retail eyond the tipping point…
TRANSCRIPT
Retail Beyond the Tipping Point….. Tackling the fulfillment challenges of the rapid development in Omni Channel Retailing
Neil Ashworth Chair, CILT(UK)
CEO, Collect+
Agenda
• The Change in the world of Retail and the move to an Omni-channel future
• The challenges presented by the new retail norm
– Home delivery
– Click & Collect
– Merchandise Returns
• Questions
Agenda
• The Change in the world of Retail and the move to an Omni-channel future
• The challenges presented by the new retail norm
– Home delivery
– Click & Collect
– Merchandise Returns
• Questions
The largest per capita ecommerce market in the world
Internet economy worth £100bn 7.2% of GDP
60% driven by consumption
From channels to‘Touchpoints’
+ Customers are connected
through an array of internet-
enabled devices
+ Customers no longer interact
through “channels” – they act
through“touchpoints”
+ Stores, websites, call centres
+ ..also apps, social media,
mobile sites, SMS
+ Smartphones, tablets,
interactive TV, cars and
appliances
+ Agile commerce – the ability to
serve across all of the
“touchpoints”
Evolution of the Customer’s Online Shopping Behaviour
Separate
e-commerce channel
Linked Multi-
channel
• Customers ‘journey’ between
online and store in transactions
through linked functionality
(e.g. price comparison, search,
social networks)
• However store and computer
are in separate locations (i.e.
home or office)
• Therefore functionality
delivered is more search-based
• Customers stop differentiating
their ‘journey’ between online
and store – they are the same
in their eyes
• Physically computer and store
are co-located and connected -
computer no longer at home, its
in the pocket (smartphones) or
on the shelf
• Retailers must provide
functionality to customers at the
point of need
• No connection between
online and store: separate
channels
• E-commerce = drag a
product in to online basket
and checkout - mirror of
store
• No real functionality to
complement shopping trip
The ideas of the dotcom bubble haven’t changed. The technology (broadband
penetration, wireless / cellular networks, tablets, handset and phone devices)
however, has finally caught up with the ideas
1999 c. 2005 - 2009 2010 - ?
Source: Deloitte
Linked Multi-channel Connected Consumer
2010
The retail market is swinging towards a
cross channel approach
Web/Direct-only
Store-to-web
Web-to-store
(including click-
and-collect)
Store only
Source: Javelin Group Research, Verdict, Eden McCallum
UK Non-Food Retail Market 2010-2020
Split by Channel (% of total sales)
UK
Multichannel
Market Size
2014
54.5bn
UK
Web-only
Market
Size
£13.6b
n
£3.3bn
Multichannel Market Share
Mu
ltich
an
ne
l De
finitio
n
UK Market Size
Estimate
(Verdict)
£123bn £124bn 2014
£40.7bn
£54,5bn
£8.6bn
£13.6bn
£8.6bn
Retailers are bringing ecommerce into
store supporting Omni-channel
Click & Collect is becoming hugely popular
Polarisation in location performance
-30% • )
-30%
Polarisation in location performance
-30% • )
The 100 or so prime locations in the UK
continue to get stronger at the
expense of the weaker ones……the
solution..cannot be found through the
retail industry
Peter Williams, ASOS,
former CEO Selfridges Retail Week, 5th April 2013
Mobile devices increasingly the tool of choice
Shop ‘til you drop?
Noise……..
Customer needs, and implications for retailers
Customer expectations are changing…
Good prices
Promise What customers used to expect What customers expect now
Price comparison was difficult, they had to trust you were the right price - it could only be seen at
the shelf edge. Online expected to be cheaper
Customers can easily compare prices online and will increasingly get information from one retailer and buy the product at the cheapest – wherever they may
be online or in-store
Range & Availability
Range was dictated by what the retailer could fit in the store space
Space no longer the constraint, retailers can offer unlimited range online. The stores role needs to change to provide some immediate access to range but also
help customers choose from the extended range online
Availability could only be seen once customer was in store Product availability can be seen online and customers can make decisions about
where to buy based on availability before they get to the store
Customers will be more informed generally – through information online and through social networking reviews and dialogue
Ease of Shopping Finding products used to be about getting round
the physical store easily and quickly
Retailers now need to help customers navigate their way through many more products online and in the store through simple easily navigable websites and
staff knowledge in store
Great people Staff were there to help at checkout and find stock
if needed
The Shopping Experience
Customers had to queue and checkout in store or get home delivery
Customers expect flexibility in how and when they get their products – order in store or online and pick-up in store now, later or deliver to home when it suits
Customers want services alongside their products e.g. warranty, delivery, assembly
Staff need to have more tools and information to hlep advise, inspire and support customers with product choice and placing / amending orders.
