what is happening in retail and the australian consumer group- retail presentation by trent... ·...
TRANSCRIPT
Disclaimer
These slides are not for commercial use or redistribution. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. KPMG have indicated within this presentation the sources of the information provided. KPMG has not sought to independently verify those sources unless otherwise noted within the presentation. No reliance should be placed on additional oral remarks provided during the presentation, unless these are confirmed in writing by KPMG. KPMG is under no obligation in any circumstance to update this presentation, in either oral or written form, for events occurring after the presentation has been issued in final form. The findings in this presentation have been formed on the above basis.
Forecasts are based on a number of assumptions and estimates and are subject to contingencies and uncertainties. Forecasts should not be regarded as a representation or warranty by or on behalf of KPMG or any other person that such forecasts will be met. Forecasts constitute judgement and are subject to change without notice, as are statements about market trends, which are based on current market conditions.
Neither KPMG nor any member or employee of KPMG undertakes responsibility arising in any way from reliance placed by a third party on this presentation. Any reliance placed is that party’s sole responsibility. The presentation (and the accompanying slide pack) is provided solely for the benefit of the conference attendees and is not to be copied, quoted or referred to in whole or in part without KPMG’s prior written consent. KPMG accepts no responsibility to anyone other than the conference attendees for the information contained in this presentation.
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
How is the Australian market performing?
…trends have continued based on public Q3 sales information3
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Growth has been strong and consistent across most categories – Electricals and Hardware have outperformed
Australian Retail Sales Statistics – Year-on-Year Movement, By Category
Source: ABS 8501; Table 11 Unashamedly.com.au
Prior year Current year
Dec-13 Jan-14 Feb-14 Mar-14 Dec-14 Jan-15 Feb-15 Mar-15Supermarkets 7% 8% 5% 4% 4% 3% 4% 4%Liquor 0% 5% 3% -2% 7% 3% 5% 7%Specialty food 4% 4% 1% 0% 0% -6% 0% -2%Cafes, restaurants 16% 17% 15% 18% 2% 5% 3% 2%Takeaway food 4% 7% 4% 1% 8% 7% 8% 7%Furniture, homewares 8% 8% 7% 12% 9% 6% 6% 7%Electricals 0% -1% -1% 2% 9% 12% 14% 11%Hardware and garden 7% 7% 12% 8% 6% 9% 8% 11%Clothing 11% 12% 10% 16% 1% 0% -2% 3%Footwear and accessories -3% -3% -3% 1% 13% 14% 12% 12%Department stores -1% 4% -4% -7% 1% 1% -1% 6%News and books -9% -7% -10% -4% -6% -13% -10% -8%Recreational goods 15% 21% 13% 11% 1% -3% -4% -5%Pharmaceuticals, health and beauty 3% 4% 4% 2% -1% 1% 1% 2%
All retail 5% 7% 5% 4% 4% 4% 4% 5%
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
2014-2015
3.0%
4.6%
0.7%
3.4%
7.4%
-3.3%
0.1%
8.6%
11.6%
6.3%
13.6%
1.4%
-12.7%
4.0%
What sectors are performing better than others?
Per cent change in retail sales in Australia for 13 categories over ten and five years and over 12 months to Jan-2015
Source: Based on Australian Bureau of Statistics data; KPMG Demographics
2010-2015
21.1%
49.9%
26.8%
24.5%
16.9%
16.1%
21.1%
36.6%
4.0%
16.7%
8.2%
0.1%
-26.3%
20.5%
2005-2015
121.0%
100.7%
89.6%
75.8%
73.2%
50.9%
47.1%
44.4%
39.1%
37.3%
31.1%
18.0%
-23.5%
58.3%
Industry
Liquor
Cafes, restaurants & catering
Pharmaceutical, cosmetic & toiletries
Supermarket & grocery stores
Takeaway food
Recreational goods
Clothing
Hardware, building & garden supplies
Electrical & electronic goods
Furniture, floor coverings, housewares, textiles
Footwear & other personal accessories
Department stores
Newspapers & books
Total (incl other)
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
This growth is despite a falling consumer sentiment
Westpac Melbourne Institute Index of Consumer Sentiment
Source: Westpac Economics, Melbourne Institute
98
104
108
100
110
112
94
92
102
106
96
Jan-15Sep-13 Mar-14 May-14 Sep-14Mar-13 Nov-14Jan-13 Jul-13 Jul-14May-13 Jan-14Nov-13 Mar-150
Unashamedly.com.au
April sentiment reduced by 99.5% in March to 96.2%.
