International Management Consulting
Is there any future for physical distribution ?
July 3rd 2013
Cédric Foray +33 6 70 77...
2© 2013
Greenwich Consulting is a top 10 international management consultancy with
a sector-based approach, leveraging cli...
3© 2013
Greenwich Consulting has conducted a prospective cross-sector study on
the evolution of physical distribution
Meth...
4© 2013
4 key trends will make traditional distribution evolve towards the 2020
horizon
Taking into consideration
the evol...
5© 2013
What has changed in the last 8 years?
Source(s) : AP, NBC News, 2013
6© 2013
How customers judge a successful customer experience? New reference of
excellence, induced by the Digital
Personal...
7© 2013
The development of Showrooming accentuates the threat of e-commerce
towards physical distribution
18% 17%
24%
5%
4...
8© 2013
The digitalization of POS should be part of an overall strategic approach to
choose the most relevant and useful l...
9© 2013
The success of “Audi City” in London illustrates the need to propose a
digital consistent experience between the s...
10© 2013
POS Digitalization answers 4 major issues
Inform consumers about the products they are interested in
even if not ...
11© 2013
The Omni-channel distribution offers an identical and homogenous
experience to the client in all channels
Approac...
12© 2013
The Kooples proposes to reserve items in the preferred store from the
website and then to live an unique in-store...
13© 2013
Second trend: Hyper-personalization at the center of an Omni-channel
Distribution
Taking into consideration
the e...
14© 2013
In order to ensure clients have a unique in-store experience, retailers
will develop customized offers and hyper-...
15© 2013
“My Sephora” enables salespersons to identify customers with their
loyalty card to tailor their recommendations a...
16© 2013
Third trend: POS reinvention in order to achieve a complete brand experience
with consumers
Taking into considera...
17© 2013
Some companies have already reinvented their physical store concept
Stores as entertainment areas Stores as advic...
18© 2013
Beyond the transformation of POS concepts, sales force profiles and
financing of physical spaces should be rethou...
19© 2013
Forth trend: integration of a new distribution network structure to create a
unique experience in physical stores...
20© 2013
Different types of physical spaces will coexist to meet the various
customer needs
Sources : Analysis Greenwich C...
21© 2013
Retail business model will evolve
Omni-channel
development
New store concepts
and new network
capilarity
The valu...
22© 2013
Our three main conclusions from this study
Physical stores will keep a prominent place in the distribution for br...
23© 2013
Greenwich Consulting supports distribution players on 8 key issues
Customer behavioural
observatory
Analysis of c...
Your personal contacts:
International Management Consulting
Cedric Foray – Managing Partner Paris office
Mobile: +33 6 70 ...
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Is there any future for physical distribution?

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Cedric Foray, managing partner of our Paris office and our top expert in Distribution was in Lisbon in the Mobile Forum Portugal 2013, organized by APDC, to share his vision regarding the main distribution trends and their connection to the digital arena.

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Is there any future for physical distribution?

