Customer Centric Retail Innovation - Bucharest May 29, 2008

RETAIL INNOVATION: A STRATEGIC PERSPECTIVE FUTURELAB

FUTURELAB GO TO WORK

1. GET ON A PLANE TO LEARN AND NETWORK FUTURELAB

2. IMPORT – SKILLS, IDEAS, FORMATS FUTURELAB

3. SECURE AND TRAIN THE BEST PEOPLE

FUTURELAB COPY MODIFY CREATE DEGREE OF INNOVATION Introduce global Modify existing Develop new formats that already concepts to better concepts, targeting exist match local needs specific local segments and needs 4. INNOVATE LIKE ONLY ROMANIANS CAN

RETAIL INNOVATION, ACCORDING TO MANY POP Systems Online FUTURELAB

THEN, GO TO WORK BRANDS RETAILERS/INVESTORS Be the first to become friendly with your Be first to bring a (modified) format into the new customers market Help your existing distribution to Come with something « unique » which « make the jump » internationals can’t offer Pro-actively say goodbye to those who Get out of the way and sell as expensive as can‟t or won‟t innovate. possible. FUTURELAB

BUT WE WILL START WITH INNOVATION FROM A STRATEGIC PERSPECTIVE And to be more precise: « customer centric retail innovation » Source: IBM Business Consulting Services – The Retail Divide, 2004 FUTURELAB

Think Beyond the Store Broaden Your Innovation Horizon FUTURELAB

Why Customer Centric? • Traditional Innovation is Broken • Competition is Changing • There‟s not much to be done at retail anyway

Why Customer Centric? Quiz: Which % of innovations fail? 97% FUTURELAB

Why Customer Centric? WHO COMPETES WITH MARS? CONSUMER PERSPECTIVE FUTURELAB

WHY CUSTOMER-CENTRIC? FORMAT INNOVATION IS LIMITED FUTURELAB

Why Customer Centric? • Traditional Innovation is Broken • Competition is Changing • There‟s not much to be done at retail anyway FUTURELAB

FUTURELAB CUSTOMER CENTRIC RETAIL INNOVATION Customer Centric Retail Innovation WHAT ABOUT THE CUSTOMER?

REMARKABLE FUTURELAB

FUTURELAB Apple Retail 2001 Sorry Steve, Apple Stores Won‟t Work (Business Week) Apple Retail 2004: Watch video on Fastest retailer ever to reach the http://www.youtube.com/watch?v= $1 billion mark a year m-Y7vZMEPrU Apple Retail 2006 Fastest retailer ever to reach $1 billion/quarter mark Apple Retail 2007 Sales per sq.meter = $ 30,176 (as comparison: BestBuy = $10,643) HOW DID THEY DO IT?

DRIVERS FOR RECOMMENDATION IN ICT Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008 FUTURELAB

• Careful segmentation and focus on students, educators and creative professionals (even now consumer appeal broadens) • A retail experience differentiated by service before, during and after sales (Genius bar) • Scenario or lifestyle Marketing & Sales vs. Product « What do you want to do ? » • Style & design THE RESPONSE Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008 FUTURELAB

BREAKING ALL THE RULES • No commissions • Team bonuses • Focus on experience • Fashion & design people to run computer retail • Hire for personality, attitude and customer fit … train the rest Ron Johnson • High identification: Tshirts, iPod, discounts, … Target • 3 week immersion at start of job ONLY on customer relationship skills and understanding customer needs/lifestyle • All product training is online (except geniuses) • Training on store computers or borrowed MickeyDrexler laptop The Gap FUTURELAB

RESULTS Apple: 2007 Net Promoter Performance and 5 Year Trend vs. Overall B2C High Tech Computer Hardware Manufacturers FUTURELAB Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008

RESULTS Total Customer Value of an Apple advocate is almost twice that of the industry average FUTURELAB Source: Net Promoter ™ Economics: the Impact of WOM, Satmetrix, 2008

Revenue Growth % 2007 vs 2008 Source: Fortune Magazine, May 5,2008 24,3 13,8 8,4 6,5 6,2 5,5 0,8 HP Dell Apple Xerox Sun NCR Pitney Bowes RESULTS FUTURELAB