All elements of the shopping experience need to complement one another – stores, website, mobile, in-store kiosks
Customer needs, and implications for retailers
Customer expectations are changing…
Good prices
Promise What customers used to expect What customers expect now
Price comparison was difficult, they had to trust you were the right price - it could only be seen at
the shelf edge. Online expected to be cheaper
Customers can easily compare prices online and will increasingly get information from one retailer and buy the product at the cheapest – wherever they may
be online or in-store
Range & Availability
Range was dictated by what the retailer could fit in the store space
Space no longer the constraint, retailers can offer unlimited range online. The stores role needs to change to provide some immediate access to range but also
help customers choose from the extended range online
Availability could only be seen once customer was in store Product availability can be seen online and customers can make decisions about
where to buy based on availability before they get to the store
Customers will be more informed generally – through information online and through social networking reviews and dialogue
Ease of Shopping Finding products used to be about getting round
the physical store easily and quickly
Retailers now need to help customers navigate their way through many more products online and in the store through simple easily navigable websites and
staff knowledge in store
Great people Staff were there to help at checkout and find stock
if needed
The Shopping Experience
Customers had to queue and checkout in store or get home delivery
Customers expect flexibility in how and when they get their products – order in store or online and pick-up in store now, later or deliver to home when it suits
Customers want services alongside their products e.g. warranty, delivery, assembly
Staff need to have more tools and information to hep advise, inspire and support customers with product choice and placing / amending orders.
All elements of the shopping experience need to complement one another – stores, website, mobile, in-store kiosks
Implications of the emergence of the
Cross-channel consumer
Retailers have to take the store to the consumer Digital infrastructure becomes imperative to the business
– not just the website
The current paradigm of ecommerce changes
Services and service bundles become imperative
Content becomes a competitive advantage
Retailers shift from focusing on products to needs
Price transparency drives increased competition and innovation
Customer relevancy becomes the new battleground
The role of the store remains important, but it becomes more experiential
Retailers rethink customer service and the role of the in-store colleague
Business analytics becomes increasingly important
Supply chain becomes much more complex
Source: Deloitte MCS
So……
• The customer is in command
more than ever before, and
more technology-agile than
most retailers
• There is a fundamental shift
in the centricity of operations
• Multi-channel perspectives
are already outdated
• Retailers increasingly have
to be able to “fit” the
customer, rather than the
other way around
You can’t control your customers interaction
Pre Purchase Purchase Post Purchase
Awareness Research Select Transact Receive Support Repurchase
Store
Online
Phone
Catalogue
Mobile
Social
• Online product chooser
• Check in-store availability
• Visits store to see product
• Compares products
• Reads customer reviews
• Requests call back
• Purchases online
• Opts to collect from store
• Gets guidance from staff • Seeks support online
• Purchases accessory
• Receives Buyer s Guide
• Browses latest releases
• Tells friends on Facebook
The new customer journey is multi dimensional and more complex
The end of “Average”
• Was it a recession??
• This is a period of change – at speed
• Businesses will fail – most have been mediocre •“Normal” trading conditions may not recover – no more “business as usual”
• The middle class has been squeezed – “Middle England” has become akin to Rutland
• The Babies have Boomed - and have reached middle age
• Demand has eased
21
The Road to Remarkable
22
High Fidelity High Convenience
• Exclusive • Premium priced • Limited availability /
distribution • Concierge level of service • Niche appeal • Consumer develops
emotional connection
• Ubiquitous • Low priced • Available through
multiple channels / mass • Low service / self service • Wide appeal • Consumer forms
cognitive connection
Source: Doug Stephens, Retail Prophet Consulting
Getting out of the Middle…..
23
(Sell remarkable products in a differentiated way)
Getting out of the Middle…..
