segment deck omni channel merchandising
TRANSCRIPT
C2BCustomer to BusinessOmni-Channel Merchandising
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Customer to Business It’s really about knowing your customer Showing them you’re listening, caring, adopting, anticipating, Going-the-extra-mile by doing the large-, small-, and in-between things showing you really care C2B business put the customer at the center of the business…. Simply put, they are delivering value at speed and scale while treating customers as individuals. C2B isn’t the future. It’s what’s happening now. You must transform your business and your profession to deliver the best experience possible to win the hearts and minds of you customers – keep them loyal and coming back for more. All parts of your organization whether the creation of an on-line offer or enabling the pick up of an order at a store the customer has never used before or enabling them to split a large value transaction onto two credit cards…All of this, whatever it takes to provide them with excellent and memorable experiences. So what else is happening in Commerce, what is it that is driving each of us to have to keep improving…
© 2015 IBM2
The empowered customer has put pressure on the enterprise and its entire value chain
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As enterprises are increasingly aware of the power every customer has to impact the brand, their need to create, monitor and recreate excellent customer experiences becomes paramount. Customers expect you to know them. You need to go that extra mile by doing the big, small and in between things that show you really care. And, when you put the customer at the middle, every part of your organization must focus on ensuring the customer experience is a great one. Every part of your organization must be pulling in this direction. Your customer facing functions in marketing, merchandising and sales along with partners and suppliers become critical collaborators in the execution of great customer experiences. Whether it’s the creation of an on-line offer or enabling the pick up of an order at a store the customer has never used…or the payment opportunity to split a purchase on 2 separate credit cards, all of these impact how your customer will experience your brand. Your ability to create an enterprise capable of personalization and prediction through to an efficient and flexible value chain can set you apart All of this, whatever it takes to provide your buyer with excellent and memorable experiences. IBM recognizes this need in both the B2C and B2B worlds and believes it is best to consider all this in the context of C2B, or customer to business, C2B business put the customer at the center of the business…. Simply put, advancing enterprises are delivering value at speed and scale while treating customers as individuals. Whether those customers are individual consumers or entire businesses or organizations, the buyer you are selling to is increasingly the focus of all you do. And, C2B isn’t the future. It’s what’s happening now. You must transform your business and your profession to deliver the best experience possible to win the hearts and minds of you customers – keep them loyal and coming back for more. How can we consider this from an organizational perspective?...
© 2015 IBM3
…fueled by analytics, IBM Commerce solutions put the customer at the center of your value chain
IBM Commerce enables the enterprise to serve the empowered customer…
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IBM Commerce enables the enterprise from Front Office to Back Office and serves the needs of multiple line of business buyers. For those front office leaders charged with delivering an exceptional customer experience we have offerings in marketing, eCommerce & merchandising, and customer analytics. And to deliver a coordinated and seamless experience we offer solutions in procurement, payments and B2B integration to enable an integrated, transparent and secure back office. We have developed a dedicated and integrated business unit to help our clients move with speed to meet their customer, partner, and supplier needs. And by integrating predictive and cognitive analytics with our industry focused capabilities, our clients are succeeding in being essential and with each success, IBM Commerce is becoming essential. Let’s turn and talk about the specific segments of our business that are aligned to help you with yours… Additional background for this slide: PARTNER AND SUPPLIER ENGAGEMENT: IBM Partner and Supplier Engagement solutions help you increase business value by engaging in innovative ways with your partners and suppliers on a global scale with speed and flexibility. IBM Partner and Supplier Engagement Solutions provide a set of proven capabilities that enables procurement, IT and supply chain leaders, and payment and transaction services teams to create and deliver collaborative, always on, secure gateways that provide a 360 degree view to monitor and govern operations, and proactively manage constant change with confidence and agility. Procurement that “gets” what your customers need C2B is customer-to-business. Customers are telling you what they need, when they need it and what they want to pay. Your ability to respond depends on your ability to quickly drive those requirements into an optimized procurement process. To achieve procurement excellence, you have to go beyond sourcing supplies and controlling costs. You have to proactively manage risks and develop strategic relationships with your suppliers. How you buy matters. A C2B business knows that being a smart customer is one of the best ways to make your own customers happy. B2B integration and collaboration that works C2B is customer-to-business. Customers want products and services, not excuses. They build relationships with organizations