Why is the Australian market faring relatively well through these tough economic times?
Growth in the number of high income earners
Increased life expectancy
translating to a growing “lifestyle”
and an older, wealthier customer
segment
Growing levels of wealth and strong
GDP growth
Strong population growth has supported
increased demand for goods and
services
Growing professional
workforce and continued job
growth
Increased participation in the
workforce by women
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Australia is a good place to do business …
BIGGEST1. United States 17.419
2. China 10.380
3. Japan 4.616 4. Germany 3.860 5. United Kingdom 2.945
6. France 2.847
7. Brazil 2.353
8. Italy 2.148
9. ...
12. Australia 1.444
RICHEST1. Norway 97,000
2. Switzerland 87,000
3. Australia 61,000
4. Sweden 58,000
5. United States 55,000
6. Netherlands 51,000
7. Canada 50,000
8. Belgium 48,000
9. Germany 48,000
10. United Kingdom 46,000
FASTEST-RISING1. China 98%2. Nigeria 85%3. Korea 53%4. Saudi Arabia 52%5. Russia 51%6. Indonesia 43%7. India 40%8. Argentina 36%9. Mexico 35%10. …11. Australia 34%
GDP > $US500bn$US GDP pc 2014$UStn GDP 2014 GDP > $US500bn
2009 - 2014Source: Based on International Monetary Fund, World Economic Outlook Database, April 2015; KPMG Demographics
…I expect continuation of the growing number of new foreign businesses starting operations in Australia…specialty fashion, health and beauty, discount grocery
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
23 years of continuous economic prosperity shapes a nation and its people … creates a culture of “consumerism”
Source: ABS Catalogue 5206.0 Australian National Accounts: National Income, Expenditure and Product; KPMG Demographics
Per cent change in Australian GDP by quarter from September 1959
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
Sep-
1959
Mar
-196
0Se
p-19
60M
ar-1
961
Sep-
1961
Mar
-196
2Se
p-19
62M
ar-1
963
Sep-
1963
Mar
-196
4Se
p-19
64M
ar-1
965
Sep-
1965
Mar
-196
6Se
p-19
66M
ar-1
967
Sep-
1967
Mar
-196
8Se
p-19
68M
ar-1
969
Sep-
1969
Mar
-197
0Se
p-19
70M
ar-1
971
Sep-
1971
Mar
-197
2Se
p-19
72M
ar-1
973
Sep-
1973
Mar
-197
4Se
p-19
74M
ar-1
975
Sep-
1975
Mar
-197
6Se
p-19
76M
ar-1
977
Sep-
1977
Mar
-197
8Se
p-19
78M
ar-1
979
Sep-
1979
Mar
-198
0Se
p-19
80M
ar-1
981
Sep-
1981
Mar
-198
2Se
p-19
82M
ar-1
983
Sep-
1983
Mar
-198
4Se
p-19
84M
ar-1
985
Sep-
1985
Mar
-198
6Se
p-19
86M
ar-1
987
Sep-
1987
Mar
-198
8Se
p-19
88M
ar-1
989
Sep-
1989
Mar
-199
0Se
p-19
90M
ar-1
991
Sep-
1991
Mar
-199
2Se
p-19
92M
ar-1
993
Sep-
1993
Mar
-199
4Se
p-19
94M
ar-1
995
Sep-
1995
Mar
-199
6Se
p-19
96M
ar-1
997
Sep-
1997
Mar
-199
8Se
p-19
98M
ar-1
999
Sep-
1999
Mar
-200
0Se
p-20
00M
ar-2
001
Sep-
2001
Mar
-200
2Se
p-20
02M
ar-2
003
Sep-
2003
Mar
-200
4Se
p-20
04M
ar-2
005
Sep-
2005
Mar
-200
6Se
p-20
06M
ar-2
007
Sep-
2007
Mar
-200
8Se
p-20
08M
ar-2
009
Sep-
2009
Mar
-201
0Se
p-20
10M
ar-2
011
Sep-
2011
Mar
-201
2Se
p-20
12M
ar-2
013
Sep-
2013
Mar
-201
4Se
p-20
14
1960s 1970s 1980s 1990s 2000s 2010s
MenziesWhitlam
Fraser
Hawke
GST GFC
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Strong population growth is driving Household formation
“Household formation not population growth is the driver of demand” The Australian
Population growth:
Avg 368,000p.a population increase over last 10 years
(2005-15)
Avg 220,000p.a population increase since 1950-2005
Forecast 380,000p.a (2015-25)
= At least 152,000 new households formed per year for next 10 years (at current
levels)
“Average household is now less than 2.5 people” Aust Property Investor
“Average household spends $69k per annum on living costs” (excludes formation spendASIC
…average household size likely to further reduce with ageing population, increased migration (espstudents) and modern living styles