24
(Sell remarkable products in a differentiated way)
Getting out of the Middle…..
25
(Sell differentiated products in a remarkable way)
Getting out of the Middle…..
26
(Sell differentiated products in a remarkable way)
Getting out of the Middle…..
27
(Sell differentiated products in a remarkable way)
Getting out of the Middle…..
28
(Offer remarkable ease of access with differentiated service)
29
(Offer remarkable ease of access with differentiated service)
Getting out of the Middle…..
Getting out of the Middle…..
30
(Offer remarkable ease of access with differentiated products)
Getting out of the Middle…..
31
(Offer remarkable ease of access with differentiated products)
Getting out of the Middle…..
32 (Offer remarkable price with differentiated products, service or ease of access)
Getting out of the Middle…..
33
(Sell remarkable products in a differentiated way)
(Sell differentiated products in a remarkable way)
(Offer remarkable ease of access with differentiated service)
(Offer remarkable ease of access with differentiated products)
(Offer remarkable price with differentiated products, service or ease of access)
Agenda
• The Change in the world of Retail and the move to an Omni-channel future
• The challenges presented by the new retail norm
– Home delivery
– Click & Collect
– Merchandise Returns
• Questions
What service, what price?
37
Click & Collect, Free Home delivery, carrier selection
38
Free “Super Saver” – 1 Click; “Prime” Subscription
What service, what price?
39
Third Party collection services with local access
What service, what price?
Integrated collection and delivery options
Immediate Reserve & Collect (reserve online, collect now at desk / drivethru)
Click & Collect (reserve online, collect later from desk / drivethru)
Immediate Order & Collect (order instore, collect now at desk / drivethru)
Order & Collect (order at desk, collect later from desk / drivethru)
Get it now Collect it later Deliver it later
Click & Deliver (reserve online, deliver to home / work)
Order & Deliver (order at desk / kiosk, deliver to home / work)
Click and Collect Desk
Stocked Order & Collect Desk
Locker / Drivethru
Drop Ship
Courier from Depot
Local Vehicle (picked from store)
Shelf Pick Up
Integrated collection and delivery options
Immediate Reserve & Collect (reserve online, collect now at desk / drivethru)
Click & Collect (reserve online, collect later from desk / drivethru)
Immediate Order & Collect (order instore, collect now at desk / drivethru)
Order & Collect (order at desk, collect later from desk / drivethru)
Get it now Collect it later Deliver it later
Click & Deliver (reserve online, deliver to home / work)
Order & Deliver (order at desk / kiosk, deliver to home / work)
Click and Collect Desk
Stocked Order & Collect Desk
Locker / Drivethru
Drop Ship
Courier from Depot
Local Vehicle (picked from store)
Shelf Pick Up
Terminology of these services confusing for customers and colleagues
Thinking about deliveries of items you’ve ordered online or over the phone, which, what do you find frustrating?
0
10
20
30
40
50
60
Having to wait in for the delivery
Risk of missing the delivery
Having to collect the item from a depot
Security risk if the item is left in an unsafe safe place
Timed delivery is more expensive
Costs attributed to returning purchases
Other frustrating things (please specify)
I do not find anything frustrating
If you've missed the delivery of an item bought online or by phone, who do you tend to blame most for the inconvenience?
0
5
10
15
20
25
30
35
40
45
50
I don't blame anyone, it's one of those things
The mail/courier company
Myself
The retailer I purchased the item from
I have never missed a delivery
Other (please specify)
Retailer Expectations
Retailers select their courier partners with the expectation of receiving a high standard of customer service that replicates their own.
They act as retailer ambassadors when delivering their products.
• Expecting High Signature Rates…
Proof of Delivery = 100%
Non-Proof of Delivery = 75% plus
• …And Secure Delivery of Products
Delivered to hand
Well presented and polite drivers
Or left in a Secure place:
Not seen by passers by
Safe from all Elements
• …first time delivery service of an average 98+%
Customer Expectations
What would you expect at the door if you are the customer?
• To Receive the product you have ordered
Not - for it to go missing
Not - to wait unduly for it
• In Good Condition
Fit for its purpose - Not damaged
• Polite & Friendly Delivery
Professional Image
See a Clean Van
A Neat Uniform
A Courteous manner
Driver Role – in making the ‘Perfect Delivery’
The Perfect Approach!