that consistently deliver on or exceed their expectations. When customer satisfaction depends on extended value chains, collaboration with your partners and suppliers is critical. With secure, automated solutions for business integration, you can create a seamless, optimized business community. An integrated business means that no matter how many partners it takes, it feels like a single C2B business to your customers. Payments that serve and protect your customers C2B is customer-to-business. Whether commercial or retail, payments are an intimate exchange of value, an act of trust. It’s a moment of openness and vulnerability. Buyers need to know that sellers are doing everything they can to respect that trust. Protect your business when sending or receiving payments with greater security, transparency, efficiency and compliance. Build trusted relationships and your customers will reward your C2B business. IBM Customer Engagement Solutions IBM Customer Engagement Solutions help you attract, delight and grow the loyalty of customers by enriching the ways you engage with each of them. IBM Customer Engagement Solutions are a set of integrated tools that empower marketing, ecommerce and customer analytics teams to identify the customers and moments that matter most, and to rapidly apply those insights to develop and deliver personally rewarding brand experiences. Marketing that makes your customers ask for more C2B is customer-to-business. The customer is always right, and they are right to expect more. Rising expectations include the desire to be understood and valued right now. Engaging customers today is less about selling a product or service and increasingly about cultivating meaningful relationships. IBM can help you do just that, easily designing and executing cross-channel experiences that make your customers ask for more. Tailor interactions by individual, across channels, devices and time, to build loyalty and grow your C2B business. Behind every eCommerce sale is a person & Merchandising that matters to individuals C2B is customer-to-business. Whether you are selling to consumers or businesses, your customers are telling you how they want to buy. Respond with VIP treatment and deliver personalized commerce experiences across every channel. Let customers drive your merchandising decisions through insights from every interaction at every location on every device. Empower them to configure and buy in ways that reflect their individual needs. Show your customers how much they matter, that they are more than transactions. They are people, and they are at the heart of your C2B business. Customer analytics means being a good listener C2B is customer-to-business. A C2B business listens to what the customer is saying—especially what customer data is saying. Hidden in data, your customers are telling you how they feel, what they are doing and why they purchase. They are telling you how to serve them better. With an array of analytics from behavioral and digital to predictive and cognitive, IBM can help you transform it all into actionable insights. If you are ready to listen, your customers are ready to help you build a better C2B business.
CustomerConnected and in control
Carry the stores in their pocket
Expect a personalized experience
ChannelsDigital and physical convergence
Cross Channel consistency and coordination
Cross channel fulfilment complexity
CompetitorsBrick and mortar growing online presence
Digital retailers opening physical stores
Competition evolves as eCommerce grows
The new dynamics of the retail evolution
© 2015 IBM4
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Customer Speaking Notes: The emergence of technology has enabled a more “connected customer” and disrupted the traditional retail business model. The customer is now king - interactions have moved from transactions controlled by retailers to relationships driven by the customer. Customers have more product choices from more retailers than ever before and can purchase from almost anywhere at any time. In this evolving environment retailers can no longer target activities to mass audiences as customers expect a more personalized experience Channels Speaking Notes: Online and brick and mortar retail is converging. Customers don’t see or necessarily care about channels, to them it’s just retail. But when they shop - searching, comparing, buying – they are likely to be doing this across a retailer’s multiple channels. To meet and exceed customer expectations retailers need to manage across channels, not treat them as discrete. This convergence also makes it more difficult for omni-channel retailers to make optimal merchandising decisions. For example, should they be consistent with prices and promotions across all channels? Or can they better coordinate these decisions to maintain customer loyalty while preventing one channel cannibalizing the sales and margins of the other? And after purchasing the customer now has multiple fulfilment options, from buy online and pick up in store, to buy in-store and shipping to home. This provides a new level of complexity for omni-channel retailers to profitably fulfil orders. Competitors Speaking Notes: Most traditional brick and mortar retailers now have an online presence. This provides them with an additional sales channel and a platform with which to expand the range of merchandise they can offer their customers. Conversely, some digital retailers are starting to open physical stores. They have acknowledged the need to provide a more immersive experience for their customers, enabling them to ‘touch and feel’ products, and have face-to-face contact with store associates. And with brick and mortar retailers expanding their online presence, plus the internet providing a platform for literally anyone to open up a digital store, this has created an even more competitive environment.