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Source: Based on Australian Bureau of Statistics data; KPMG Demographics
Consumer demand is shaped by changes in the demographic profile
2003-2013: 3.4 million (19.7m to 23.1m)
Net change in Australian population by 5-year age group over 10 years to 2013 and 10 years to 2023
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85+
2013-2023: 4.2 million (23.1m to 27.3m)
Mature adults
Premium products
Young adults
Household formation
Kids & teenagers
Social & leisure
Active retirees
+Convenience & value
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
What will be the effect of the Federal Government budget…
12
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Zone reform clears way for Aldi expansion
Inside FMCG
Quality – the Nanna berries effect
Online effect…Amazon?Others?
Changing retail offers
“Convenience outpaces majors”
Increased regulation…
“Kellogg’s signs up to health star
system” Inside FMCG
Changing consumer habits
“Is the weekly shop dead?”Inside FMCG
ACCCGrocery code
Further internationalisation
Lidl? Specialty fashion?
Social media and the changing
consumer
14
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Defining the new consumer
Consumers are… Which means they… So companies must…
Connected Can shop anytime and anywhereGet products to consumers when and where they want them
InformedHave unlimited information at their fingertips and are constantly looking for more
Embrace the shift in buying behavior andhelp them learn more (don’t always go for the conversion)
Conscious Are socially, ethically and environmentally aware
Meet the demand for transparency
Empowered Have many outlets to express their opinion
Use consumer generated content to innovate and improve
Individual Expect a personalized experienceAnalyze consumer data to provide a targeted and meaningful journey
Vulnerable Are more exposed to riskPut measures in place to protect theconsumer
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
The consumer has fundamentally changed through technology
TODAY ... A “CONNECTED” CONSUMER IS ...
A Consumer A Creator A Critic A Producer A Spectator A Community Manager A Collaborator
L I K E
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
… technology empowered behaviour is changing brand engagement and interaction
The impact of behaviour change
1 DEVICE OWNERSHIP EQUALS EMPOWERMENT Average Smartphone user uses the device 18
times a day
2 THE DIGITAL LIVING ROOM Commerce in the living room as increased by 42%
compared to 2012
3 ALL SOCIAL, ALL THE TIME Two of five Americas are digitally social at work and
one in five have used social media in the bathroom
4 TWO SCREEN MINIMUM 84% of Smartphone users use the device
whilst watching TV
5 STREAMING NOT DOWNLOAD Streaming has overtaken downloads for movies
and music in the US
© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority toobligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
What can we learn from these trends and how can we respond?
18© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority toobligate or bind KPMG International or any other member firm third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Lesson 1: Embrace the new purchase path
In today’s world where consumers have access to constant information, variety and accessibility through computers, smart phones and tablets, the once traditional customer journey has turned into a much more dynamic experience. Digital and mobile have transformed the once linear progression – from awareness to consideration to purchase to loyalty – into an intricate and complex web with each consumer’s path unique and individualized. To succeed in this new reality,
retailers must see the world as a “purchase platform”. Twitter and Facebook both offer instant purchase options without even leaving the platform.
