JIM OKAMURA MANAGING DIRECTOR OKAMURA CONSULTING LLC
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OMNICHANNEL RETAILING
Agenda Global Trends in Digital Retailing The Omnichannel Response Global Best Practice and Innovation Omnichannel Challenges: Convenience Store Opportunities Future Omnichannel Scenarios for Convenience Stores
Ecommerce is the Foundation of Omnichannel Excellence 4 Omnichannel Capabilities Allowing customers access to information, services and products across channels & devices 3 2 Infrastructure Integration Integrated reporting, customer data and contact management across the customer lifecycle 1 Marketing: Coordinated planning and integrated messaging E Commerce Enablement Build channel knowledge & expertise But the critical path runs through retail store operations and back office.
Global Trends in Digital Retail and the Competitive Response: Omnichannel Retailing
Define the Strategic Role of Digital Market Factors > Digital channel growth > Customer expectations > Competitors strategy > Technology disruption Internal Factors > Sources of future growth > Customer experience strategy > Brand versus revenue goals > Investment and risk tolerance Year 1 Years 2 3 Years 3 5 Independent Ecommerce Omni Channel
Source: Tuft University and MasterCard
Ecommerce Leaders Expand Their Global Share International North America 80.2 69.7 60.7 51.8 43.6 36.2 30.0 26.3 12.9 18.8 26.8 35.0 44.5 53.7 63.3 72.8 82.3 91.8 102.0 21.3 11.7 15.5 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E CAGR 2009 14 2014 19 25% 17% 33% 14%
But Digital Retail Is Still Young and Business Models Are Evolving 10% Ecommerce Executives Obsess About Conversion $15 $10 Ecommerce Expenses per Order Are Increasing 5% 2.69% $5 0% Ecommerce Conversion Rate (US) $0 Marketing Fulfillment Customer Care Source: State of Retailing Online 2015, Shop.org and Forrester Research
Omnichannel Advances Globally
Digital Investment Priorities (USA) Site Merchandising Priorities for 2015 Mobile Omnichannel Marketing International Expansion 20% 38% 34% 45% 58% 0% 20% 40% 60% Examples Responsive design, mobile site optimization, app development In store pickup, ship to store, cross channel inventory visibility Brand marketing, search optimization, acquisition, loyalty, CRM Content development, on site videos, personalization Ecommerce sales to international markets Source: State of Retailing Online 2015, Shop.org and Forrester Research
Walmart Invests Globally in Digital & Omnichannel Online product assortment Clear purchase options Inventory visibility Site to store Reserved parking spaces Special desk for order collect Knowledgeable sales associates Associate tools Mobile
Walmart s Omnichannel Merchandising Strategy Model of Retailer s Stages Towards Multichannel Category Management: Walmart s reaching to be here Its end goal Separate Assortment Operated as distinct channels with separate goals, metrics Some Overlap Limited coordination, lack of flexibility for shoppers to engage across Online Store Store assortment replicated online Some specific offers Extended Aisle Channels aligned, store assortment augmented with added inventory Endless Aisle Integrated Visibility online, instore to product availability across system, stores & warehouses Convenience stores should benefit from high growth Source: Kantar Retail research and analysis 16
Mobile Apps: Walmart versus Target Strong consumer value propositions, and for the retailer, rich data and customer insights
Target Store Manager Omnichannel Digital Device Workbench Store manager / Associate Digital Devices Employee ipod touch devices Bring your own apps (BYOA) Inventory Visibility Tools to boost sales, improve service, increase operational efficiency including: Inventory optimization Complete transactions Track store and associate performance Visual Merchandising/Store Management Visual merchandising tools Manager workbench Employee scheduling/training/hris
Omnichannel Has Favored Market Leaders, But Specialty and Mid market Retailers Are Investing Too
Click and Collect Drive Formats Have Rapidly Become the Standard in France
Mobile Dominates the Investment Agenda 21
Nordstrom Mobile POS Will Become Standard Associate Mobile Device Mobile POS Clienteling Inventory Visibility Take with/ship to in one transaction Customer App Shop and transact Items can be shipped or picked up at full line and Nordstrom Rack stores
Store Inventory Visibility is Foundational
Container Store Omnichannel Processes
Retail Innovations 10: Global Omnichannel
Marks & Spencer (Netherlands) Urban, small format store Mostly food, but many connected store touchpoints Extended aisle in fashion categories
Argos, UK
Food and Convenience Omnichannel
Walgreens Customer Centric App Walgreens App allows customers to clip digital coupons to their device refill prescriptions by scanning the bottle with their phone s camera send photos directly from their camera roll to be printed at their local Walgreens chat with a pharmacist schedule an appointment at a Healthcare Clinic shop for items that can be picked up in stores or shipped.