  1. 1. International Management Consulting Is there any future for physical distribution ? July 3rd 2013 Cédric Foray +33 6 70 77 28 79 Mobile Forum Portugal 2013
  2. 2. 2© 2013 Greenwich Consulting is a top 10 international management consultancy with a sector-based approach, leveraging clients growth Thanks to this differentiation, Greenwich Consulting is a unique success story in Europe, with a 35% CAGR in revenue over the last 10 years Key differentiation aspects Our focus allows us deep industry insights and a precise understanding of the challenges ahead Sector-based approach Key differentiation aspects Our focus and proximity with our clients enable us to deliver actionable insights for value creation Strategy into actionStrategy into actionInternational Footprint We have experience and credentials in more than 80 markets, more than 120 clients and a global perspective International Footprint Telecommunications Energy Financial Services Media
  3. 3. 3© 2013 Greenwich Consulting has conducted a prospective cross-sector study on the evolution of physical distribution Methodology Objectives of the study • How will digital impact distribution further? • What will be the salesperson’s role in store (assistance, advice, sales, etc.)? • Which client actions will be prominent in stores? • Which client actions will be deported on other channels like the web? • Which positioning of the distribution network by 2020? • What are the associated concepts? • How many points of sales by 2020? • Which technologies in your POS to support/ accompany clients? • Which interactions and management rules between the web and physical stores? • Which key customer journeys? Key questions • Interviews of 20 large groups in different sectors: - Telecommunications - Banking - Optical - Automotive - Retail - Shopping centers - Design agencies • Country scope: - France - Germany - Northern America • Identification of a common vision of distribution market trends and which future outline by 2020 • Collect the strategic areas of development of the distribution in 2020, including the following topics: - Digitalization of the POS - Point-of-sales (POS) objectives - Role in the client relationship - Size and capillarity of the physical distribution network • Go beyond sectorial trends and find common perspectives shared by different actors of distribution with the 2020 horizon
  4. 4. 4© 2013 4 key trends will make traditional distribution evolve towards the 2020 horizon Taking into consideration the evolution of client behavior and expectations, the POS will become digital and distribution will become Omni-channel 1 2 3 4
  5. 5. 5© 2013 What has changed in the last 8 years? Source(s) : AP, NBC News, 2013
  6. 6. 6© 2013 How customers judge a successful customer experience? New reference of excellence, induced by the Digital Personalization The offers that suit me Autonomy I drive the level of support that I want Consistency of the points of contact My interaction with the brand (commercial, services) make SENSE in cross-channel, multi-channel, inter-channel,… Multi-screens I can find my services in each one of my screens Socialization What the brand says to me isn't enough The unpredictable Omni-channel The augmented meeting The benevolent Big Data The new client expectations Impacts for Companies
  7. 7. 7© 2013 The development of Showrooming accentuates the threat of e-commerce towards physical distribution 18% 17% 24% 5% 45% 72% OtherEasier to order online Prefers home deliveries than bringing Out of stock in physical store To see the products before purchasing online Better prices online Price difference and product testing are the main motivations for Showroomers1 • Flexibility and convenience issues in relation to consumer wishes • Issue of capillarity and strategy of the distribution network Nearly half of customers have already experienced Showrooming 40%43% 7% Use their Smartphones in stores to compare prices Have already purchased a product online after having tested in a physical store Declaring themselves as Showroomers Casual Showroomers US consumers that answered “Yes” to the statements, (% within a representative panel of consumers in 2012) Regular and convinced Showroomers Showrooming is defined by a visit from a consumer to the physical POS to collect product information (price, fitting, counseling), followed by online shopping in order to find the lowest price (1) % of consumers who already tested Showroomin Sources : Access Panel LaSer from L’Echangeur, Nielsen, Harris Interactive, comScore
  8. 8. 8© 2013 The digitalization of POS should be part of an overall strategic approach to choose the most relevant and useful levers Different levers used in the process of making digitalization reflected as useful and ergonomic • « Audi City » is a concept of de digital auto dealer that offers clients the opportunity to choose and customize their vehicle in an interactive touch screen Interactive screens • Paypal has created physical solutions of QRCode payment • Tesco proposes in South Corea to do shopping in the metro stations via QRCode panels Usage of QRCodes • Apple offers a self-checkout in its Apple Stores : scan of a code bar with an iPhone and direct payment with the iTunes account Self service and simplified payment • Auchan has integrated into its mobile apps geo-targeted promotions geo (geo-referencing) addressed to users closest to a given supermarket Brand loyalty • Some Grosbill stores enable ordering and paying the purchases on interactive kiosks with direct access to the online store Extensions of product ranges • Vodafone UK installed in its stores interactive kiosks allowing customers to do simple customer care operations Vending machines and kiosks