BEFORE 2000 2000-2007 2007-2013 TODAY
PHYSICAL STORES ONLINE MULTI-CHANNEL OMNICHANNEL
BRICKS AND MORTAR
E-COMMERCEMOBILE
SOCIAL
APPS
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Lesson 2: Merge online/offline to create a “frictionless” experience
Consumers are looking for a frictionless shopping experience across channels and for retailers to be successful we recommend they remain focused on removing friction from every point in the purchasing journey. Mobile and social platforms should be embraced and leveraged to close the gap between product discovery and purchase. Retailers should be present and accessible on a wider variety of channels in a consistent way that allows for customers to make purchases instantly and seamlessly.
An opportunity: consumer engagement across platforms
Retailers can increase the information provided to consumers with variety in media – such as using videos and increasing social engagement with product reviews.
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Lesson 3: Empower consumers to own their shopping experience
Consumers want to own their shopping experience. They want the relevant information to be readily available whenever they need it. We recommend retailers don’t always look for the conversion – if their consumers are looking for more product information, help them with that. Providing customers with a near real-time view of what’s in stock in every store or available for delivery helps them feel informed and empowered to make choices. In exchange, consumers are more willing to share their data with retailers.
Mike Rogers, Vice President of eCommerce & Digital Operations at JCPenney on Customer Experience
Help me find it, Help me get it, Make it worth it. Customers know more than they used to, have access to more data than they used to and have come to expect more than they used to.
An opportunity: Cloud in the supply chainCloud based software can increase the speed of data transfer across the supply chain. These solutions have allowed retailers to link POS transactions to inventory reports, updating the systems in minutes.
The implementation process may include the preparation of internal processes, organizational re-structuring (as required) and education on how to get the most out of this new level of information sharing.
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Lesson 4: Offer on-demand delivery options
Click & Collect (also known as ‘Buy online and pick-up in store’) is quickly becoming one of the most desired delivery options. A 2014 survey of 1,992 US consumers showed in 2013, 4 percent of customers had ordered online and picked up in store and in 2014, 64 percent of consumers had ordered online and picked up in store*. Retailers are finding that if they do offer click & collect many customers don’t even want to come into the store – or even get out of their car. This has led to pick-up desks at the front of stores, or drive-up kiosks in the parking lot. In cities, we will see a rise in collection locations at major commuter hubs.
UK retailer John Lewis, for example, recently opened a 'click and commute' store in a major London train station. Retailers offering delivery services are also under pressure to deliver products increasingly faster. Amazon’s next day delivery service is becoming insufficient for many of its customers looking for immediate satisfaction. Cole Haan in the US is now working with NYC courier UberRush to provide their online shoppers the option of ”rush 2-hour delivery” for an additional US$10.
*Report source: BOPIS & BISBO will propel retail into orbit by Blackhawk Engagement Solutions
No Inventory Model: Drop ShippingDrop shipping enables retailers to forward orders to a third party which holds their stock and fulfills orders on their behalf. This services allows retailers to offer a wider range of products without the cost associated to storing inventory.
John Lewis has adopted a hybrid fulfillment strategy – storing most of their products in warehouses and then delivering them via their own fleet of vans. However, for slower moving items, it’s not always practical to keep high stock levels so in those cases they use drop shippers.
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Lesson 5: Fulfill each order profitably
With the increasing complexity of converged channels, retailers are focusing heavily on inventory and fulfillment management. Retailers may know that the cost of fulfillment is high but do they…
- Know how to make the most profitable decision for each order?
- Fulfill from their stores and leave their shelves short of product?
- Fulfill from their own distribution centers and interrupt a third party logistics provider?
- Fulfill orders directly from suppliers via drop ship?
To enable smarter decision making, retailers need to dynamically connect their warehouse, distribution system and their stores. They need a clear fulfillment strategy that makes use of predictive analytics to enable better demand planning. Smarter stores have better inventory visibility, better fulfillment and efficient labor productivity.
To succeed in omnichannel you must have a really good front end, but unless you have re-engineered the back-end and are ready to cope with peaks in traffic you’ll have real issues. There’s no point doing one without the other.
