How To Make A Successful Retail Business

Transcription

1 113: Navigating the Omni-Channel Retail World Mark Allen, Accenture Bill Connell, Macy s, Inc. Debbie Nyquist, Nordstrom Accenture: Market Trends and Consumer Perspectives 1

2 Everyone is Focused on Becoming Seamless 3 Our Seamless Retail Research: Answering the Key Questions 4 2

3 The Seamless Consumer is a Global Phenomenon Source: Seamless Retail Consumer Survey, November and 55-Year Old Consumers Have More in Common than You Think Source: Seamless Retail Consumer Survey, November

4 Most Desired Information Before Shopping in a Store Product availability 82% Freshness new products just in (sorted by favorite departments) Fast pass schedule a shopping time for speedy check out / preferred service Customer ratings and reviews about nearby stores and associates working there Store crowd indicator letting you know how busy the store currently is 33% 27% 29% 31% None of the above 7% Source: Seamless Retail Consumer Survey, November Importance of Delivery Options Same-Day Delivery US Very important 5% Important t 19% How Much Would You Pay for Same-Day Delivery US Greater $41-$50 $31-$40$ 1% 2% 2% Slightly important 47% $21-$30 $11-$20 8% 19% Not important at all 29% $5-$10 Less than $5 30% 37% Wait for Free Delivery # Days 21 days 2% 14 days 25% 7 days 48% 3-5 days 20% 1-2 days 5% Source: Seamless Retail Consumer Survey, November

5 Price Still Rules Source: Seamless Retail Consumer Survey, November Consumers Expect Integration of Product, Promotion and Price Source: Seamless Retail Consumer Survey, November

6 Seamless Means Personalization at Every Touchpoint 55% 90% 90% 53% 59% 50% 45% 43% 45% Source: Seamless Retail Consumer Survey, November The Path to Seamless 12 6

7 Retailers Have Focused on the Easier Capabilities Foundational Leading Edge Flexible Better Consistent Connected Integrated Personalized Fulfillment/ Faster Experience Shopping Merchandising Interactions Returns Memorable Department Grocery/Drug Hardgoods Hyper/Mass Softgoods Most important based on Consumer feedback Where retailers have invested the most Absent Underdeveloped Developed Advanced Highly Advanced Source: Seamless Retail Benchmarking Study, November Capabilities Differ by Segment and so do Consumer Expectations Source: Seamless Retail Consumer Survey, November

8 The Customer Experience is Everything Infuse merchandising with customer advocacy Trade productcentricity centricity for customer advocacy by offering the right price, assortment, promotion, AND customer experience s In the new Lowe s recently unveiled a customer experience organization with both merchandising and marketing leaders working together to create and deliver seamless customer experiences. Lowe s Website Customer experience team could be fully embedded in merchandising Separate customer experience function with individual team members matrixed into each merchant buying team Customer experience teams could be located within marketing and influence merchants from there with an equal voice at the table 15 Traditional Channel Boundaries Among Teams are Over Business Foundatio on Channel Operations Stores Digital Customer Center Services Merchandising Marketing Supply Chain eliminate channel boundaries The Enterprise Holistic ownership of product categories, and customer and product P&L responsibility Leadership and organizational changes tion Technology Foundat In the news In the United Kingdom, John Lewis department store has strengthened its ability to offer customers crossdelivery options and click-andcollect services by unifying online and store business under a single reporting function. 16 8

9 Metrics for a New Reality The way retailers are measured How to measure holistic performance? Comp customer sales as important as comp store sales Behavioral Change How to incentivize employees? Changing measures and metrics to incent Associates to operate with a Seamless mindset. Driving sales across all channels 17 Getting Started To deliver seamless experiences, retailers must operate seamless themselves BUT there is no one-size-fits-all guide. 1. Acknowledge the burning platform 2. Identify target customer experiences 3. Put the right leadership in place 4. Involve the right people from the beginning 5. Know that making the business case will be challenging 18 9

10 Macy s: Inventory Accuracy, Omni-Channel and The Case for EPC-Enabled RFID 20 10

11 A Compelling Opportunity Opportunity: Create significant financial and customer-facing advantages by dramatically improving the real-time accuracy of on-hand inventory. Strategy: Implement RFID in major replenishment-based categories in all Macy s and Bloomingdale s stores. Key benefits: Drive sales and profit Enhance customer satisfaction 21 RFID for Replenishment Categories Providing accurate and timely data Initially implementing RFID in replenishment categories. About 30% of Macy s sales our most productive, fastest growing, and most profitable businesses. Re-ordered on weekly or bi-weekly basis and critically dependent on accurate data. These categories will most benefit from more frequent inventory counts. Current Categories Include 22 11

