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The State of Multichannel Retail Retail Operations Benchmarking and Excellence Survey 2014

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Page 1: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

The State of Multichannel Retail

Retail OperationsBenchmarking and Excellence Survey 2014

Page 2: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Benchmarking and Excellence Survey 2014Agenda

- 1 -

• Context

• Scope & Methodology

• Key Insights

• Call to Action

Page 3: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

ContextWhy Multichannel?

- 2 -

Reduce store SizeIncrease ReachReduce stores Dependency

Reinvent your Operations

Delight your Customers differently

Multichannel offers opportunities to reorient the business radically !

Page 4: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public- 3 -

ContextWhy Multichannel?

Page 5: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Multichannel Offerings Today

- 4 -

TransactionsCOD, Mobile, Credit, Debit

EngagementComparative sites, SEO, Social sharing, Info kiosk

DeliveryNext day delivery,

Click & Collect,Delivery tracking, Service at delivery

After Sales Service

Multi-channel returns, complaint resolution,

troubleshoot on social

Multi-channel OptionsWeb, Contact centre, Marketplace, Mobile,

Catalogue

Page 6: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Survey PreviewGood News

- 5 -

70%

>15%

6371

For majority, e-commerce has seen

healthy growth

have online business reporting directly to CEO or COO

ATV on website

Page 7: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public- 6 -

Survey PreviewReality & Challenges

Are retailers ready to do justice to the potential? Are these tactical or strategic issues?

• Only 30% have a single view of customer orders

• 38% pursue uniform pricing across channels

• Only 17% have a unified marketing calendar

• Only 25% incentivize cross-channel collaboration at stores

• Only 17% have a unified CRM program

Page 8: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Key PerformanceIndicators (KPIs)

Strategic FocusAreas

Scope & MethodologyParameters & Processes

The first-ever comprehensive multichannel retail benchmarking study covers the following parameters:

- 7 -

Customer Experience

Marketing

Operations

Organization

Technology

Financial management

Process Maturity

1 2 3

Page 9: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Participating Brands

- 8 -

*The logos are property of their respective corporations

Page 10: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Methodology Used for This Study

- 9 -

LEVEL 2

LEVEL 3

LEVEL 4Unified Customer Marketing & Relationship Program

Over-lapping programs (common promotions)

Channel specific programs

LEVEL 1 Store-based CRM program

25%

50%

75%

100%

Example: Customer Experience

TCS Process Maturity FrameworkTCS’ Process Maturity Framework was used to:

• Define process maturity from Level 1 (Low Maturity) to Level 4 (High Maturity)

• Allocate scores to each level of maturity, which ranged from 25 to 100 percent

• One-to-one, in-depth interactions with CXOs captured data and insights.

• 1,200 data points were gathered across six process areas.

Page 11: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Key Insights

- 10 -

Page 12: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Industry Level KPIs

- 11 -

Contribution of revenue from non-store channels

Less than 1% 43%1% to 3% 21%3% to 5% 7%5 to 10% 21%

>10% 7%

What is the sales growth of the non-store channels (e-commerce)?

0-5% 8%5-10% 8%10-15% 0%15-20% 28%>20% 56%What is your average transaction

value (ATV) in the channels that you operate (Rs.)?

Store 5737

Website 6371

Marketplace 3967

Mobile Channel 4300

What is the proportion of repeat/loyalty customers for non-

store channels (e-commerce)?

< 30% 58%

30-40% 11%

40-50% 32%

50-60% 0%

> 60% 0%

What is the percentage of customer returns for your non-store channels

(e-commerce)?

0-3% 65%

3-5% 9%

5%-10% 13%

10%-15% 9%

>15% 4%

Loyal customers are driving your non store sales. The ATV on the website is higher than the physical store !

Page 13: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Primary Objective of Multichannel

- 12 -

Improving Customer Experience and Geographical Expansion high on retailers’ multichannel strategy for FY2014-15

21%Geographical

Expansion

Improve customer experience

Revenue Enhancement

Customer Loyalty

Inventory Optimization

Profitability

21%

18%

17%13%

10%

Prime objective of multi-channel strategy (FY2014-15)(% of retailers for whom this item is a top priority

Page 14: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Overall Process Maturity – Cross Segment

Industry Maturity

- 13 -

Overall low process maturity

• Overall industry maturity is “low”

• Organizational structures are evolving to meet the dynamic requirements

• The industry still faces challenges on “one version of truth”

