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Global Trends All Channel Retail Paul Hill – Solution Director, Retail

Copyright 2013 JDA Software Group, Inc. - CONFIDENTIAL

The new bread of shopper: Informed, empowered and always connected


Single Channel

“Legacy” • Customers experience a

single type of touch point

• Retailers have a single type of touch point

Multi-Channel

“Reality” • Customer sees multiple touch

points acting independently

• Retailers’ channel knowledge & operations exist in technical and functional silos

Omni-Channel

“Aspiration” • Customer sees multiple touch

points as part of single brand

• Retailers’ have a ‘single view of the customer’, but they operate in functional silos

All-Channel

“Nirvana” • Customer experience a brand,

not a channel within a brand

• Retailers leverage their ‘single view of the customer’ in coordinated and strategic ways

The Furious Pace of Change…and its Impact on Retail

Accelerating Pace of Change

6

3.5 yrs

10 yrs

15 yrs

28 yrs

31 yrs

Time to 50% Consumer Adoption

Change Will Happen Faster Than We Can Imagine…

Driving this rapid change, the Millenial

Born Between 1981 and 2000

76M 51M 80M

The Largest Generation Retail has Ever Seen

The store is often the last step the millennial takes

Yesterday’s

“Moment of Truth” “Moment of Truth”

COMMUNICATE

DISCOVER

EXPLORE

COMPARE

SOCIALIZE

SELECT

Today’s

“Moments of Influence” “Moments of Influence” Opportunity –and Risk– in Every Moment


1:1 Mass

YESTERYEAR TODAY

CU

STOM

ER EXPEC

TATION

S

New Supply Chain Complexity

Copyright 2013 JDA Software, Inc. - CONFIDENTIAL

• Product choice – access to the biggest shop on the Planet

• Buying choice – buy from any channel, any device, anytime

• Fulfilment choice – deliver anywhere, anytime

• Knowledge rich – Product info. and live reviews

• Price savvy – access to the lowest price available

• Connected – instant communication to social media channels

Consumer led change


Customer Focus Product I Want Where I Want The Device I Choose When I Want to Shop The Price I Want When I Want It

“R” Transitioning to “I”

Tomorrow’s Enterprise Focus Right Product Right Place Right Time Right Price Right Quantity

Today’s


Customer Front & Center

Real-time, shared inventory


How Can Retailers Succeed?

PEOPLE

PROCESS

TECHNOLOGY

Processes must evolve from product to consumer centric

People need to adapt new practices that ensure an aligned enterprise Technology must be capable of supporting new business paradigms


• Reacting to consumer behavior

• Nightly inventory batch updates

• Static & rigid supply chains

• Channel segmented inventory

• Channel order management

• Supply chain is cost center

• Anticipating consumer demand

• Real time inventory visibility

• Flexible & dynamic supply chains

• Enterprise inventory orchestration

• Profitable distributed order management

• Supply chain is a strategic differentiator


All Channel Strategy Maturity Model

1

2

3

4

CH

AN

NEL

STR

ATEG

Y All Channel

Cross Channel

Web Channel

Store Channel

TRANSACTIONAL BRICK & MORTAR MASS MERCHANDISING COST CONTROL

EXPLORATORY SIMPLE WEB PRESENCE SEPARATE TEAMS DISPARATE INVENTORY

MANDATORY BRAND ENHANCEMENT LIMITED COLLABORATION INVENTORY VISIBILITY

IMPERATIVE MAXIMIZE ENGAGEMENT INTEGRATED TEAMS SHARED INVENTORY


Key Tenets of All-Channel Success

Consumer-centric All-channel assortments

Unified All-channel customer engagement

Flexible, real time, responsive supply chain

Profit-based distributed order management

Single enterprise-wide demand shaping forecast

1

2

3

4

5


Web

Call Center

Catalog

All-Channel Engagement

Existing Practices • Disparate Customer Data Sources • Multiple Views of Customer • Independent Customer-Channel Interaction

Emerging Practices • Single repository for all customer data • Integrated all channel view of customers • Synchronized channel – customer interaction

Store


011010001011011100011010101001010101010101010101010101010101010101010101010 1010101000100101010001011110110100101001100110101010101010110100001111010101 1110010100101001010011101010101010101010101011110100101010100101001100110010 010101010101110101010011011001110100100100101010101010101010101010101010101 100101010110101011001101000110100101100010100101010101010101010101001101011 011010001011011100011010101100100100111010101101001010101010110010101010101 10101010001001001101001010101010111001100111001101101001000100101011110101010 11100101001010010101010101010100100101010101010100100111001010010100101011010 010101010101110101010101011 01010101011010001010010101010 100101010110110010100 10101001010100110101100 0110100010110110110100 01000010100110010101010 1010101000101101010100 101010101001010111101010 1110010100101101010101 11010010011010010101001 0101010101011110101010 01010110100101010101010 1001010101101011010101 10101010101010011010110 0110100010110111010101 101101010101010110101010 10101010001001010101010 101010101010101010110101 11100101001010010100101 0101010101010101010010101 010101010101110101010000 01010101010101001001010101 010101010101110101010000101 01010101010110100101001010101 1110010100101001010010101010 1 010001110101010101010101111010101 0101010101011101011010010000101 001110101010101011001001011100101 111001010010100101001010101010101101101010101010101010101100011100101010101 01010101010111010101000010101010100001010010101010101010101010101010101010 111001010010100101001010101010101101101010101010101010101011110100101010100