An opportunity: Cost-to-serve and supply chain analyticsRetailers can determine the product and channel cost-to-serve –analyzing operational and financial data to provide insights into the true cost of fulfillment. This cost and performance data can be used to recommend fulfillment process improvements, for example adjusting the pricing processes at distribution centers such as packing and scanning.
Mike Rogers, Vice President of eCommerce & Digital Operations at JCPenney on Customer Experience
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Lesson 6: Create an unforgettable experience
The physical store still remains a critical part of the shopping journey. Consumers crave social interaction and they want to experience the brand and have an emotional connection. They also want instant gratification —to be able to find what they need and leave the store with bag-in-hand. Experiences help to forge meaningful connections and relationships with retailers that transcend the transaction.
This is the Achilles' heel for pure-play e-commerce as consumers may obtain the product but there is no sensory element, no immediacy and no social interaction. Pure play e-tailers are recognizing the power of a physical consumer-facing presence with Amazon, Birchbox and Rent the Runway all moving into bricks.
Focus on experiences not products
Stores need to be both fulfillment centers and social playgrounds, allowing consumers to interact with products, sales associates and the brand. The degree of which is dependent on the type of retailer. Creating aspirational settings presents customers with novel ways to use products and helps upsell a total ”look” or lifestyle.
Cultivate a community
Retailers need to offer customers reasons to visit their store beyond the product. By bringing like-minded individuals together, involving them in product decisions and offering complementary services, retailers can build on emotional touch points and create relationships that go beyond the transaction.
Future of Retail 2015, PSFK Labs
Offer complementary services and experiences that go well beyond products, reimagining stores are market places for relationships.
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Lesson 7: Make it personal
A core part of making an experience unforgettable is about meeting the needs of the modern consumer and making it relevant for each individual.
Retailers are increasingly offering consumers the opportunity to customize or personalize their products. Micro-manufacturing, segmenting to deliver-to-scale and 3-D printing provide profitable ways to make customers feel like products were made just for them. Selfridges’ in-store ”Lab” offers assessment-based fragrance recommendations or the option to create a custom scent. Levis Lot 1 is a premium service offering made-to-order bespoke jeans.
In an effort to offer increased personalization, retailers are focusing on the collection of customer data. To accomplish this they are building sophisticated analytics into their back-end strategies to ensure the most seamless, simplistic, customized experience for their customers on the front-end. The amount of personal information that customers are willing to share is directly correlated to the value of what they receive in return.
Personalize the experience Customize products
IBM Insights on Business: The Power of Insight: Delivering on Brand Promise, 2014
In the online world, consumer experience is as important as product and price. A recent IBM Institute for Business Value study shows 81 percent of consumers expect the same brand experience across channels and 54 percent of consumers would end their relationship with a retailer if not given personalized content.
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
27
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
2. Increasing use of in-store experience
28
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
2. Increasing use of in-store experience
3. Technology integrated into bricks and mortar stores
29
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
2. Increasing use of in-store experience
3. Technology integrated into bricks and mortar stores
4. Re-invention of loyalty programs
30
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
2. Increasing use of in-store experience
3. Technology integrated into bricks and mortar stores
4. Re-invention of loyalty programs
5. Social media influence on purchasing decisions
31
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
2. Increasing use of in-store experience
3. Technology integrated into bricks and mortar stores
4. Re-invention of loyalty programs
5. Social media influence on purchasing decisions
6. Investment in Big data by retailers – improved personalised offers
32
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
2. Increasing use of in-store experience
3. Technology integrated into bricks and mortar stores
4. Re-invention of loyalty programs
5. Social media influence on purchasing decisions
6. Investment in Big data by retailers – improved personalised offers
7. Likeable “experts” in store and “online”
33
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
2. Increasing use of in-store experience
3. Technology integrated into bricks and mortar stores
4. Re-invention of loyalty programs
5. Social media influence on purchasing decisions
6. Investment in Big data by retailers – improved personalised offers
7. Likeable “experts” in store and “online”
8. Mobile wallet
34
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
2. Increasing use of in-store experience
3. Technology integrated into bricks and mortar stores
4. Re-invention of loyalty programs
5. Social media influence on purchasing decisions
6. Investment in Big data by retailers – improved personalised offers
7. Likeable “experts” in store and “online”
8. Mobile wallet
9. Ongoing internationalisation of Australian retail landscape
35
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
2. Increasing use of in-store experience
3. Technology integrated into bricks and mortar stores
4. Re-invention of loyalty programs
5. Social media influence on purchasing decisions
6. Investment in Big data by retailers – improved personalised offers
7. Likeable “experts” in store and “online”
8. Mobile wallet
9. Ongoing internationalisation of Australian retail landscape
10. Consumer demanding increased speed – service, offer and delivery flexibility
36
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail execution with the consumer...the past...