Walgreens Buy Online, Pick Up In Store $20 minimum purchase for in store pick up
Walmarts Omnichannel Fulfillment is a Strategic Differentiator Lockers in the Neighborhood Market Fulfillment Revenue of Ship to Store has surpassed the store s traditional revenue in some cases. We made great progress on our priorities, including our global technology platform, next generation fulfillment network and the integration of digital and physical," Neil Ashe, Global ecommerce president and CEO Source: Kantar Retail store visits and analysis, company brochure, company presentation
Ocado s Effective Consumer Proposition: Convenience and Value Quick, easy to use Customer experience focused Growth and differentiation through private label and niche branded products Wider Range Price Fresher Produce Better Value Price and value leadership
My Muesli: Customized Cereals
Au bout du champ, France Hyper Local Omnichannel Click and collect food locker concept Combines the best of digital formats with traditional foods (local, fresh, natural products) Appeals to both the online and offline consumers. Click and collect customers receive a code to open the locker Promotes conscious consumption, and lower price points than traditional organic stores.
Emmas Enkel: Re invent a Category Neighborhood shops with a mix of an online shop (with home delivery) and traditional brickand mortar store
Starbucks Mobile App & Click and Collect Best Practice Mobile App Gift card accounts for 25% of US sales 16% of transactions on the mobile app My Starbucks Rewards 10+ million members Click & Collect Customers pre order to a specific time to skip the line
Whole Foods & Instacart Instacart shoppers embedded in stores to speed up delivery Competing against AmazonFresh, FreshDirect, and Peapod in grocery delivery wars
Amazon Fresh is a Threat to Traditional Food Retailers
Google Express: Friend or Foe?
Online/Mobile Food Delivery = Market Share Gains Delivery services e.g., GrubHub are proven high growth business models (200,000 Orders per day (May 2015) ~40% of national pizza chains orders placed via online/mobile, driving market share gains
Just in Time Product and Service Delivery Enabled by Mobile + Humans
Omnichannel Opportunities for Convenience Stores
How Can Convenience Stores Improve Ecommerce and Omni Consumer Shopping? Source: Shop.org, 2014
Omni Opportunities, Immature vs Mature Markets Immature Markets Building digital foundation Mobile first Market share goals Customer acquisition Performance based partnerships Mature Markets Decelerating ecommerce growth Moderate advanced omnichannel Profitability goals Customer retention / Personalization International ecommerce expansion Independent Ecommerce Omni Channel
Convenience Store Opportunities Omnichannel Challenge Customer experience Organization Marketing & Analytics Operations and payments Pricing and Profitability Issue Immature Mature End to end customer care, across digital devices and stores Specialized skills, structure, process and KPIs Converting data to insights, marketing programs and revenue Fulfillment and tendering as new sources of strategic advantage Price optimization and lowering variable expenses
Customer Experience Leadership Customer experience strategy, design and execution will become a core competency as well as a core tenet of every organization s culture 43% 2007 2012 Stock Performance Convenience Stores May Impact the Customer Experience: Physical store coverage and reach In store marketing to stimulate demand Loyalty and customer insight programs Optimize inventory and supply chain Fulfillment and returns Customer care touchpoint 15% CXi Leaders S&P 500 Cxi Laggards 34% Source: Watermark Consulting
Omnichannel Merchandising Requires New Levels of Integrated Planning (Red Box Indicates C Store Influence) Product Lifecycle Ends Marke ng & Presentaon Demand Plans Fact Based Business Performance Management Supply Chain Mgmt Product Plans Inventory Flow Plans Inputs to Integrated Planning: Consumer Insights Industry Trends Historical and Forecasted performance by product/channel/customer segment Outputs: Assortments by Store, Channel Pricing & Promotions Open to Buy & Flow Timing Marketing Plans Enablers: Clear Benchmarks/KPIs Participation across the organization Tools, analytics and expert insights