Retail dynamics are driving meaningful behavior changes
© 2015 IBM5 Source: IBM IBV, RSR Research
29% of shoppers made their most recent purchase online, more than doubling in the last two years
75% of retailers saw an increase in price changes sent to stores and other channels over the last three years
52% of “Retail Winners” state holistically predicting the impact of future pricing, assortment and promotional decisions is their top operational challenge
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With these new dynamics in retail driven by more informed customers, convergence of channels and a increasingly competitive environment, the industry is understandably seeing changes in both customer and retailer behaviors. 29% of shoppers made their most recent purchase online, more than doubling in the last two years. Source: IBM IBV surveys 2013- 2015, n= 78,163 Q:21: Last Purchase Channel So while the physical channel is not going away, online purchases are increasing as consumers become more informed and retailers offer a consistent experience across channels. 75% of retailers saw an increase in price changes sent to stores and other channels over the last two years. Source: RSR Research: Pricing 2015: Learning To Live In A Dynamic, Promotional World This has been driven by the extension of traditional B&M retailers not only engaging customers in their online channel but also expanding into other product categories and the growth of eCommerce players. This is forcing an increase in the number of price changes in both the in-store and online channels. 52% of Retail Winners state their top operational challenge as holistically predicting the impact of future pricing, assortment and promotional decisions�Source: RSR Research: Modern Merchandising: Managing Complexity with New Tools and Techniques, Benchmark Report 2015 How RSR Research define Retail Winners: RSR’s research always focuses on a category of retailers we call “Retail Winners”. Our definition of Retail Winners is straightforward. We judge retailers by year-over-year comparable store/channel sales improvements. Assuming industry average comparable store/channel sales growth of 3.5 percent, we define those with sales above this hurdle as “Winners,” those at this sales growth rate as “average,” and those below this sales growth rate as “laggards." It is consistent throughout much of RSR’s research findings that Winners don’t merely do the same things better, they tend to do different things. They think differently. They plan differently. They respond differently.
Getting an actionable view of shopper behavior is difficult“ ”
I can’t coordinate my pricesacross different channels“ ”
It is hard to keep prices competitive and aligned with
policies across all locations ”“I need help to make the best merchandising and fulfilment
decisions ”“I need a better way to
negotiate and work with my suppliers on deals and
introducing new products“
”I want to validate my
competitive strategies and ensure I’m pricing
competitively”“
Technology has made more possible, while raising expectations
© 2015 IBM6
I can’t react to market changes and the right
competitors fast enough“ ”
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As the retail environment becomes more dynamic, technology has also evolved to make more possible, but has also raised expectations of what can be done. Retailers want to better understand the customer/segments purchasing their products, how their behavior impacts consumer demand so there is expectation that technology needs to support and help answer these key questions. For example, focusing on competitive environment, with the proliferation of competition, retailers may think they are focused on their key competitors. But across categories and now channels, those competitors could be different. Retailers need help understanding which competitor actions (e.g. price changes) they should respond to, and which to ignore. And, after reacting, what, if any action, should be taken in the other channels? Additionally, with the convergence of channels and customers having more buying and delivery options available to them, retailers need to become smarter with how they fulfill these orders. Should they ship a multi-product order from a DC which has limited inventory or should they ship from a store which is over-stocked to help avoid markdowns? This has become front of mind with customers and a focus of how to intelligently fulfill these orders.
A better way for retailers to sell and fulfill profitably
Cutting edge science-based optimization
Right-time analytics and insights
Digitized partner collaboration
© 2015 IBM7
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Transition Statement: With all these challenges facing retailers (proliferation of data, convergence of channels, dynamic competitive environment), they need a better way to sell and fulfil profitably Using analytics and insights at the right time to make more informed and data-driven merchandising decisions Applying cutting edge science-based optimization to resolve complex omni-channel scenarios in the most optimal way Digitizing collaborative processes and share insights with partners Right-time analytics & insights: Provide analytics at the right time helping retailers make the best merchandising decisions. For example, retailers need to price online almost instantly, and react to what key competitors are doing. However, the right time to change prices in stores may not be the same, they have operational challenges and it may not be appropriate to change the price in store as online store. Cutting edge science-based optimization: Leverage science and research capabilities to solve complex retail challenges. With proliferation of data and ability to capture and normalize this data, science techniques continuously evolve providing optimum recommendations. Digitized partner collaboration: Digitize processes and share insights: Retailers and their partners need a better way to collaborate and share insights in order to provide a more consistent customer experience. They require more streamlined, digitized processes that capture all actions and communications to help improve effectiveness and reduce errors when negotiating new product introductions and promotional offer.
© 2015 IBM8
Right-time analytics & insights
Dynamically set the right prices by product and channel
Predict the best promotions using multi-objective analytics
Drive loyalty, sales and profit through understanding of Shopper behavior
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Right-time analytics & insights Combine merchandising art and experience with customer insights and retail analytics to help retailers make more informed, data-driven, merchandising decisions at the right time. Dynamically set the right prices by product and channel: With omni-channel analytics retailers can identify the right competitors by category and channel, and react to competitive price changes and/or market changes at the right time Predict the best promotions using multi-objective analytics: With multi-objective based analytics retailers can better understand sales volume, revenue and profit trade-offs to determine promotions that will best meet objectives Drive loyalty, sales and profit through understanding of shopper behavior: Customers are more connected, informed and empowered when making purchase decisions. With insights into shopper behavior, retailers can gain a better understanding of which shopper segments are high value and most profitable. Analytics can also help inform a retailer’s strategy and support marketing initiatives in recommending offers relevant to the customer.
