6th annual retailroi super saturday recap...!1 january 16, 2014 fung business intelligence centre...

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January 16, 2014

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D E B O R A H W E I N S W I G E x e c u t i v e D i r e c t o r – H e a d G l o b a l R e t a i l & T e c h n o l o g y F u n g B u s i n e s s I n t e l l i g e n c e C e n t r e d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m N e w Y o r k : 6 4 6 . 8 3 9 . 7 0 1 7

January 16, 2014

6th Annual RetailROI Super Saturday Recap

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January 16, 2014


6th Annual RetailROI Super Saturday Recap Last weekend, we attended the 6th annual RetailROI Super Saturday, a daylong series of presentations and panel discussions about the future of retailing, interspersed with updates on the group’s outreach efforts.

RetailROI enlists the efforts of retailers, vendors, manufacturers, and industry executives to donate time and materials to improve the lives of 400 million vulnerable children worldwide. The group organizes trips going to countries in Africa, South America, and even Chicago to help families, rescue children from trafficking, set up computer labs and build clean-‐water facilities. Many of the attendees had gone on several of these trips and they shared their stories and experiences, which have had a positive effect on their lives. The guest of honor was Katie Meyler, of morethanme.org, who had set up a school in Liberia just prior to the Ebola outbreak and who was featured in Time’s Person of the Year issue.

Here are short recaps of the retail-‐oriented sessions:

Panel: 'Retail 2020', New Concepts… New Technologies

(Opening remarks by Scott Bauer of PwC)

There are disruptive forces in retail, with technology such as beacons, Big Data and the Cloud fostering new retailing concepts and new types of retailers. This is evidenced by the composition of the panel, which included traditional retailers, one startup, and a technology company. Last year, there was a fundamental shift to more than seamless retail, which requires a fundamental change in skills, metrics, processes and governance. It’s about more than cool tech—“total retail is more than omnnichannel.” Retailers’ focus needs to be on more than just omnichannel; it needs to be more customer-‐centric with purpose-‐built experiences and no break in communications in the transfer of the sale from mobile to Internet to the store.

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To win, there needs to be a renewal of IT to create a total IT platform, requiring a consistent restructuring of organizations and processes to create coherence across all channels. There also needs to be cross-‐channel, supply-‐chain optimization and retail marketing and innovation design.

PwC is nearing the completion of its Total Retail Survey report for 2014. The initial conclusion is surprising: while online continues to grow, consumers are less likely to shop online for purely price reasons, as retailers find more ways to differentiate. Bauer coined the term, “reverse showrooming,” which involves more purposeful shopping. People are using mobile devices increasingly to do research before shopping. Young women with higher incomes are more likely to use two-‐way feedback on social media. Finally, “digital natives” who have grown up in the era of the Internet and cellphones prefer to use their device than to speak to a sales associate.

Security in Retail

We had a preview into this session, since we sat at the “Data Security” lunch table, where we were joined by four executives from Verizon, who discussed the activities of Verizon’s RISK Team. Bryan Sartin, Managing Director of the group, said that on average, hacking attacks are found seven months after the break-‐in had occurred. Last year, the mantra at the meeting was, “You’re gonna be breached. Either you know it, or you don’t.” The lesson learned from the hacking incidents in 2014 is that anyone can be breached.

One risk for data security is the explosion of data that will be created by the Internet of Things. This was a topic of discussion at an overbooked data-‐security dinner the night before. With all the wearable and health-‐related devices, data such as our weight, whether we smoke, etc. will be saved somewhere and could be easily accessed by hackers. Of the entities that have had a breach, two thirds didn't find out on their own, while 96% of retailers (who are in last place) didn’t find out on their own that they had been hacked.

This begs the question, what does it mean to be prepared? Previously, cybersecurity was relegated to the IT department, although the topic now receives an hour at corporate board meetings versus 15 minutes previously. Cybersecurity touches many other areas, including legal, forensics, insurance, and public relations. Since there are more touch points in a network, there need to be more mechanisms for incident response.

Many organizations seem to think that compliance with certain audits and requirements provide sufficient security. However, companies generally become secure ahead of the audits and forget security afterwards. Much of security is a game of “Whack-‐a-‐Mole.” The US still uses magnetic-‐strip based credit-‐card payments, and nine out of ten of global counterfeiting incidents happen here. After the US implements the EMV (Eurocard, MasterCard and Visa) standard with a smart chip and PIN number for payment approval, criminality is likely to move to retailers’ websites.

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Panel: Creating an Innovation Culture

The panel began with the question, “What is innovation”? One element is that one portion is tactical—not everything is about the future. Across the retailing industry, much innovation has a questionable return on investment (ROI). It’s possible that the highest ROI could be in online chat algorithms.

One retailer said that it’s essential “to give people time to think” about innovation. Other options include having a dedicated innovation staff, a relaxed work environment, and having an innovation lab. This same retailer expressed a willingness to try out any idea, even that of the janitor, despite being owned by a bottom-‐line-‐focused private equity firm. The better-‐funded large retailers rely on consultants such as Forrester and Bain for fresh ideas. Another manager at a major retailer said that he holds a first brainstorming session where only problems (not solutions) are discussed, then gives everyone some time to mull it over. He found that better solutions tend to emerge from subsequent sessions.

Hiring was also discussed as the key to success and innovation. For example, Southwest Airlines interviews 50 people for every hire, and Walgreens keeps its development team located downtown, which sponsors “hackathons” to find great talent. Smaller retailers used LinkedIn to locate talent.

Deborah Weinswig, CPA Executive Director – Head Global Retail Research and Intelligence Fung Business Intelligence Centre Global (FBIC Global) New York: 917.655.6790 Hong Kong: +852 6119 1779 [email protected] Marie Driscoll, CFA [email protected] Christine Haggerty [email protected] John Harmon, CFA [email protected] Amy Hedrick [email protected] Fong Lau [email protected] Lan Rosengard [email protected] Jing Wang [email protected]

6th annual retailroi super saturday recap...!1 january 16, 2014 fung business intelligence centre...

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