12 All Remaining Replenishment Departments 23 Accuracy = Effective Decisions Analysis, information, and knowledge drive our decisions and depend on accurate data. DATA ANALYSIS INFORMATION KNOWLEDGE DECISIONS Bar Code RFID 1 2 Inventory Counts Per Year Reporting & Analytics Inventory Counts Per Year Merchandise Planning 2% 3% Deterioration PER MONTH Assortment Planning 2% 3% Deterioration PER YEAR Accurate Timely Optimal Order Management Allocation & Replenishment 24 12

13 Barcodes as used today can not cost-effectively support the need for inventory accuracy and visibility 25 EPC-enabled RFID makes it possible Anytime, anywhere, any product retailing requires near real-time product visibility and accuracy in the supply chain and retail operations. Replenishment Store Execution Omni-Channel and beyond 26 13

14 Omni-Channel is: Leveraging assets across channels, and creating a seamless customer experience Our focus today: 1. Aligning two successful, separate business channels and integrating for growth and join success 2. Leveraging assortments; If she wants it, she should be able to buy it, whenever and however she wants 3. Leveraging our stores; Updating the in-store experience 27 The Changing Face of Retail Consumers are demanding the merging of the bricks and the clicks. The direct-to-consumer retail channel is being driven by consumers who are challenging retailers and brands to: Provide more (and better) product data including images Expand the shopping experience for total inventory access Deliver the right product at the right time regardless of inventory deployment 28 14

15 Research Proved the Technology Works EPC-enabled RFID is becoming a driver in the solution for retailers to meet customer requirements: Research reports drastic improvement in inventory accuracy when RFID is implemented: 32% improvement, which boosted sales between 2% and 20% on replenishment products 96% reduction in time to perform routine cycle cle counts allowing them to perform weekly (or daily) inventory analysis leading to more frequent replenishment 29 Pilots Validated the Research Findings Case Studies at WalMart, Dillard s, JCP, Bloomingdales, and Lord & Taylor have validated the benefits: Counting 12,000 items per hour compared to 200 2% or higher sales lifts because of more accurate display compliance 75% reduction in labor to accurately stock shelves at one retailer 16.5 man hours down to 1.5 man hours to complete plan-o-gram compliance in one department Multi-million dollar replenishment orders are being placed weeks in advance of standard order 30 15

16 Chain-wide Deployments of RFID are Underway 3 leading retailers are able to read EPC-enabled inventory at all stores - totaling 5,900 stores 5 leading retailers are engaging with EPC in pilots to validate process improvements at more than 150 stores RFID RFID provides the accuracy and speed required to count faster RFID functionality and uses cases will continue to expand for retailers and suppliers alike 31 In Summary EPC enabled RFID is essential to achieving physical inventory accuracy and visibility Replenishment and Display Execution use cases are in deployment Omni-Channel leverages our assets and provide a seamless customer experience Accuracy and speed are essential components of any omni-channel strategy RFID will change the face of retailing as much, if not more, than bar codes have in the past 2 decades 32 16

17 Nordstrom: Achieving Supplier Drop Ship Success in an Omni-Chanel Retail Environment Nordstrom Overview A leading fashion specialty retailer offering clothing, shoes and accessories for men, women and children In business since 1901, serves customers in 44 countries and 31 states 117 full-line li stores 124 Nordstrom Rack locations 2 Jeffrey boutiques 1 clearance store Nordstrom.com Private sale subsidiary, HauteLook NYC treasure&bond (100% of profits to charities benefiting children in NYC) Canada Opening in Calgary Fall 2014 Key hallmarks of Nordstrom include: Excellent customer service Free shipping and free returns Mobile shopping 34 17

18 EDI Overview Nordstrom Divisions Full Line Stores/Rack/N.Direct Nordstrom Product Group (NPG) N.Direct Drop Ship Coming soon Canada/Puerto Rico Different: Certification process EDI IDs Off set fee guidelines 35 Omni-Channel Seamless experience regardless In Store Buy Online ship to home Buy Online - pick up in store Returns to any channel Excellent customer service 36 18

19 6/11/2013 Drop Ship Advantages Greater Volume Greater exposure Broader style/size/width assortment New products Broader B d color l and d size i offerings ff i Oversized products Customer satisfaction available in store POS 37 Drop Ship Process Pre-qualification conference Key players EDI, shipping, accounting Considerations Require 97% fulfill rate Generic packaging Can supplier hold inventory Timely inventory updates Shipping volumes, combining, expedited Packaging pack slip Open RA Peak shipping times 38 19

20 Drop ship - EDI EDI Expectations 846 Inventory frequency 810 1i invoice i per PO PO per item ASN per PO 870 Cancelation Ship or cancel in 3 business days Next day, 2 day, 3 day shipping Testing In-house and scenarios simulate production 39 Drop Ship Production Production Small number of items to begin 4-6 weeks monitoring Sample order Score cards Fulfillment rate Cancellation rate Areas for improvement 40 20

21 Questions? 21