Martin Newman - Practicology - eRetail 2014

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  • 1. Martin Newman – CEO Practicology Preparing for customer-centric evolution 18th March 2014
  • 2. What gives me the right to stand in front of you today?
  • 3. What Practicology does Strategy Development Commercial Planning Technology Selection Organisational Design & Change Analytics & BI Conversion Rate Optimisation Customer Insight UX & Usability Site Design Digital Marketing Trading Services
  • 4. What makes us special?
  • 5. Who we do it for
  • 6. Retailers can’t afford to be only thinking about today and next year…
  • 7. Bricks
  • 8. Flicks
  • 9. Clicks: Waitrose 1.0
  • 10. What a difference 10 years make!
  • 11. The customer journey has changed and the customer is firmly in control of where, how and when they shop
  • 12. The old Retail driver: Used to be location, location, location
  • 13. The new Retail drivers: • Now its: Convenience, Convenience, Convenience • Buy from the channel of choice: Online, in store, by phone • Return to the channel of choice…free • Have your order delivered to the place of choice: Work, home, your store for pick up • Have the order fulfilled at a time of your choosing • You could call this ‘The New Normal’
  • 14. Delivery is a competitive differentiator House of Fraser offers next-evening delivery slots 7 days a week Dixons offers same-day delivery for orders made before 9.30am Grocery Click & Collect: Asda shoppers can order before 10am for pick up after 2pm at 200 shops
  • 15. High Barnet tube: Order before 12pm, collect after 4pm
  • 16. HOWEVER changes in customer behaviour are running ahead of changes in retailers’ multichannel propositions…
  • 17. Omni channel/Shmomni channel
  • 18. The challenges retailers face • The percentage of sales online is increasing in all categories – there is no “saturation” point • Online browsing and transactions are increasingly conducted on mobile devices • Retailers face channel proliferation. • It’s no longer just stores, catalogues and online; you’ll need to think about mobile-optimised channels, localised sites for international markets, marketplaces and social channels too • Customers’ journeys cross these channels and they expect to move between them seamlessly
  • 19. The five things retailers can do to future-proof their businesses
  • 20. 1. Embed a customer-centric culture
  • 21. Retailers’ responses must be truly customer-centric
  • 22. • What does a customer-centric culture mean in online retail? • It means Argos feeds back product reviews to its buying and merchandising teams – and stops selling products that get consistently bad reviews • It means Debenhams credits its stores with online sales based on the postcode of where they are delivered to – this means staff are incentivised to offer great service to customers who come into store and then go home and buy online. • And it means John Lewis has integrated its Direct business and stores business to help customers feel like they are dealing with one business whether they buy online or offline.
  • 23. Loyalty 2.0? • I’m not sure we ever reached loyalty 1.0 • Too many retailers take customer loyalty for granted • It has to be earned • Where can you add value? • To make the customer’s weekly chores easier • To enrich their experience through content • To deliver a truly personalised experience
  • 24. Engagement is the new loyalty
  • 25. What’s just about the most boring product category?... White Goods!
  • 26. Washing machines just became interesting Customer value proposition Community & engagement = Trust 150k views a week on YouTube
  • 27. The customer feedback loop • AO.com have created a Facebook feedback book • The CEO writes to couriers/drivers personally to tell them about customer complaints • He also writes to compliment them • Responses are posted on Facebook and customers respond commenting positively
  • 28. The online customer of the future • Any age • Any country • Expect product when and where they want it – without constraints on fulfilment • Mostly using mobile devices (the exception potentially being at work) • Expect personalised experience, offers, prices and even product • Will be loyal to brands who provide unique and/or innovative products or services, and not loyal to others
  • 29. 2. Organisational design
  • 30. Team realignment • Retailers’ teams must work more closely together • This is not just about channels, but aligning marketing, merchandising, supply chain, customer service and other functions • Current hierarchies, reporting relationships and even P&L and incentive structures are simply not designed to deliver on what the customer assumes is an entirely logical - if largely invisible - infrastructure to support how they already shop
  • 31. Current organisation design
  • 32. A model for the future?
  • 33. My favourite quote of 2013
  • 34. Greg Wasson, CEO Walgreens speaking at Shop.org 2013 “I see myself as a B52 bomber providing cover for Sona and her team, removing roadblocks to enable her to leverage digital to help us achieve our business objectives”
  • 35. 3. An international outlook
  • 36. International Ecommerce • The Netherlands was 11th for online retail sales in 2012, punching well above its weight by population • To maintain the double-digit growth rates previously seen, UK online retailers are now targeting sales in other countries on this list • UK retailers who sell more abroad than they do in the UK include ASOS and Boden
  • 37. International ecommerce • Even if you don’t want to target an international customer base, you need to be aware that your competition is now international • US retailers and brands entering Europe often set up an EU website to accompany flagship stores
  • 38. 4. Technology platforms that enable flexibility
  • 39. Responsive design Sites are being built with responsive design principles to addressing device proliferation
  • 40. Connected devices of the future • Internet giants such as Google are obsessed with what could be connected to the internet • What kind of consumer devices might your systems need to interact with in the future? • The Internet of Things concept holds that many devices will become internet- enabled within the next decade • There will be 50 billion internet-connected objects by 2020 – 6.6 objects for every person who uses the web More web devices than humans since 2008
  • 41. The internet of things “The Internet of Things (IoT) is the network of physical objects accessed through the Internet, as defined by technology analysts and visionaries. These objects contain embedded technology to interact with internal states or the external environment. In other words, when objects can sense and communicate, it changes how and where decisions are made, and who makes them.” - Cisco
  • 42. The possibilities…
  • 43. Smart pad is already here People talk about smart fridges, but the smart pad is already here. Internet-connected devices are entering the home by stealth Imagine what the data on what people actually eat would be worth to a major supermarket!