  9. 9. 9© 2013 The success of “Audi City” in London illustrates the need to propose a digital consistent experience between the store and the web The interior of “Audi City” is a beautiful place with 4 wide-screens, 4 tactile interactive tables and private rooms Each table is disposed in front of the wide screen which shows instantly a 3D model of the personalized car that visitor is “creating”. They can also show videos of car models. All the material for customization of the vehicle are available in samples so that the clients can make an informed decision Customers leave the store with an Audi USB key containing the project they created , in order to continue their buying experience at home via the web channel
  10. 10. 10© 2013 POS Digitalization answers 4 major issues Inform consumers about the products they are interested in even if not shown in the catalogue or shelf 1 Encourage consumers to purchase independently of the channel used to finalize the sale2 Enhance the value proposition of the store and provide immersive experiences around the product and the brand 3 Facilitate the salesperson access to customer data and trace the customer journey, via dedicated tools in the store, to simplify the buying process and make them live an unique experience 4
  11. 11. 11© 2013 The Omni-channel distribution offers an identical and homogenous experience to the client in all channels Approach in silos • Same process and same message in independent channels • Each service request has to start, proceed and finish in the same channel • No opportunity to resume process on other channels (no references in other channels) Channel Management Multi-Channel Integrated approach • Consumers live the same experience through all the channels • All channels are equivalent offering the same information and service levels and no discrimination is made between them. • Consumer can switch channel at any moment of his purchase process, based on his convenience (smooth and seamless experience) Omni-Channel CALL CENTER STORE INTERNET MOBILE Cross-Channel Connected approach • Consumers have an experience within interacting channels • Consumer is encouraged to navigate between channels via the offer of other options(e.g. : click-to- call) • It is a tailored approach aiming to target the most accurate consumer segments for each channel • Example Online buying, in-store delivery CALL CENTER STORE INTERNET MOBILESTORE INTERNET CALL CENTER MOBILE
  12. 12. 12© 2013 The Kooples proposes to reserve items in the preferred store from the website and then to live an unique in-store experience Possibility to book the products directly in a store from the website of The Kooples Stock visibility of each store in lists or maps via geo- referencing of the consumer Monitoring the booking process through SMS Each reservation is valid for 2 business days When the consumer arrives in store to withdraw the order, the seller invites him to try the clothes and offers complementary products
  13. 13. 13© 2013 Second trend: Hyper-personalization at the center of an Omni-channel Distribution Taking into consideration the evolution of client behavior and expectations, the POS will become digital and distribution will become Omni-channel Hyper-personalization will be developed in the center of Omni-channel placing companies closer to client needs 1 2 3 4
  14. 14. 14© 2013 In order to ensure clients have a unique in-store experience, retailers will develop customized offers and hyper-personalized interactions The hyper-personalization induces the transition from a logic of "knowledge of my clients" to the "knowledge of each of my clients“, where the overall vision is taken over by a very refined granular level of the individual Customizing the final product or service Customizing communication with the client Customizing the content pushed after-sales Customizing the client relationship Customization along all the client lifecycle 21 4 3
  15. 15. 15© 2013 “My Sephora” enables salespersons to identify customers with their loyalty card to tailor their recommendations and product suggestions • « My Sephora » is a cross-channel digital tool available to Sephora’s sales representatives • 8 000 000 online client profiles clients can be accessed online through ipod touch by sales reps to identify customers with a loyalty card and access their purchase history • The salesperson can propose new products based on cloud-powered recommendations and chooser whether the clients likes the product or not in order to update the profile • The experience has been deployed in over 200 stores in France, making an average upsell increase of 20% to 30% on clients bills
  16. 16. 16© 2013 Third trend: POS reinvention in order to achieve a complete brand experience with consumers Taking into consideration the evolution of client behavior and expectations, the POS will become digital and distribution will become Omni-channel Hyper-personalization will be developed in the center of Omni-channel placing companies closer to client needs POS will be reinvented in order to accomplish a true brand experience with consumers 1 2 3 4