HOW ABOUT YOU? 5 To Customer Centric Retail Innovation steps FUTURELAB

Image by : Zombiefactory, CC-license 2.0 #1 TAKE THE CUSTOMER PERSPECTIVE FUTURELAB

HOTSPOT HOTSPOT Building Use & Awareness Purchase Repurchase Loyalty Advocacy Preference Service THE CUSTOMER JOURNEY – BRAND/RETAIL PERSPECTIVE FUTURELAB

Flipchart Time Which are the steps in the customer journey when booking a holiday? How could you innovate on them? THE CUSTOMER JOURNEY CUSTOMER PERSPECTIVE FUTURELAB

THE CUSTOMER JOURNEY CUSTOMER PERSPECTIVE 1. I dream of going on holiday 2. I research my holiday 3. I plan my holiday 4. I select my holiday 5. I purchase my holiday 6. I receive travel documents & tickets 7. I anticipate departure 8. I prepare my trip 9. I travel to my destination 10. I discover my destination 11. I experience my destination 12. I record my memories 13. I share my experience How Can You Innovate Now? 14. I travel back home 15. I share my memories LVMH - AOL Time Warner UBS - Richemont FUTURELAB

THE CUSTOMER JOURNEY CUSTOMER PERSPECTIVE How About You? TRAVEL CARS BANKING FOOD Photo Nils Bremer, cc. 2.0 FUTURELAB

FUTURELAB Photo: Joeannenah, cc: 2.0 #2 GET THE CUSTOMER HEARTBEAT

1. I dream of going on holiday 2. I research my holiday WHAT DO YOUR CUSTOMERS 3. I plan my holiday REALLY CARE ABOUT? 4. I select my holiday 5. I purchase my holiday 6. I receive travel documents & tickets 7. I anticipate departure 8. I prepare my trip WHICH EMOTIONS ? 9. I travel to my destination 10. I discover my destination ARE ALL EMOTIONS EQUALLY STRONG? 11. I experience my destination 12. I record my memories 13. I share my experience 14. I travel back home 15. I share my memories FUTURELAB

FUTURELAB BUT DON’T JUMP TO CONCLUSIONS … THINK SCENARIOS

#3 FOCUS YOUR EFFORTS FUTURELAB

WHERE SHOULD YOU FOCUS? FUTURELAB

FUTURELAB WHICH IS THE EASIEST PATH TO WALK? Photo: StuSeeger, cc 2.0

AIRLINES BANKS COMPUTERS INNOVATORS SEEM TO DISAGREE PHARMA UTILITIES PROCESSED FOOD Source: The Doblin Group FUTURELAB

THIS ALSO APPLIES TO CUSTOMER CENTRIC INNOVATION 1. I dream of going on holiday 2. I research my holiday 3. I plan my holiday 4. I select my holiday 5. I purchase my holiday 6. I receive travel documents & tickets 7. I prepare my trip 8. I travel to my destination Observation 9. I discover my destination Most of the travel 10. I experience my destination industry focuses on 11. I record my memories those areas which have 12. I share my experience least or most negative 13. I travel back home emotional involvement 14. I share my memories FUTURELAB

DEBATE: ARE YOU A PENGUIN? FUTURELAB

CROSS YOUR INNOVATION LANDSCAPE WITH THE CUSTOMER ENGAGEMENT High Opportunities for Areas to keep up meaningful or stay ahead Customer Engagement differentiation Copy when Look at the niches proven only Low Low Innovation Intensity High FUTURELAB

#4 MAKE SURE YOUR PEOPLE ARE WITH YOU FUTURELAB

perception 80% of CEO‟s believe of believe their brand provides a superior customer experience 8 % of their customers agree (Bain & Company) FUTURELAB

Watch video on: http://www.youtube.com/watch?v=xa aAYVUWP0I We show that we value our customers by serving them well, putting their needs and interests at the center of everything we do. (from the AOL mission statement) FUTURELAB

