming not about shelves of products but about customer experience. Websites that look like stores and stores that reflect their websites. What s driving this retail revolution is Machine-to-Machine (M2M) technology machines that can communicate with each other constantly and accurately. That information allows the supply-chain to run effectively and efficiently so shops can have the right stock and offers in place to gain insight into their customers behaviours before, during and after their visits. This in turn, enables online outlets to deliver a seamless brand experience and ensure the goods are available in an efficient and customer-friendly way the omni-channel approach. This paper shares with you our insight into how M2M is enabling retailers to do more than they ve ever been able to do before, get closer to their customers, and make the brand experience immersive.

6 Introduction Introduction Our urge to shop our need to buy stuff isn t changing. People will always be buying things and I think what we are seeing is not so much a change in what people do, it s a change in how people do it, says Phil Skipper, Head of M2M Business Development, Vodafone, It s more about how retailers get customers engaged, and having sufficient trust along the supply chain in retail, as well as giving people an experience they value. Yatty Wu, Global Client Advisory (Retail & FMCG), Vodafone, agrees, What retailers have to do is to create a single experience for a customer a joined-up experience that s based on a journey: from online to in-store and back again. It s got to be seamless and easy one big joined-up experience that makes the most of technology to get shoppers shopping with you. It s what everyone calls the omni-channel strategy. Technology can make retailers smart but only if they understand what it s good for and what it can t do. It s amazing how we can apply M2M technology to the simple act of parking a car at a store and use it to improve every other part of the retail organisation. It s thinking big looking for analytics in that one place and using them to inform what you do in another that s really clever, says Jim Short, Technical Sales Manager, EMEA, Smart Parking. What s clear is that shopping isn t going out of fashion. In fact, we re shopping more than ever before. But consumers have changed, and the technology within the retail industry has changed too. Logistics is absolutely key to delivering on the expectations of consumers, stresses Phil Skipper, The technology of logistics is what has changed retail over the last 20 years and what s happening now with the so-called Internet of Things is another stage on that journey. There are three key areas in which M2M technology is having and will continue to have a profound impact on the retail sector: 1. The Shopping Experience 2. Tracking and Predicting Consumer Behaviour 3. Logistics: The Supply Chain and Delivering the Goods One of the main drivers in this M2M market is the increasing usage of electronic payment devices - Almost half of European shoppers use Smartphones for impulse buys. ibtimes

7 Biography Phil Skipper, Head of M2M Business Development Phil joined Vodafone in July 2013 as Head of M2M Business Development. He is fully responsible for driving new business and developing M2M solutions for vertical industries on a global basis. M2M adoption will continue to accelerate over the next couple of years with smaller organisations being able to harness the advantages of M2M technology to drive greater efficiency and value for their customers. As Head of Business Development for Vodafone M2M, I m particularly excited to play a key role in developing this important application area he says. Phil has a wealth of experience in a broad range of industries including defence, FMCG and media. Prior to joining Vodafone Phil was responsible for Markets and Portfolio within the Siemens Infrastructure and cities organisation. Before this he held the position of Director Electro-Mobility for Siemens and has worked for a number of well know blue chip organisations including Landis+Gyr and Mars in the UK, USA and Switzerland. Phil holds a degree in engineering from the University of Sussex.

8 Biography Yatty Wu, Global Client Advisor Retail & FMCG, Vodafone Yatty Wu is part of Vodafone Global Enterprise s client advisory team, focused on Retail & FMCG where he works with some of Europe s largest retailers to develop ideas for innovation in the areas of in-store experience and digital. With over 20 years of experience in delivering technology services to companies in the industry, he has extensive insights of how disruptive these technologies have been to retailers and how upcoming developments are being harnessed today. His areas of interest now are in analytics, in particular using geo-location to personalise services, e-commerce customer service solutions using digital and the Internet of Things in retailing. All these nascent technologies, he believes, form the foundations of the future of retail.

9 Biography Jim Short, Technology Sales Manager, EMEA, Smart Parking Jim joined Smart Parking in June 2013 bringing over 5 years experience selling parking technology solutions for Xerox s transportation group. Smart Parking was founded in 1993 and has since grown to manage over 1,100 car parks across the UK. Smart Parking is a publicly listed company on the Australian Stock Exchange (ASX). This union of Smart Parking s substantial operational experience with a cutting edge range of parking technologies has ensured that Smart Parking offers expertise in both parking technologies and innovative car parking management right across the UK. Our client base includes some of the UK s largest retailers, including Sainsbury s, Asda, The Co-operative Group, Iceland and Matalan. This retail experience combined with our unique M2M parking technologies and global experience allows us to offer retailers world class parking solutions. Despite the relative infancy of M2M parking technologies, Smart Parking have installed over 60,000 sensors worldwide with deployments in the UK, Australia, New Zealand, South Africa, Spain, France & Saudi.