PRODUCT

CHANNEL

CUSTOMER

TIME

All-Channel Data Capture

SOCIAL SERVICE

CLICKSTREAM PREFERENCES

see adding customer data to merchandising as

a top-three opportunity

51%

--RSR Research Optimizing Assortments to

Invigorate Retail, 2012


50%

47% Source: Teen Vogue

45% shop in-store for the

experience Source: Accenture

The Store Still Matters

shop both in-store & online

choose to shop in-store








1

2

3

4

5


61% of major purchase shoppers start with ONLINE RESEARCH

to narrow products and brands IN-STORE

RESEARCH

to experience and finalize selection BACK TO THE WEB What can I afford?

Best Deal?

How will I pay?

67% decide how to pay before they go in store

94% MAKING THE PURCHASE

of consumers make major purchases in store

Advice from friends & family

? # $

1

2

3

4

5

Assortment Demand: Today’s Reality


Web

Call Center

Catalog

New Assortment Paradigms

Existing Practices • Chain wide homogenous assortments • Pre season assortment range plans • Disjointed or loosely coupled processes • Gut feel “buy-based” decisions • Inadequate supply chain integration • Inconsistent practices across channels

Emerging Practices • Micro-segmented all channel assortments • Continuous lifecycle assortment planning • Tightly integrated to all critical processes • Analytics driven “sell-based” decisions • Incorporate supply chain constraints • Consistent all channel business processes

Store


Assort to the Shopper, not the Channel

Customer Profile Assortment Demand Channel Fulfillment Channel

Strategically position assorted inventory across the network and remain flexible enough to manage a myriad of options








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2

3

4

5


Cost Center vs. Strategic Weapon

Traditional Supply Chain View

Supply Side Dominance

Unsupportive of All-Channel Retail

Segregated Channel Strategy

Rigid, Single Path

Constraint Based vs. Customer Driven


New Levels/Sources of Demand Causing Increased Variability

Increased Service Standards Across All Retail Channels

Creating Sustainable Business Models for Profitable Growth

Increased Supply Chain Visibility and Traceability

Demand shifts to alternate channels e-Commerce, mobile, social interaction growth

Demand generation & desired fulfilment channel

Rising consumer expectations, zero tolerance 24/7 connected consumers desire for transparency

Balancing customer service and cost to serve

Heightened pressure for forecast accuracy Increasing regulation & carbon footprint reduction

Segmentation agendas to manage disruption

Demand shifts to alternate channels e-Commerce, mobile, social interaction growth

Demand generation & desired fulfilment channel

Forces of Change

1 2

3 4


Custom

er e-

Com

mer

ce

Hea

dqua

rter

St

ore

Shared stock

Warehouses Marketing

E-Commerce

Store

Planishment

Till

PSP

Collect in store

Home delivery

Planning Mobile Drop shipment

All-C

hann

el

Shared stock

All-Channel: Integrated objectives, methods and platforms

“Success will come when the SC is managed as a unified total vs. independent business units”








1

2

4

3

5


Customer Service Realities

44% High shipping costs

41%

25%

Not ready to purchase

High product prices

Why

We

Wal

k Aw

ay…

61% of all online shopping carts are abandoned``

Source: Invesp


Retail’s New Balancing Act

Customer Expectations and Organizational Constraints Retail has evolved from a single-channel ‘transactional’ environment into a complex matrix of all-channel order orchestration

Walking the tightrope between…


Customer Engagement: All-Channel Order Orchestration

Six In Stock in Her Size Busiest Weekend

• Gold Coast

• Melbourne

Plenty in Stock in DC Shipping Constraint?

• Adelaide

Brisbane •

Platinum Customer Places Order via Website

Free 2-Day Delivery

Vendor Has in Stock Shipping Constraint?

How to Maximize Profitability and Meet

Her Expectations?



Consumer-centric all-channel assortments

Unified all-channel customer engagement




1

2

5

3

4


• Complexity managing . apps • Purpose-driven apps address

across all channels

Incorporating the voice of the customer as a demand influencer

Anticipating consumer response to

price, promotions and offers

Leveraging the consumer’s cross channel shopping behavior

New Demand Challenges Emerge


Incorporating the voice of the customer as a demand influencer

Anticipating consumer response to

price, promotions and offers

Leveraging the consumer’s cross channel shopping behavior

Orchestrating all downstream systems to profitably execute against demand shaping plans

Organizational constraints buried in myopic demand execution principles (vs. integrated demand management)

New Demand Challenges Emerge


Succeeding in the future

“The key is flexibility. With the increasing occurrence of channel overlap and the pace at which new applications and devices are brought to market, the future leaders of retail will be those who can quickly……..

Source: Stores Magazine, January 2013

embrace operational changes brought about by new technologies and anticipate integration of emerging solutions that have not yet been invented.”

Global Trends All Channel Retail

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