• Drive to customers address safely & sensibly
• Park safely & considerately, Get out of van appropriately
• Ring doorbell (if available) Knock the door as alternative
or on second attempt
• Meet & Greet
• Announce your presence if you need to access the back of
property
• Check parcel details before delivering!
• Pre-empt potential conflict if order not complete
Agenda
• The Change in the world of Retail and the move to an Omni-channel future
• The challenges presented by the new retail norm
– Home delivery
– Click & Collect
– Merchandise Returns
• Questions
Click & Collect is becoming hugely
popular
When you purchase items online, or by phone, to what extent, if at all, do the delivery options available (e.g. the waiting time for delivery, the delivery times available, length of delivery window) tend to influence your choice of retailer?
0
5
10
15
20
25
30
35
40
45
50
A great deal
Quite a lot
Hardly at all
Not at all
What made you decide to use click & collect services?
0
10
20
30
40
50
60
70
It was more convenient to pick up the product
It saved me from having to wait in for delivery
To save money on delivery
To keep a present a surprise
Other (please specify)
If you could collect items that you’ve ordered online or on the phone at a collection point local to either your home or work, but not the retailers own store, how likely would you be to use this delivery service?
0
5
10
15
20
25
30
35
40
45
Very likely
Quite likely
Neither likely nor unlikely
Quite unlikely
Very unlikely
Agenda
• The Change in the world of Retail and the move to an Omni-channel future
• The challenges presented by the new retail norm
– Home delivery
– Click & Collect
– Merchandise Returns
• Questions
• Commercial Terms – Enhancing our Commercial agreements with both IS and Domestic Suppliers
– Ensuring all suppliers have a financial obligation with regard to returned stocks
• Product Quality – Selling products where the quality meets and exceeds customer expectations
– Having a quality control process which drives continuous improvement
• Aftersales capability – A suite of aftersales operations and options which recover customers at least in
line with expectations
– Fair application of Returns Policy
• Logistical Flow – A reverse logistical flow route which is fast, reliable, low cost and secure
– A returns operation which is market leading and supports future growth &
breadth
• Maximising Recovery – Finding creative ways of driving up recovery rates on returned & surplus stock
– Ensuring that returns agreements are administered simply and collaboratively
Driving a cross-functional approach to
returns
. . . however it is
a complex task
for IT to
aggregate and
deliver
information to
any device
whenever
needed
Data
Data sources
Devices
People
Services
Static reference data Location specific Transactional
Customers Staff
Find it Price
Dietary Green / CO2
Promotional offers
Where else ? (catalogue/web)
Where in store ? (Aisle/shelf)
Compare it
Recipe
Service terms Linked items
Reserve it
Order it
Feedback / complain
• Product (& service) data
• Structured e.g. descriptions
• Dimensions, packaging
• Category specific e.g. Wine
• Unstructured
• Pictures, videos, guides
• Price
• Promotion
• Ranged
• Stocked – Store
– Catalogue
– Web
Features & benefits See it
Stores Distribution Office Suppliers
Context - Who am I ? : Interests, skills, experience, disabled, English speaking….. Where am I ? : At home, in store, mobile
Text, voice, scan, web
Suppliers 3rd parties
• In stock – Stores
– Distribution centre
– Fulfilment centre
– Third party
• On order / delivery
Store MPC Mobile iPhone Staff assisted Kiosk MSC Laptop Tablet Office / Distribution
• MU
• Supplying DC
• Supplier
• Aisle & shelf
Retailer
.com IS Commercial Technical Branded Own label Clothing Books Drop Ship
Scan as you shop
Search Integration Security Caching Logging
Blackberry
Inevitably, the IT is very complex and challenging...
Cleansing Standardisation Workflow Filtering Classification
With a demand for seamless information across all levels and channels
Addressing the new
cost/service balance
+ Traditional supply chains favour cost over service - new demand chains demand a ‘service first’ approach
+ Myriad supply options, high level of demand, and expectation
+ Failure ‘at the press of a button’
+ Agility or leanness? + Optimising inventory and
position to benefit the customer and the provider
AURORA FASHIONS
“if it’s anywhere,
it’s everywhere”