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11 The Shopping Experience The evolvement of the shopping experience Back in the 1990s and early 2000s it was all rush rush busy busy, no time to do anything. Now consumers are going through a phase where they are more aware of what things cost and what they actually need they are prepared to spend the time to go to two supermarkets instead of one to save money, states Phil Skipper. People are now much more informed to make decisions on what they want to purchase, from where. Customers will shop around, online or in store, before purchasing. This pattern is certainly empowering the customers with their decision making and purchasing.

12 The Shopping Experience Just a few years ago there seemed to be a strict distinction between e-commerce and bricks and mortar shops. They were two different worlds. Some brands had their online divisions, but many didn t. Pure-play steered away from real-estate. But that s been changing for a while now and the online and the high-street are merging to become one. Yatty Wu insists, Do not regard the retail outlets as being an island in its own right in terms of how consumers are interacting. As far as consumers are concerned, they see being online and being in store as being one experience provided by the retailer. And that s regardless of whether you are a high-street with online or a pure-play retailer. This brand then needs to be connected seamlessly and deliver a coherent message as well as the experience. As a retailer, you can drive down your costs as much as you can, but it is how you differentiate yourself from the competition, and the more pleasant the experience for the customer, the more likely they will make that choice on price vs quality of experience, says Jim Short. The point is to direct consumers to the store s own online capability and back into the store. That s a big part of the omni-channel experience. People look up what they want online, compare, read reviews, get information, then go to a store to get up-close-and-personal with what they desire. With M2M technology, millions of machines are able to exchange data with each other to ease the flow of goods, information, and instructions to one purpose: so the consumer receives the goods and service they expect. A seamless and quality experience is really critical, says Yatty Wu, If you can create it then you ll make the sale whether it s in a shop or in the customer s home. The real-estate is still generating revenue even though the sale gets done online, and lots of research shows that an omni-channel customer is a more profitable customer. The experience is what engages the customer and keeps them loyal to your brand. What M2M enables you to do is focus on managing the customer experience end-to-end in ways that were never possible before. Presence technology and personalised relationships are vital and both can be facilitated by M2M. Many consumers don t want to talk to a salesperson. That s why they like shopping online. But sometimes, they do want to talk to someone. By integrating it all you can get the best if both worlds, says Phil Skipper. The in-store experience is still vital, It s about customer experience management and making sure you as an individual have a journey that is suited to you, says Yatty Wu. Sometimes it s functional, and sometimes it s all about personal interaction. It is about how to make the sale in any way that suits the consumer. 95% of the respondents indicated customer experience/customer engagement is one of their top three current initiatives Digital Journal, June 2014.

13 Tracking and predicting

14 Tracking and predicting customer behaviour M2M generates the data that gets you closer to your customers Ever wondered when analysing your data that the question that really needs to be asked is who is not included in the data set? M2M enables everything from empty shelves to parking bays to feedback information that can improve the shopping experience and flow of goods to where they need to be. Phil Skipper explains, Retailers make massive assumptions based on the data they ve got and because there is a lot of data, it is assumed all is statistically relevant. Parking is a good example of how you can use data to get closer to customers and anticipate their needs, says Jim Short. Our job is to make parking your car at a supermarket or shopping centre as forgettable as possible. It s just got to be easy. But, when you park your car we can gather information about a whole host of things to generate data that s really useful.

15 Tracking and predicting customer behaviour A three-meter high camera can read every number plate and clocks the time the vehicle enters the car park. In the past stores would have to employ people to track cars using handsets and then issue tickets for overstays. Automation has saved money and made the enforcement of rules (usually a three-hour stay) more effective. But each time a car enters or leaves a car-park data is generated and that data is valuable. It is the ability to identify someone and that can be valuable to the retailer and the consumer. It is so important to have that real-time store level analytics where we can track the movement of customers and goods in real-time, says Yatty Wu. In the first instance, it means we can work out the optimum amount of time stores can allow people to stay in the car park. Stores want customers to stay as long as possible that s why more and more have cafes and restaurants in them and that means they spend more money. But you don t want people abusing the space especially in urban areas where parking is scarce. So, data about what customers actually do allows stores to get the balance right, explains Jim Short. The data also reveals consumer behaviours in terms of time of day and time of year. It helps shops predict peaks and troughs in demand. It can match car ownership to shopping habits to help predict consumer trends. We ll soon be able to use Radio-frequency identification (RFID) tags to link specific cars to loyalty cards. Consumers can opt in by providing their plate number and then stores can work out shopping patterns like when the big shop is done, or when people just pop in for something small, or even walk! Car parking is a single example of how M2M technology can turn something that seems purely functional into not only a way of managing a store better and at less cost, but also using the data to improve the customer experience and target offers more scientifically. In the past, when people mostly shopped locally and knew their shopkeepers, and they knew them, there was a flow to shopping that disappeared in the age of the supermarket. The shopkeeper knew what people liked, how they liked it, and could use that information to recommend new products or new combinations of brands. That was business analytics based on data but it was all in the shopkeeper s head. Now, with M2M technology sharing all kinds of data-sets retailers have the chance to get to know their customers intimately and not just local ones but millions of them at a time, says Phil Skipper. Modern consumers are highly connected. They re digitally-savvy, and they re increasingly good at manipulating their own data to get the best deals. Retailers have to embrace that trend. They have to take their data seriously and see it as a raw material that can be turned into a rich business resource. M2M technology means that new kinds of data can be collected in real-time and with ease. Never before has it been possible to listen to products as they move through the supply-chain and reveal real-time trends that can inform clever decision making. 22% of retailers have implemented real-time analytics and 61% plan to implement it within two years. Digital Journal, June 2014.

