A Pragmatic Take On BIG Data and Why You Should Care
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1 A Pragmatic Take On BIG Data and Why You Should Care SAP Retail Forum The Waldorf Astoria New York City, NY October 7 8, 2014 Brian Kilcourse, Managing Partner Retail Systems Research, LLC
2 3 About RSR Founded in 2007 to quickly become the leading source of insights for trends in retail technology, and retail in general Mission: To elevate the conversation about retail technology to a strategic level within the retail enterprise by: Providing objective, pragmatic advice to both retailers and solution providers Leveraging our extensive retail industry experience (75+ years) Providing a deep bed of research into retailers' technology investment plans and the business opportunities and challenges that drive those investments.
3 Retail s Reset Moment 4
4 WHAT S HAPPENING? 5 The Retail Industry Is At A Reset Moment Triggered Consumer Adoption Of Technology In A Way That Changes Society
5 6 A Profound Change Has Occurred That s Hard To Overstate Todays Consumer Carries The Store With Her Wherever She Goes
6 7 Beyond Any Doubt Multi-Channel Customers Are: Significantly more profitable than single channel customers 34.6% Slightly more profitable than single channel customers Equally profitable 18.5% 18.5% Less profitable than single channel customers 4.9% Don't know / Can't tell 23.5% RSR Research, August 2014
7 8 When It Comes To Consumers, Digital Is the New Outreach Tool What Is The PRIMARY Role Of Digital Selling Channels In Your Company's Overall Strategy? Winners Laggards To transact to sell products To drive traffic to stores To educate consumers about lifestyle elements related to our brand To create brand awareness To help consumers educate themselves about categories and products before they come into stores To help consumers educate themselves about categories and products while shopping in a store 0% 5% 10% 11% 10% 11% 9% 10% 37% 35% 31% 30% RSR Research, August 2014
8 9 It s A Winning Behavior! What Percent Of Your Offline/Store Sales Are Influenced By Digital Channels? Winners Laggards Greater than 75% 50% - 75% 6% 10% 11% 10% 25% - 50% 10% - 25% 10% 10% 23% 26% 5% - 10% 10% 17% 0% - 5% 17% 50% RSR Research, August 2014
9 10 Today, a Retailer s BRAND VALUE Is Defined By A Five C Strategy Community Commerce Customer Context It s Not What You Want To Sell, But What/When/Where/How Consumers Want To Buy Content
10 11 The Question is, What Does All Of That Have To Do With?
11 12 Digital Has Fundamentally Changed WHERE & HOW Consumers Shop Investigate & Select Pay For & Take Possession Of Go to a Store Go to Site Place Items in Shopping Cart Purchase in Store Same Store Access Mobile Site Click on Ad Click from a Blog Redeem a physical offer Purchase via Mobile App Alternative Store Organic Search Click from an Affiliate Post a Review Access Mobile App Open an Redeem a digital offer Purchase via Mobile site Purchase on e-comm Site Online DC Store DC Vendor Direct Rec v an SMS offer Abandon Sale
12 Not All That Different? Take A Look At What s Happening In This Picture! 13 We re Paying For & Taking Possession Of Our Purchases I m Investigating I m Selecting! I m Advocating!
13 The Difference? We Can t See What Happens In The Digital Space Without Data 14
14 See What? Consumers Research At Home, Compare In The Store 15 What Are The Primary Activities You Perform On Your Mobile Device While Shopping... In a Store At Work/School At Home Research product selection Compare prices View product ratings & reviews Locate the nearest store Search for deals or coupons Compare products Purchase products Research product availability Save products to a shopping cart so I can look at them later Call my local store Create a shopping list I can take with me into the store Complement my shopping activities on other devices (tablet, laptop, or desktop computer) Ask friends or family for advice Purchase gift cards 13% 8% 15% 6% 19% 8% 19% 20% 9% 11% 18% 5% 10% 15% 18% 11% 11% 2% 5% 9% 29% 46% 60% 44% 55% 57% 34% 38% 57% 38% 46% 34% 30% 46% 33% 33% 42% 29% 39% 28% 32% 26% Source: RSR Research, November 2013
15 16 With So Much Of Consumers Pathsto-Purchase Happening Beyond The Store, How Can We Be Relevant Now? The Answer: Today s Information Enabled Consumers Leave (Digital) Breadcrumbs
16 17 Digital Breadcrumbs Community Commerce Customer Context Content
17 18 Here s The Question At Work Anywhere At Home Inside The Store On The Way To The Store At The Perimeter When Do You Start Paying Attention?