© 2015 IBM9
Cutting edge science-basedoptimization Apply science to determine
optimal sets of prices to achieve strategic goals
Define markdowns to accomplish inventory and financial objectives
Fulfill omni-channel orders profitably
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Cutting edge science-based optimization Analytics and insights are an initial step in better understanding customer behavior to support/inform strategy and merchandising decisions. This data is also used as the foundation for applying science-based optimization techniques, which can provide retailers with optimal recommendations when they are making lifecycle pricing decisions. We partner with multiple IBM research groups to continuously evolve and productize their research. This delivers industry-leading retail science to help retailers optimally resolve their complex omni-channel merchandising challenges. Apply science to determine optimal sets of prices to achieve strategic goals: Pricing is not always dynamic, and many products do not need their prices changed on a very frequent basis. It depends on the retailer, their pricing policies and the type of merchandise. Retailers need to set the right prices across a broad mix of products particularly within fast moving consumer goods categories, to ensure the best overall performance. They can make the right pricing decisions using science-based optimization that captures the elasticity of each item, in addition to cannibalization, halo effects, cross-category pull-through effects, trends, seasonality and other causals. Define markdowns to accomplish inventory and financial objectives: By designing optimal plans to set markdown timing and depth retailers can maximize profitability or meet inventory on-hand objectives for virtually every clearance item. They can define a cadence to sell through inventory by a specified date and/or optimize to budget, and implement new markdown recommendations as inventory is updated. Fulfill omni-channel orders profitably: As customers purchase online, retailers struggle with how to intelligently fulfill these eCommerce orders. Should the entire order from a distribution center or should they intelligently fulfil based on inventory levels and shipping costs to not only optimize how it’s fulfilled but also to avoid markdowns.
© 2015 IBM10
Digitized partner collaboration Automate and streamline trade deals
Rapidly react and adapt to market fluctuations
Easily collaborate and negotiate new product introductions
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Digitized partner collaboration Simplify and digitize collaborative processes with trading partners to share insights, minimize costs, and bring new products and supplier offers to market Retailers have joint processes, many of which are still manual. With our cloud-based collaboration solutions, retailers can digitize their processes, share insights with their partners (both internal and external partners) thereby providing visibility into merchandising activities, streamline communications and eliminate. Automate and streamline trade deals: Retailers and suppliers need to regularly collaborate on offers/promotions, making informed decisions on what promotions to execute and at what time. By digitizing and streamlining these processes, and automating labor-intensive elements, retailers and suppliers can eliminate the countless e-mails, faxes and spreadsheets typically involved, and reduce the errors often associated with unstructured communication. Rapidly react and adapt to market fluctuations: For example, if raw materials increase for a particular type of product, the manufacturer may have to increase the price of their products and pass this onto the retailer. Retailers need the ability to quickly react to these cost changes and update their prices accordingly. Easily collaborate and negotiate new product introductions: Similar to automating and streamlining trade deals, retailers and suppliers can digitize the process of introducing new items into the retailer’s assortment and ensure pricing is consistent with pricing strategies and goals.
IBM Omni-Channel Merchandising provides a better way for retailers to maximize sales, profit and shopper loyalty by enabling collaboration with trading partners, leveraging analytics
and applying science-based optimization to make informed decisions.
End-to-end Promotion
Management
Shopper Insights
Trading Partner Collaboration
Omni-Channel Pricing
© 2015 IBM12
Coop DanmarkIdentifies variations in customer preferences and adjust markdowns to increase sales -- all powered by IBM Omni-Channel Merchandising solutions.