16 the supply chain and delivering the goods

17 Logistics, the supply chain and delivering the goods M2M boosts the supply chain Retailers need to think differently about what their purpose is it s all about the supply chain that s how you deliver what customers want in-store or online. You ve got to run your operation based on the customers needs. That s what they see as service and that s what they value, says Phil Skipper. What s different now to any other era in retail, is speed. People want what they want, when they want it. Going down to a store after looking up a product online and discovering that the store doesn t have it, has to be one of the worst impacts on the customer experience. It undermines a customer s loyalty in a big way, and that s why replenishment is such an area of focus for retailers. Being able to deliver the goods in a timely way on the shelf, to the door, or to a locker in a railway station.

18 Tracking and predicting customer behaviour M2M technology really comes into its own right across the supply-chain: from factory, farm or container port through to the customer s door. Parking is relevant here too, says Jim Short, It s true. We help our customers work out how many click & collect parking bays they might need. A customer might want to order online after doing their research and comparisons, then make their purchase safe in the knowledge that the thing they want is in their local store waiting for them. They don t want to wait in for a delivery, so they drive down to the store. It s not ideal to have to park on the other side of a big car-park when you know you ve got to get a bulky item to your car. So, stores are now providing premium parking bays and specialist click & collect dedicated areas (perhaps with a much shorter time limit), which allows consumers to book their space, drive in and collect their goods, load it up, and perhaps grab an impulse purchase before heading home that is one of the most exciting things for us at the moment. M2M is driving a much more competitive supply-chain and that s important because the flow of goods through efficient distribution channels is what enables them to have the right stock levels to match demand. You don t want too few products or too many you want just the right amount, says Phil Skipper. RFID tags on products, crates, lorries, and just about any object you can think of, can all be linked together to track, plan and sustain the flow of goods. Delivery is a big issue. We live in the age of We ll deliver between 9am and 5pm It s not ideal, says Phil Skipper, If you deliver at 4.59pm after someone s been in all day, that s a bad experience. It tarnishes the customer experience and hurts the brand. That s why a lot of work is going into making delivery faster and more efficient. It is about consistency Again, M2M is powering the effort to deliver the goods on time. Customers want options they want to be able to choose delivery methods that suit their day-to-day lives, and they want it faster. A couple of years ago we thought 48-hour delivery was brilliant, but now it s not good enough, says Yatty Wu, We re moving to a world where same day is feasible. Some consumers want their goods the next day, and will pay a premium to ensure it arrives that day. They might opt to pick up their goods so they can be in control of when they can go to the store, or choose to have their packet sent to a locker so they can collect it at their convenience. It s all a logistics issue, says Phil Skipper, logistics is getting parcels delivered to where they need to be, and can accurately estimate the time they will arrive. Currently this can be ever so fragmented, however M2M is a really good way of changing this and achieving better. Retailers put this M2M umbrella over what is quite traditionally a complicated supply chain to gain more accurate visibility. M2M enables supply chains to be consolidated in real-time. Because sensors attached to any kind of object or machine within the supplychain can exchange data with every other machine or object and be monitored centrally, then the flow of goods is smooth and efficient. The future of retail depends on great logistics. It really is that simple, says Yatty Wu. Retailers expect to see strong growth in externalfacing strategies, and their preferred solutions reflect that. Connected cabinets (16%) lead the charge, along with asset tracking (17%) Barometer report 2014.

19 Summary What should you be asking for from your M2M supplier? Smart Parking Track individual parking bays to better manage limited parking resource Wireless CCTV Instant visibility of your assets in locations where there is no infrastructure Remote Asset Monitoring and Maintenance Monitor and maintain expensive assets such as escalators remotely to prevent downtime. Mobile Asset Tracking Track vehicles, products and high value assets gain visibility on a global scale to help you better manage your supply chain Energy Data Management Keep energy costs down by monitoring individual devices in each store Dynamic real time advertising Communicate to your customers with relevant and timely offers and information controlled from a central location. So come and talk to Vodafone M2M about your ideas. The earlier you talk to us, the easier it is to find the right solution to fit your needs. Vodafone is one of the world s leaders in M2M service delivery. We ve been working in M2M for over 20 years, and today we provide full support for M2M security solutions, including alarms, CCTV and asset tracking. Our capabilities include: global M2M platform; global M2M-specific SIM cards; a broad portfolio of M2M terminals, application and service enablement development, testing and deployment; network connectivity; and system integration all from a single supplier, with a single contract. To find out more about how we support M2M security solutions globally, or how our portfolio of wireless communications solutions can support your business, please contact your Vodafone account manager, m2m@vodafone.com, or visit m2m.vodafone.com