Mobile engagement key part of 7 Eleven strategy to reach customers on the go 7 Eleven uses product (e.g. Slurpee Cups with short code 711711 to drive downloads of their app) Mobile app then used to deliver coupons, sweepstakes, surprise free product for loyalty, app download links, brand messages & share worthy content 50 Always striving for innovation, 7 Eleven & Japanese soft drink Pocari Sweat using BEACON technology in Singapore POCARI CROSS RUN app tracks runners progress and offers rewards when they pass one of the chain s locations
Organization: Digital and Analytical Talent Shortage, Outsourcing (Red Box Indicates C Store Opportunities) E commerce & Omnichannel GM Merchandising Leader Site Merchandising Director of Planning Leader Digital Marketing And Analytics Director Creative Production Director of Operations & Fulfillment Product strategy Pricing strategy Assortment plan Site Visual Merchandising strategy & execution Cross Sell/Upsell Online positioning Merchandise forecasting Receipt flow Open to buy Traffic strategy, performance & budget Email SEM, SEO, Affiliate, Partnerships, etc. Site & marketing analytics Brand right presentation and voice Messaging and SEO guidelines Navigation and User Experience Photo studio and image planning Service strategy, performance & budget Fulfillment Customer service IT Leader Site Strategy & Production
Marketing Attribution Challenges. Convenience Stores May Provide Key Inputs and Analytics Media Measurement is Disparate In Most Retailers Today Sale Sale Sale Sale Best Practice Channel Attribution Measurement 20% 30% 10% 40% Marketing and Channel Attribution Percentages used above are illustrative only Sale
Omnichannel Operational Best Practices it s all in the operational details The top performing retailers consistently Communicate the status of delivery and returns, Make the process as easy and convenient for shoppers as possible Delivery Pickup Returns Customer service Packaging fit and quality presentation
Omnichannel Fulfillment Ecosystem That Includes Convenience Stores Will Prove More Complex Retail Stores B2C Ecommerce Contact Center B2B POS/Special Orders, Transfers, Replenishment Web Sales Orders CSR Sales Orders EDI, Web, Phone Sales Orders POS ERP Ecommerce, Store Special Order, Call Center Applications Master Data Order Management Systems Transactional Systems Store Gateway Warehouse Management Supplier Enablement / Hub Mgt Retail Stores Carriers & Distribution Centers (Retail, DTC, 3PL) - Vendors - Factories - Drop shippers - 3PLs Supply Networks Customer Facing Back Office Distribution
Omnichannel Fulfillment Driving Traffic to Convenience Channel Fashion retailer Zalora Asia s On line Fashion Destination partnering with 7 Eleven Singapore Cash on Collection Model Zalora Shoppers order on line, ship to 7 Eleven, receive SMS when delivered, pay in cash in store
Dynamic Pricing Accelerates
7 Eleven Taiwan Provides Convenient Omnichannel Payment Solutions Customers can buy on the Yahoo Kimo Auction, ship & pay cash at 7 Eleven 57 Or, auction customers can receive a code, visit a 7 Eleven ibon machine, pay in cash & have item shipped to home Ibon machines allow customers to buy train tickets, concert tickets, pay telephone bills, top up phone and gaming credits and pay cash directly at the 7 Eleven counter after making purchase.
In Summary Omnichannel Challenge Customer experience Organization Marketing & Analytics Operations and payments Pricing and Profitability C Store Opportunities Store as the customer touchpoint for services, collection point, payments, endless aisle, returns, customer care Specialized skills e.g., data and analytics, store workforce management Rich transactional data, geo spatial, customer profiling, mobile enabled Omnichannel fulfillment partnerships, customer care, alternative payments Price optimization for omnichannel, expense reduction opportunities in marketing, fulfillment and customer care
Future Scenarios for Convenience Stores Immature versus Mature Markets 59
Omnichannel for Convenience Stores Will Have Many Paths Immature Markets Faster omnichannel development cycles Underbanked segments Fulfillment returns options proliferate Immature Markets Ship to home hubs Payments Ship to store Data and analytics Ship to store Endless aisle Returns Payments Marketing Data and analytics Mature Markets Endless aisle strategies Private label Squeezing costs/profitability in marketing, operations and customer care Mature Markets Ship to store Data and analytics Omni services Ship to store Returns Data and analytics Independent Ecommerce Omni Channel
Jim Okamura Managing Partner E jim@okamuraconsulting.com W okamuraconsulting.com