The future of retail Javelin Group

Transcription

1 The future of retail Javelin Group Amy McGee, Manager

2 Javelin Group: planning & implementing omni-channel transformation 2 The world s most experienced specialist consultancy in omni-channel retail 170 colleagues focused on omni-channel strategies and transformation Vertical specialists with skills in Strategy, Operations, Store locations & Technology 50% of our work is outside the UK, especially DE, FR, NL and DK Plan & help execute omni-channel retail for world class clients all over the world Strategy & organisation Operations Technology Stores MCR ecom

3 3 Shopping is getting better for consumers, but... retail is getting much tougher

4 Many more ways to shop 4 At home, or on the move Digitally enhanced destinations Pop-ups In-store with help Omni-channel small stores

5 ecommerce has come of age globally; but more left to come 5 B2C ecommerce penetration (% share of retail sales), % UK retail sales take place online; significantly ahead of other European geographies, e.g. Germany 6%, France 5%, Spain 0.9% UK: 9.6% Lower online penetration but fast growth forecast to 2017, e.g. Spain from 0.9% to 2.2%, Australia 2.0% to 3.5% Sources: Javelin Group, Euromonitor, zdnet.com

6 Sales ( m) Sales ( m) UK ecommerce / multi-channel continues to grow in a static retail market 6 UK Non-Food Retail Sales (all channels) ( m) 200, ,000 Little or no top-line growth 160, , , , % 54% Store only 42% 80, , % Research online, buy in-store (ROPO) 32% 40, , % 6% 15% Direct only 20% 26% of NF sales online by Direct only Direct ( m) only ( m) Store-to-direct ( m) ( m) Buy/reserve Direct to store direct - C&C to collect/buy / R&C ( m) in store ( m) Direct to Direct-to-store - ROPO ( m) Store only Store ( m) only ( m) Source: Javelin Group analysis

7 UK retailers now take a significant proportion of sales in direct channels ecommerce sales for the UK s leading non-food retailers 4.0bn est. % of retailer s total UK non-food sales taken in direct channels 100% direct Direct sales bn 75% direct 1bn 39% direct 33% direct 25% direct 24% direct 13% direct (Feb 2013) (Jun 2012) (Jan 2013) (Jan 2013) (Apr 2012) UK non-food (Mar 2012) Amazon Source: Annual reports, Internet Retailer and Javelin Group estimates

8 Sales ( m) Sales ( m) Sales ( m) UK Toy market already heavily influenced by ecommerce / multi-channel 8 UK Toy market (all channels) ( m) 2,500 2,000 2,500 CAGR 12-15: 3.3% 1,500 1, , ,500 64% 1, % 27% 38% 31% % 500 4% 8% 0 11% 13% 31% of toy sales online by 2015 Store only ( m) Direct-to-store ( m) Direct only Store ( m) only Store-to-direct ( m) Direct-to-store ( m) Buy/reserve ( m) direct Store-to-direct collect/buy in store ( m) ( m) Direct only only ( m) Direct-to-store ( m) ( m) Store only ( m) Source: Javelin Group analysis 15% 15%

9 % smartphone users UK penetration (% population) Direct / ecommerce means more than just a desktop website 9 Growing smartphone penetration leading to 66% 62% 58% 54% 52% 48% 48% 42% 43% 38% 34% 31% 22%.use of smartphone in stores % of smartphone owners performing activity in previous 3 months Purchased goods online 6% Checked product availability 8% 9% Tablet Smartphone emarketer Researched product features Found coupons for deals 11% 11% Found store location 13%.browsing & shopping 54% Compared product pictures 18% 32% 23% 43% 32% Browsing Shopping 38% Scanned product barcode Sent product picture to a friend 21% 22% Took picture of a product 42% Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Browsed online Shopped online IMRG/eDigitalresearch 0% 20% 40% Comscore UK research, 3 months ending Oct 2012

10 Exponential increase in competition 10 GMs Brands Pureplays / marketplaces Toy retailers Discounters Niche Digital gaming

11 Amazon increasingly influential 11 Amazon s net annual sales $bn Market value equivalent to Target Best Buy Macy s Sears Staples combined x2 in 3 years Last reported Y/e Dec 2012 Int l Nordstrom J.C.Penney Kohl s North America Forecast

12 Amazon dedicated Toys and Games department 12 Over 2 million items Brand stores Leading price & home delivery proposition

13 Amazon increasingly influential 13 Amazon isn t eating our lunch... but it s making it less tasty. Sebastian James CEO of Dixons Retail August 2012

14 Those who don t transform and compete will fail 14 Number of stores affected by retail failures/restructurings ,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Kwik-Save Ravel Music Zone Woolworths Roseby s Ethel Austin Zavvi Dolcis MFI Border s UK Alexon First Quench All d Carpets Baugur/ Mosaic Birthdays Stylo Faith Shoes Adams Best Buy UK Focus DIY Oddbins Peacocks Comet JJB Sports Clintons Game Group Blacks Dreams Republic Play.com Blockbuster HMV Jessops Q1 annualised Source: Centre for Retail Research

15 Vacancy Rate (%) For stores, today s picture doesn t look good. 15 UK store vacancies (% of retail units) 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Store vacancy has quadrupled since end in 7 UK stores now stand empty Many of these vacant shops will never re-open 0.0% Source: Local Data Company

16 Increasing polarisation of UK shopping venues 16

17 Retailers are reshaping their store portfolios 17 The classic portfolio bell curve is flattening out Obsolescent retail portfolio New Retail 3.0 portfolio Importance More ecommerce More convenience More touch-points Fewer mid-sized high street stores Bigger, better stores Virtual/Small format High Street format Large format Formats/channels

18 Top 5 ecommerce priorities for toy retailers 18 1 Full range online 2 Experiential website 3 Product information & content 4 Integrated customer experience 5 Optimised mobile / tablet experience

19 Multi-channel retailers can differentiate via experience & convenience 19 Enhanced in-store experience Increased convenience Apple Digitally enhanced

20 Trailblazers are putting service at the heart 20 1bn online (+40% YoY) Click & Collect growing like crazy Collect+, same-day delivery, TV installation

21 Brands can support their retailers 21 Production & sharing of digital assets Publication to all Digital touch-points assets Digital assets Publication to all touch-points TV Brands Retailers Direct fulfilment Long tail stock-holding Despatch to end customer

22 Brands can support full service retailers 22 New Pay for Performance approach High service store retailers get the best terms Big box low service retailers get mid terms Pure-play ecommerce get the worst terms

23 Brands play important role as multi-channel dominance increases 23 Brands must have Strong online presence Reach across many touch points Full range and great product information Strong support for retailer partners (e.g. digital assets) Clear pricing policy to support high service retailers Good eshop to cover retail gaps

24 Ability to manage change is critical 24 It is not the strongest of the species, nor the most intelligent, that survives... It is the one that is most adaptable to change. Charles Darwin

25 Thank you javelingroup.com