Three Tech Trends that will drive Retail and how GS1 is part of them

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1 Three Tech Trends that will drive Retail and how GS1 is part of them Gernot Gutjahr Partner KPMG AG CIO & Sourcing Advisory September 2014

2 KPMG is convinced digital disruption for Retail will grow KEY MESSAGES Total digital disruption through 2025 Though Digital Transformation will affect every industry, they ll hit some businesses much harder and faster than others. Today Incremental through 2025 We believe Retail is one of the hardest hit industries: virtually every retailer has faced severe disruption from pure-play online competitors, and many have already spent hundreds of millions on building up their digital marketing and e- commerce capabilities. Sources: Bain, KPMG Research 12

3 , and Cognitive are driving, Semantics underpins KEY MESSAGES We see three key trends driving digital transformation -, and Cognitive GS1 identifiers and structured data, including semantic markup, will be foundational for, powered e-commerce and Cognitive Computing, i.e. data mining, pattern recognition and natural language processing Cognitive

4 KEY MESSAGES New business models are increasingly driven by big data Drawing competitive advantage from the rapidly growing body of data will be the key to these models. GS1 is foundational to making sense of this data it ties together information on what item, is where in the supply chain, where it was previously, why it was there PERVASIVE SENSORS, BANDWIDTH & STORAGE COST ARE IN DECLINE More people have mobiles than running water. A quarter of the worlds population will be on social media. Social media will exceed 20% of marketing budgets. 80% OF THE WORLD S DATA IS LESS THAN 2 YEARS OLD Marc Andreessen a16z.com The retail guys are going to go out of business and e-commerce will become the place where everyone buys. Take comfort: KPMG believes stores will remain great sources of data. Shoppers are human being, like to go out, to interact in person with other people, to touch and handle and make things. 2,5bn gigabytes of data is created per day. This data comes as structured and unstructured data (location data, social media, blogs). GS1 allows structure. WE RETAILERS WILL CONTINUE TO EMBRACE BIG DATA This will influence how retailers will engage with customers, and GS1 will be part of it. One example GS1 allows comparison, and reviews drive conversion rates. 3

5 KEY MESSAGES Building new business models will require experimentation and agility and making privacy and big data go along. Hybrid cloud will be part of the solution. CLOUDS BY NATURE ARE SHARED Private clouds are shared with immediate family public cloud with neighbors you may not yet know. is increasingly about business capabilities delivered as a service. SHARING, STANDARDIZATION AND AS A SERVICE MAKE CLOUDS POWERFUL Sharing resources make clouds potentially more cost effective. Standardization makes for easier integration and faster time to market. And as a service means lower entry barriers, with more partners and clients getting to the service.. GS1 HAS SHOWN HOW PRIVACY AND CONSUMER CENTRICITY CAN GET ALONG GS1 s cloud-based food recall notification service is a great example of that: it has been helping its 1.5 million member organizations to reduce errors, decrease the amount of time it takes to respond to recalls and minimize the costs associated with managing the recall process. 4

6 Beyond BI - Cognitive KEY MESSAGES 011 Cognitive computing involves self-learning systems that use data mining, pattern recognition and natural language processing to mimic the way the human brain works. Cognitive is making its way out of the labs and into crunching big data Retail has always been a data-intensive industry. Now, we see an explosion of consumer and enterprise data that dwarfs anything we, as an industry, have ever dealt with before. PROGRAMMING MAY NOT BE UP TO THE CHALLENGE The biggest challenge facing retailers isn t managing the volume or variety of data. It is having the ability to identify what business outcomes they can impact through the integration and analysis of this data. DATA MINING AND PATTERN RECOGNITION MIGHT HELP Discovery will help delivering value from the data tsunami coming from POS systems, enterprise transactional data, machine logs, loyalty data, unstructured and semi-structured data from s and machine logs, social media data AGAIN, THIS IS LINKED TO CLOUD AND MASTER DATA BI already consumes vast amounts of compute: we have seen Wal-Mart move from an experiential 10-node Hadoop cluster to a 250-node Hadoop cluster we have seen clients using cloud to help to scale this web-scale infrastructure. And we see opportunity for GS1 to continue to tie together otherwise disparate data.. 5

7 GS1 KEY MESSAGES GS1 is a key foundational technology that will tie together, enabled E-Commerce and. Until now, most information on the web consists of documents intended to be read by people rather than machines. Facts within the documents are mostly unstructured and difficult for computers to interpret. GS1 will drive linking disparate and in-depth product information as well as additional content such as peer reviews, where the product can be sourced (ie is in stock) locally to that user s location and so on. GS1 already is a key foundational technology that will tie together, enabled E-Commerce and. Google is one example of companies rapidly adopting semantic Web technology. At the end of 2014, Google took another step toward becoming that a semantic engine with Hummingbird. ONLINE RETAILERS LEVERAGE GTINS & STRUCTURED DATA Today, GTINs (Global Trade Item Numbers) are leveraged across all major comparison shopping and search engines BUT GS1 MIGHT NEED TO DO MORE TO STITCH TOGETHER DISPARATE DATA SOURCES The mobile example approximately 1/3 of consumers would like to access product information scanning a barcode, more that half of those would also use mobile payment. But at the moment, shoppers rarely conduct their transaction on the phone - the smart phone conversion gap. Amazon has taken a major step to reduce the friction between desire and fulfillment. Amazon Firefly is a visual (and auditory) search system that effectively turns the entire world into a shoppable catalog. GS1 Barcode are only one (important) source - the Firefly database 100 million objects that are use for comparison. While KPMG believes Fire Phone wont be an immediate consumer hit : What if Amazon offers Firefly as a Google Glass application are you all prepared? 6

8 Technology Trends driving Retail & how GS1 is Foundational to them I will share insights sourced from recent KPMG research. Sematic Web 107

9 Technology Trends driving Retail & how GS1 is Foundational to them About KPMG KPMG delivers a globally consistent set of multidisciplinary services based on deep industry knowledge. Our industry focus helps KPMG professionals develop a rich understanding of clients' businesses and the insight, skills, and resources required to address industry-specific issues and opportunities. KPMG global member firm combined revenues totaled $22.7 billion for the fiscal year ending September 30, 2011, a 10.1 percent increase in U.S. dollars, or 6.2 percent in local currency terms. With 200 mio. in revenues and appr. 1,300 employees KPMG Consulting is one of the leading advisors in Germany We already provide a wide range of services to fit your challenges and continuously evolve our offerings to suit our clients demands We align ourselves along the market and bundle our competencies along the value chain of our clients With the acquisition of EquaTerra in 2011, we are the world s largest sourcing advisor. With our consultative approach and collaborative reputation w/ providers we build the foundations for a sustainable partnership, engaging potential partners and get the best out of the market - rather than standard commodity answers Sematic Web 11 8

10 2014 KPMG AG Wirtschaftsprüfungsgesellschaft, a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. As a subsidiary of KPMG AG Wirtschaftsprüfungsgesellschaft, BrainNet is one of the largest supply chain management specialists in the world. As part of the international KPMG network dozens of different languages are spoken in this network which spans the entire globe. KPMG member firms have acquired the business and subsidiaries of advisory firm EquaTerra, Inc. EquaTerra and the EquaTerra logo refers to the Shared Service & Outsourcing Centre of Competence within KPMG. The KPMG name, and logo are registered trademarks or trademarks of KPMG International Cooperative ( KPMG International ).

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