BAD EMPLOYEE? FUTURELAB

FUTURELAB ONLY 5% OF THE WORKFORCE UNDERSTANDS THE STRATEGY (when innovating this gets even worse). Source: Norton, D. Aligning your Strategy to the Customer Value Proposition, 13/9/2005

WHILE THEY NEED TO DELIVER THE RETAIL (INNOVATION) PROMISE. FUTURELAB

76% of consumers don‟t believe that companies tell the truth in advertisements Yankelowich,2006 FUTURELAB

FUTURELAB BUT PEOPLE TYPICALLY DON‟T HAVE “EMOTION MANAGEMENT” IN THEIR JOB DESCRIPTION

WHEN YOU INNOVATE, TRANSLATE INTO 6 DIRECTIONS Remarkable Practice: Gemalto

FUTURELAB Remarkable Practice: Gemalto

#5 START SWIMMING YOU FUTURELAB

5 To Customer 1. Take the Customer Perspective Centric Retail 2. Get the Customer Heartbeat Innovation 3. Focus Your Efforts 4. Make Sure your People Are With You steps 5. Start Swimming FUTURELAB

AND DON’T FORGET TO STEAL WITH PRIDE

AND THEN WE WERE GOING TO HAVE A WORD ABOUT POP Systems Online FUTURELAB

THOUGHTS ON DIGITALLY AUGMENTED RETAIL FUTURELAB

Internet Mobile In-store Digitally Augmented Retail THREE PRACTICAL OPPORTUNITIES FUTURELAB

“Out of 35 European premium brand dealers 2007 Retail Study for Customer Focused Excellence (N = 300 large online retailers) only 1 responded to an email enquiry from their • 61% do not offer any information on the product page regarding own website … after 2 in-stock availability weeks” • 38% of sites have difficult to read fonts • Only 58% correctly answer an e-mail question within 24 hours • Only 33% offer customer reviews. • 24% do not allow customers to enlarge the product image Source: FutureNow, 2007 INTERNET IF YOU PLAY, GET THE BASICS RIGHT FUTURELAB

Hi Joel, Sorry if we weirded you or your friend out by US Online Review Users Identifying Review as following you on twitter. @JetBlue isn‟t a bot, it‟s merely me and my team keeping our ears to the Having Significant Influence on their Purchase ground and listening to our customers talk in open forums so we can improve our service to them. It‟s Category % not marketing, it‟s trying to engage on a level other than mass broadcast, something I personally Restaurant 79% believe more companies should try to do. Hotels 87% Because corporate involvement in social media is a Travel 84% new and evolving discipline, I also take a specific interest on conversations revolving around our role Automotive 78% here. I‟d have DMd you and Lisa directly if you allowed DMs, so please also forgive me for following Home 73% the link on your twitter page here to send you this note. Medical 76% You and Lisa are no longer being „followed‟ as you seem to indicate. Legal 79% Again, my apologies Source: Comscore Inc., the Kelsey Group, Oct. 2007 Morgan Johnston Corporate Communications JetBlue Airways INTERNET LISTEN AND REACT FUTURELAB

FUTURELAB KEEP IT SIMPLE ON THE MOBILE FRONT On-Demand SMS push Location Based Push ! RELEVANCE PERMISSION INFORMATIONAL (PART OF EXPERIENCE) PROMOTIONAL

IN-STORE INSPIRATION Watch video on http://www.youtube.com/watch?v=gQBFaVfBi9w&feature=related# FUTURELAB

WATCH THE CONTENT Queen‟s Arcade (Cardiff) McDonalds Amsterdam Veritas Antwerp INSTORE LESSONS IN NARROWCASTING FUTURELAB

ROMANIA IS ON THE VERGE OF SOMETHING BIG Turnover of Retail Trade in Romania 2001-2007, 2010 (€ billions) COPY MODIFY CREATE DEGREE OF INNOVATION FUTURELAB

THOSE WHO INNOVATE WIN FUTURELAB

FUTURELAB GO !!

FUTURELAB For more information contact Alain Thys via info@futurelab.net Or read up on the Futurelab blog at: http://blog.futurelab.net

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Customer Centric Retail Innovation - Bucharest May 29, 2008

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