  17. 17. 17© 2013 Some companies have already reinvented their physical store concept Stores as entertainment areas Stores as advice and services areas Stores as demonstration areas Bass Pro transformed its stores into « experience centers » where clients can eat and train for climbing and shooting IKEA Customers can create their kitchen online by themselves and then get help and advice in store using their project reference Apple stores enable customers to access freely to the products and try them
  18. 18. 18© 2013 Beyond the transformation of POS concepts, sales force profiles and financing of physical spaces should be rethought • New profiles and competencies will be required from sales forces to be able to demo products, communicate their passion, make customers live a unique in-store experience - The commissioning model must be rethought to take these new roles into account as well as Omni-channel client journeys • The physical sales area must also be rethought as an opportunity to address customer relationship and to provide brands with communication space - A larger part of the communication and the customer relationship budgets should be directed to stores and integrated into their revenues - A better balance should be reached with brands to finance physical vitrines of their products Salespersons profiles Financing of physical stores
  19. 19. 19© 2013 Forth trend: integration of a new distribution network structure to create a unique experience in physical stores Taking into consideration the evolution of client behavior and expectations, the POS will become digital and distribution will become Omni-channel Hyper-personalization will be developed in the center of omni-channel placing companies closer to client needs POS will be reinvented in order to accomplish a true brand experience with consumers A new structure for the distribution network and physical stores will be put in place, creating a unique POS experience 1 2 3 4
  20. 20. 20© 2013 Different types of physical spaces will coexist to meet the various customer needs Sources : Analysis Greenwich Consulting + –Point of Sales area Relay points Proximity stores Large stores Experience Centers & Flagships Stores Services Customer’s perception of brand • Product pick- up and deposit • Product Sale • Product pick- up and deposit • Service Center • Product Sale • Product pick- up and deposit • Experience creation • Product demonstration A brand that generates excitement A brand that takes care of its customers A brand close to its customers A brand that makes its customers life easier Pop-up and Virtual Stores Dynamic brand that is close to its customers • Very limited range of products
  21. 21. 21© 2013 Retail business model will evolve Omni-channel development New store concepts and new network capilarity The value of catchment areas will be reviewed Physical distribution’s role will need to be reinforced in the brand’s communication strategies • Pressure on revenues generated per square meter in physical stores • Pressure on lease costs • Opportunity to regain leverage opportunities on margins • Value and develop further the brand’s exposure • Drive customer awareness on shop windows in the long run Increasing in-store client relationship management for certain brands Increased objectives of client relationship in-store vs. pure sales objectives • More assistance-oriented and advice-giving persons • New and adapted models of remuneration • Uncontrolled distribution models (franchise, associate) will be put into question
  22. 22. 22© 2013 Our three main conclusions from this study Physical stores will keep a prominent place in the distribution for brands, in order to show and demo their products as well as have customer live unique experiences with the brands 1 Digitalization is an opportunity for brands in terms of product promotion and building a closer relationship with customers in physical stores 2 The business model of physical stores must be rethought to face the increasing risk of decreasing sales in POS 3
  23. 23. 23© 2013 Greenwich Consulting supports distribution players on 8 key issues Customer behavioural observatory Analysis of customer traffic among channels and management optimization Customer traffic generation Driving customer until the target channels (Marketing, concepts stores, com.) Channel Excellence Platform Reorganization, Process and Customer journeys optimization Commercial Approach Commercial Approach consolidation on the most effective channel(s) Business Model Optimization Business Model Optimization and geo- marketing, Contract mix optimization Digital Strategy Introduction of digital in points of sales and into customer journeys Global distribution strategies Operational impact 1 2 Network Strategy Definition of target channel mix and capillarity of the network Omni-channel Strategy 3 5 6 7 8 Business Model Business Model Evolution (catchment area, client relationship and sale, communication) 4
  24. 24. Your personal contacts: International Management Consulting Cedric Foray – Managing Partner Paris office Mobile: +33 6 70 77 28 79 e-mail: cedric.foray@greenwich-consulting.com Didier Collignon – Managing Partner Lisbon office Mobile: 351938123693 e-mail: didier.collignon@greenwich-consulting.com Greenwich Consulting | Lisbon Rua Castilho 44 – 10º, 1250-071 Lisboa Tel/Fax : + 351 21 390 92 20 / + 351 21 390 92 22 www.greenwich-consulting.com Follow us:

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