10%Increase in gross margins by maximizing the effectiveness of local markdowns 76%
Improvement in demand forecast accuracy 3x Increase in frequency
of running optimization
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Coop Danmark Boosting sales and profitability with effective, data-driven markdown decisions Coop Danmark is one of Denmark’s largest retailers. Generating annual revenue equivalent to approximately USD11 billion, the company operates a comprehensive range of store formats across the country. �They used markdowns as a tool to drive non-food sales, but had limited insight at store-level made it difficult to identify the right timing and depth of markdowns, and affected gross margins. The retailer implemented Markdown Optimization solutions from IBM, enabling it to identify variations in customer preferences down to store-level, and adjust its local markdowns accordingly. �With greater insight into markdown selection, depth and timing, Coop Danmark can maximize the effectiveness of local markdowns and protect its profitability. They have improved their forecast accuracy by 76%, boosted markdown gross margin by 10 percent, and can now implement markdown prices three times more frequently than before http://www-03.ibm.com/software/businesscasestudies/ro/ro/corp?synkey=H726748V93049Q27
© 2015 IBM13
PAC 2000ADrives price optimization with daily sales data for 35,000 items from its 450 stores, and combines it with weekly market analysis and data on consumer behavior -- all powered by IBM Onni-Channel Merchandising solutions.
2.7%Increase in product turns due to better pricing83%
Improvement in reaction times to market fluctuations 2.4%
Improvement in comparable store sales
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www-03.ibm.com/software/businesscasestudies?synkey=D075205O65007W23 PAC2000A is a retailers’ cooperative and member of the National Consortium Conad. Founded in 1972, PAC2000A is a market leader throughout central and southern Italy (in Umbria, Lazio, Campania and Calabria). Business need�While still a powerhouse in the Italian retail sector, this retail group was experiencing difficulties in positioning itself against the competition and setting its own price objectives, as demand fluctuations and other trends were challenging the company to react more quickly. Its price management process was highly manual and complex and very reactive. The consortium needed a new price optimization strategy that would better segment and optimize prices, and market different products to different customer segments in alignment with market demand. Its ultimate goal was to raise profit margins. Solution�As the number of sales channels increases in retail, adopting an optimized pricing strategy is critical. This consortium implemented a price optimization solution that collects daily sales data for 35,000 items from its 450 stores, and then combines it with weekly market analysis and data on consumer behavior. The solution analyzes and simulates different scenarios looking at consumer demand and competitive pricing to flexibly manage prices. For example, PAC2000A can raise prices on high-demand products, offsetting losses on less-demanded ones, maintaining margins and sales volumes. Benefits�Reduces the time needed to react to market fluctuations from 18 days to three, an 83.5 percent improvement Product turnover has increased by 2.7 percent thanks to better pricing Improves profit margins by creating more competitive pricing positions, increasing market share for key categories and optimizing the profitability of promotional campaigns
Why choose IBM for Omni-Channel Merchandising?
Right-tim
e and Om
ni-Channel
Analytics Cloud
Faster Time to Value
Deep Industry E
xperience
Industry Expertise
14 © 2015 IBM
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Analytics – right time and omni channel Industry Expertise – focused on retail and their suppliers Cloud-based solutions – help our clients achieve faster time to value Analytics Applying analytics to all of the solutions is critical. IBM Commerce has built embedded, right-time analytics into key processes for merchandising, eCommerce, and marketing, as well as supply chain execution and procurement. Not just descriptive, but from predictive to cognitive as well – Analytics to keep you informed and ahead of the game. This helps enterprises turn on a dime so that each engagement is tailored to customer needs and preferences; supply chains can be reconfigured on the fly to meet demand; and trading partners and suppliers can collaborate in real time and sense and respond to opportunities before they happen Industry Expertise Then we turn to industry expertise. We sell our Merchandising offerings to the LOB executives and if we don’t understand retail, they very simply put, don’t want to talk to us. We are working with many of the world’s leading retailers across multiple retail segments and geographies. In addition IBM has 8000 experts, across multiple industries, who are bringing the IBM Commerce message and solutions to our clients through an industry or domain lens. Software plus industry expertise is what drives outcomes for our clients and in this area we have a very strong play here. And through our work with over 35,000 organizations, we are continually building on that expertise. CLOUD - We enable you move faster with more agility and grow your business in the Cloud to stay ahead of the competition Customer: improved omni-channel and highly relevant, engaging, 'personal' experience with the brand Business: respond to a customer quickly at the right time, improved time to value for leveraging innovations, able to rapidly test and/or deploy best of breed innovations, improved revenue, order conversion, site visitors, and deliver an improved customer experience. Through the unmatched breadth and depth of our market leading products and services across the commerce cycle from more than $3.5B invested in acquisitions and organic development, 100+SaaS offerings, and rich services capabilities, we continue to set the bar high with our differentiation. Why IBM? We are ready for the tremendous opportunity. IBM Commerce has the software supported by a scalable and flexible engine via cloud or hybrid model, combined with the industry consultants and technology expertise that marketing, selling and fulfillment, procurement and B2B leaders need to succeed. We developed a dedicated business unit for Commerce to capitalize on this growing market opportunity to help our clients move with speed to meet their customer, partner and supplier needs.
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