  • 44. Smart pad is already here
  • 45. Staples Connect – universal hub • A wireless hub and smartphone/tablet app that allows consumers and small businesses to control all of their networked home devices in one place, including lighting, heating, CCTV etc. • Staples is also committing space in its stores to make all the different connecting devices available. • An office products provider has innovated in this space and stolen the march on competitors such as Best Buy who are struggling to maintain relevancy in the modern world.
  • 46. Big data, small data, who cares what you call it data… 5. Leveraging insight from digital channels to improve range, product, supply chain and marketing = Actionable insight
  • 47. Predict what your customers really want to buy? • Basket analysis of EPOS data is backward looking – it shows what has been bought in the past - but is dependent on previous B&M decisions and availability • Customers can’t buy what you don’t yet sell; they can only buy what’s on the shelves that day • What decisions would you make differently if you had insight into what they wanted to buy, not just what they ended up buying?
  • 48. ASOS is already using Editd • 200 buyers and online traders have access to real-time analytics • Pulls in data from blogs, social media, competitor websites and emails, press mentions to help with decisions about ranging, pricing and discounting • ASOS credits Editd for its recent 33% YOY sales lift
  • 49. Safeway’s Just For U programme already offers personalised prices
  • 50. How Just For U works • Customers access via a browser or iOS or Android app and are presented with discounts and deals based on their online and offline purchase history from Safeway’s Club Card • They “Add” the offers they are interested in to their Club Card in order that the system learns what they are interested in and improves relevance over time • The system is real-time so customers can even add offers while they shop and receive the discount at the checkout • Customers can even use supplier coupons on top of their personalised discounts in some cases • Store receipts provide a summary of Just For U savings so customers know they’ve got their deals
  • 51. Smart(er) advertising will appear • Sky AdSmart is now available in a fifth of UK households, tailors commercial ad breaks based upon the viewer’s profile and location, enabling advertisers to better target campaigns while also opening up channels to local businesses unable to afford national campaigns • Sky states that one quarter of brands to have signed up so far are either new to TV advertising or had previously quit the market
  • 52. What do changing customer expectations mean for your business?
  • 53. Fulfilment • Delivery and click and collect services are only just starting to really address customer convenience • In the future, radical thinking will create completely new ways of getting products to customers when they want them • You’ve surely already heard about Amazon’s drones idea, but a few other recent developments provide a more tangible taste of things to come…
  • 54. The flats pictured in London SE1 – Grange Gardens in Southwark – have a concierge and refrigerated delivery docks so they can accept grocery deliveries when residents are out. Could supermarkets and other retailers expand their delivery lockers to such locations? This could be a serious alternative to click and collect in the future.
  • 55. Deliver to car? • Volvo unveiled a system at Mobile World Congress 2014 to allow couriers to leave or take packages from a customer’s car • The couriers can unlock the car for a limited time period with a digital key • Car owners will be able to track when their car has been opened and locked with a smartphone or tablet app
  • 56. GPS to improve collect from store?
  • 57. True customer service choice • Customers want digital interactions – O2 sees one million less customer service calls than two years ago • Launched #TweetServe giving customers access to info such as account balance, call allowance and latest handset offers via Twitter DM once verified via SMS
  • 58. iBeacons: What’s to come? • Apple’s iBeacons tech being trialled in stores such as Macy’s and soon to land in the UK • In future the tech could be used in individual departments or when customers are near a store
  • 59. Amazon… • Amazon subsidiary A9 produced the Flow augmented reality app • Users hold their phone up to a product and if it’s sold on Amazon.com it is recognised and a link is created. A barcode scanner acts as a back-up recognition tool • Unlike similar barcode scanner apps, this stores links to all scanned products so it’s easy to go back and buy something at a later date or scan multiple products to compare
  • 60. Addressing changing demographics • Convenience is a huge trend due to changing demographics in developed economies • How can you meet the needs of one-person households, older customers and those with busy lifestyles online?
  • 61. Subscription models for convenience • Graze delivers over 300,000 boxes a week and recently launched in the US too. • Sales nearly doubled to £40.2m in 2013. Pre-tax profits shot up from £3.3m to £9.5m.
  • 62. Thank You! Please email me for a copy of the presentation: Martin@Practicology.com @MartinNewman @practicology