18 Data & Marketing 19
19 20 Retail Is Still An Intuitive Endeavor Supported By Data How Decisions Are Made Laggards Retail Winners PRODUCT DEV: Primarily Experience/Intuition Data + Experience/Intuition Primarily Data Oriented 21% 16% 15% 19% 63% 66% STORE OPNS: Primarily Experience/Intuition Data + Experience/Intuition Primarily Data Oriented 37% 21% 42% 21% 26% 53% SUPPLY CHAIN: Primarily Data + Experience/Intuition Primarily Data Oriented 26% 8% 26% 47% 40% 52% MERCHANDISING: Primarily Data + Experience/Intuition Primarily Data Oriented 5% 42% 21% 53% 10% 69% MARKETING: Primarily Experience/Intuition Data + Experience/Intuition Primarily Data Oriented 40% 50% 10% 13% 10% 63% Source: RSR Research, January 2014
20 21 But It Could Be More Data- Driven Than It Is! Which 3 Internal Organizations Would Gain the Most from Greater Use of BI & Analytics? Marketing 55% Merchandising 49% Store Operations 41% Corporate Strategy Supply Chain 29% 28% IT Direct channel (eg: e-commerce, mobile) Product Development Sourcing/Procurement Finance 20% 19% 16% 15% 15% HR 10% Source: RSR Research, January 2014
21 22 Digital Comes To Marketing Turn customers into brand advocates through digital channels Top 3 Digital Marketing Opportunities Winners Others 30% 50% Leverage new sources of data (for example, purchase intent via social media) to meet 28% 44% More effective targeting based on customer insights More effective targeting based on customer behavior Use content in digital channels to drive more brand engagement with our customers 35% 39% 33% 28% 44% 45% Use digital channels to drive traffic to stores 33% 53% Use engagement in digital channels to drive more sales 28% 43% Offset the fragmentation and decline in effectiveness found in mass media channels 11% 18% Source: RSR Research, September 2014
22 23 When It Comes To Supporting New Insights With Tech Rate The Value Of The Following Enterprise Technologies To Enable Your Company's Growth Strategy (High Value) ALL Durables/CE Basics/Perishables Fashion/Seasonal Big Data processing capabilities (volume, unstructured data support, reporting/analysis, actionable insight, velocity) Analysis of non-transactional customer data and geo-locational data Predictive analytics and visual presentation of data 64% 64% 45% 72% 60% 54% 50% 69% 52% 46% 55% 57% Enterprise privacy policy and technical framework 24% 43% 40% 54% Source: RSR Research, October 2014
23 24 And What About Supporting Omni-Channel With Tech? Rate The Value Of The Following "Omni-channel" Capabilities In Enabling Your Company's Growth Strategies (High Value) ALL Durables/CE Basics/Perishables Fashion/Seasonal 360 view of product, customers, channel activities 45% 59% 62% 61% A single integrated selling platform across all channels & geographies 38% 46% 45% 54% Mobile integration to both e-comm and the stores 42% 38% 36% 48% Source: RSR Research, October 2014
24 Data & The Customer 25
25 A Few Examples Of How Retailers Use Data To (1) Sell More Stuff & (2) Drive Consumers To The Brand 26
26 27 Affinity Product oriented, eg. when Product A is in the basket, Product B will also be purchased 35% of the time An expansion of something Grocery Retailers have done for years Amazon Example:
27 28 Cue-Routine-Reward Behavior oriented; according to a study from Duke University, habits shape 45 percent of the choices we make every day (not conscious decision-making) Cue ( a coupon for something I need! ); routine ( Buy it! ); reward ( take that off my list ) Lifestyle oriented: Eg. Diabetics need these products on a regular basis During the cold season, diabetics need sugar free cold remedies
28 29 Life Events Eg. Having a baby
29 30 Common Customer Analytics Segmentation Best, worst, most at-risk Predicting future behavior of segments Targeting Loyalty Segmentation Churn, Attrition Loyalty Modeling
30 Attribution: Digital Breadcrumbs That Consumers Leave Along Their Digital Paths-To-Purchase 31 First Interaction (the first touchpoint) Last Interaction (the last touchpoint) Last non-direct click (the last place a consumer went before transacting) Last AdWord click Linear Attribution (the entire digital path to purchase) Time Decay (the touchpoint(s) closest to the sale)
31 32 FMCG Lags Rate The Value Of The Following Direct Channel Technologies To Enable Your Company's Growth Strategy (High Value) Durables/CE Basics/Perishables Fashion/Seasonal Behavioral analysis 50% 58% 72% Personalized promotions and pricing 41% 52% 63% Direct-to-consumer marketing 36% 50% 52% Customer-facing social media presence (Facebook, Pinterest, Twitter, etc.) 23% 52% 52% A/B testing 14% 46% 44% Source: RSR Research, October 2014
32 The Big Hole In Our Vision 33
33 34 Consumers Aren t So Sure I don t mind retailers tracking my in-store location using my smartphone to provide relevant deals and savings as I shop. 10% 22% 46% Completely disagree Somewhat disagree Somewhat agree Completely agree 22% Source: Balance Innovations, August 2014
34 35 Why Not? How Do You Rate the Value of the following In- Store Tracking Capabilities? (High Value) Durables/CE Basics/Perishables Fashion/Seasonal In-store tracking technologies (Beacon, Video, wi-fi) 32% 52% 59% Source: RSR Research, October 2014
35 36 Tracking Customers Questions! 1. What s The Need? 2. What Are The Operational Considerations? 3. What Are Your Responsibilities? 4. What Can Be Learned From Past Experiences?
36 37
37 38 Thank You! Subscribe: Brian Kilcourse RSR Research LLC Further Information on Products & Services:
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