– Customer, product, and inventory information across channels

57%

53%

75%

70%

50%

63%

0%

20%

40%

60%

80%

100%Marketing

Operations

Customer Experience

Organization

Technology

Financial

Page 15: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public- 14 -

Overall Multichannel Process Maturity Is Low

A lot to learn from each other on good practices

Marketing Operations Customer Experience

TechnologyFinance Organization

57%

Leaders

Laggards

43%

37%Industry benchmark

53%

Leaders

Laggards

40%

30%Industry benchmark

75%

Leaders

Laggards

33%

57%Industry benchmark

70%

Leaders

Laggards

57%

40%Industry benchmark

63%

Leaders

Laggards

17%

20%Industry benchmark

50%

Leaders

Laggards

33%

40%Industry benchmark

Scope to share best practice: High High Medium

Scope to share best practice: High HighMedium

Page 16: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

P&LSingle or Separate for different Channels ?

- 15 -

10%

7%

66%

17%

Stores P&L only

Stores + Non-store (owner of multi-channel) P&L

Separate P&L for each individual channel (Intra Channel Decision Making)

Single P&L for all channels

Trade-off between collaboration and speed

Low Maturity

High Maturity

Page 17: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Delivery options offered- Cross Segment

Multichannel Operations

- 16 -

61%

18%

4%

18%

Buy on limited Channels (say, only Store or Online) &

Deliver to Home

Buy on any Channel & Deliver to Home

Buy on any Channel & Pick-In-Store in specific locations

Buy on any Channel & Pick-In-Store in any location

% respondents

• 18% have store pick up of orders made from any channel

• 52% have channel specific supply chain network but share inventory

• 71% have “one view” of their inventory

There is some way to go in terms of integrated multichannel operations

Low Maturity

High Maturity

Page 18: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

IT System Landscape- Cross Segment

Multichannel Technology

- 17 -

28%

28%

34%

10%

Independent

Low integration

Marginal integration

Complete integration

% respondents

• Only 10% have complete integration of their systems

• Only 10% of retailers have one view of customers

• 65% of respondents spend <10%of IT budget on non store channel

Technology is the least matured function

Low Maturity

High Maturity

Page 19: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Cross Channel Incentives- Cross Segment

Multichannel Organization

- 18 -

No79%

Yes21%

% respondents

• Only 21% provide cross channel incentives

• Only 34% share the same customer and product view across channels

• 70% of the retailers have multi-channel sponsorship from the CXO’s office

Need to build synergies between the store and non store channels

Page 20: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Best & Next Practices

- 19 -

A combination of mindset, policy changes and technology intervention can create value

Marketing

• Cross-channel unified view of customer and order data

• Cross-channel unified marketing and promotion calendar

Operations

• Continuous, cross-channel assortment planning

• Cross-channel order fulfillment

• ‘One view’ of inventory cross-channel

Customer Experience

• Unified CRM program across all channels

• Multiple options for order pick-up and delivery

• Multiple return options to customer for non-store purchases

Technology

• Integrated cross-channel technology platform

• Real-time, cross-channel update of data, promos and pricing

Finance

• Channel-optimized annual operating plans

• Unified P&L across channels for combined decision making

Organization

• Single cross-channel view of customer

• Intense oversight by CEO/COO

• Reporting for collaboration

P

P

P

T

T

Process, Policy TechnologyTP

P

P

P

P

P

P

T

T

T

T

Page 21: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Summary

The first ever Multichannel Operations Benchmarking & Excellence Survey reveals that:

• FY14 is a mixed bag in terms of performance

• True multichannel “integration” is not visible

• Overall maturity is low, though retailers are putting in place the organization structures and processes for a multichannel play

- 20 -

Page 22: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

ROBES 2014- The State of Multichannel RetailTCS Public

Call to Action…

- 21 -

There is a great opportunity in the making to personalize, reach out and transform customer experience

1. Re-evaluate and reboot your multichannel strategy ; Go back to the drawing board and create roadmaps for all areas

2. Get your organization structure and people aspects right; Collaborate and Innovate both

3. Unlock value of your “loyal customers” and leverage your assets(stores) ; Build synergies between the store and non store channels

4. Technology is the least evolved area ; Need to invest ; Have a long term view and do not settle for “chalta hai solution”

5. Continued CEO involvement

Page 23: The State of Multichannel Retail · • Only 25% incentivize cross-channel collaboration at stores ... Parameters & Processes The first-ever comprehensive multichannel retail benchmarking

Thank YouAnil RajpalHead Practice – Retail, CPG & E-Commerce, Emerging Markets Global Consulting PracticeTata Consultancy [email protected]