37
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
38
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
The present...
39
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Coming to Australia?....
40
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Back to the future...
41
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Emergence of in-home enablers...Amazon Dash
42
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Online delivery wars…
eBay’s CEO dismisses drone concept as “fantasy”
eBay Now - $5 for local delivery within an hour in participating cities including San Francisco, Chicago, Dallas and New York
Likely launch of Amazon PrimeAir delivery drone in 2015/6
Regulatory and technological hurdles still to be overcome
Opportunity to provide 30 minute delivery option for small items
Competitor response:
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Retail trends
1. OMNI channel will be the norm
2. Increasing use of in-store experience
3. Technology integrated into bricks and mortar stores
4. Re-invention of loyalty programs
5. Social media influence on purchasing decisions
6. Investment in Big data by retailers – improved personalised offers
7. Likeable “experts” in store and “online”
8. Mobile wallet
9. Ongoing internationalisation of Australian retail landscape
10. Consumer demand increased speed – service, offer and delivery flexibility
Bricks and mortar wont
die!…but it will
evolve
44
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
The Consumer will drive new markets, tastes and preferences...How will current and new participants position themselves?
The Bakery example:
Bakery industry going through major period of change
Per capita consumption of bread is fallingBUTAustralians are spending more on higher quality, fresher breads and baked goods.
Typical family used to purchase a few loaves of factory-produced white bread once a week
Consumers are now more likely to buy a much wider range of freshly baked bread daily, including sourdough, ciabatta, brioche and baguettes.
Rising health awareness has caused demand for new products (eg wholemeal, seeded, gluten-free and other health breads) to soar.
Introduction of functional breads that have been fortified or enriched with nutrients has also contributed to the growing demand for premium breads and bakery products
Source IBIS
45
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
The Consumer will drive new markets, tastes and preferences...How will current and new participants position themselves?
“Bakery is like fashion, fresh bakery is in and “fresh at your convenience” is the latest trend hitting runways”Neilsen UK
“The concept of fresh is having a moment because consumers are highly engaged in their food”...”when consumer go to the grocery store they’re probably not passionate about sliced bread”
How are manufacturers responding to the change in consumer preferences ?
“Artisan bakeries grow in popularity”
Australia’s bakery scene is in evolution, with the rise of quality artisan bakery operations that are expanding their brands across the foodservice landscapeHospitality Magazine “2013 third consecutive year of growth that was
predominately seen in unpackaged/ artisanal bread as both Coles and Woolworths revitalise their retail stores.”Euromonitor
2015 the first year in which unpackaged/ artisanal bread outsold packaged/industrial bread in AustraliaEuromonitor
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© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
Packaged lunch offers...
47
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
...to present
48
© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.
49
Digital engagement
rank digital as very important
54%say digital is critical
29%
61%rank digital as a
top concern
today’s consumers are online, all the time
digital strategy
© 2014 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
56%rank digital as a
top concern
© 2014 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
56%Data analytics
rated importance as high
47%Data security
rated importance as high
40%said data issues are critical
Data analytics and security
© 2014 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
think companies collect too much
customer info
82%
(Adobe, June 2013)
have tried to remove or mask
online activity
86%(Pew Research Center,
September 2013)
Source: http://mashable.com/2014/04/15/data-breach-infographic/
78%Of companies have had at least 1 data
breach in last 2 years
60%of small to medium businesses have
no routine backup
36%of data lost is
customer and financial info
72%of businesses
with a major data loss shut down within 2 years
© 2014 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
The KPMG name, logo and ‘cutting through complexity’ are registered trademarks or trademarks of KPMG International Cooperative (KPMG International).