Organizing for Success with Digital Retail

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Retail has changed! Has your enterprise? The retail landscape continues to evolve quickly, driven greatly by the information and options provided to consumers through the digital world (social media, e-commerce, mobility).
• What does this new reality mean to traditional retail functions like merchandising, supply chain, store operations and marketing?
• How are leading retailers adapting their organizations to overcome challenges and leverage opportunities?
• What does the newly empowered consumer mean to your processes and goals?
In this presentation, Kevin O’Marah, Senior Fellow at the Stanford Global Supply Chain Forum, along with Wayne Usie, SVP of Retail at JDA Software, discuss findings from Revolution Retail Industry Survey and highlight threats to traditional retail and learn how retailers are successfully driving change across the enterprise.

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Organizing for Success with Digital Retail

  1. 1. Organizing for Success with Digital Retail
  2. 2. March 27, 2012 #JDAchatOrganizing For Success With Digital Retail Kevin O’Marah Wayne Usie Senior Fellow SVP of Retail Stanford Global JDA Software Group, Inc Supply Chain Forum
  3. 3. AgendaREVOLUTION RETAIL –Organizational Considerations 1) Big changes to retail value chain Stores, supply network, merchandising and brand 2) One organization for all channels FACTORS 3) Converge or integrate processes 4) Leadership demands new talent 5) Transition by design and prepare to adopt new metrics of success Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  4. 4. Projections – eCommerceNear TermJP Morgan Gartner Global $963B by 2013 US $313B by 2015 19.4% CAGR 8.8% of total retail sales US $235B by 2013 UK $86B by 2015 12.4% CAGR 23.6% of total retail salesEuromonitor Forrester Global 90% growth US $249B by 2014 between 2010-2014 $520B Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  5. 5. Stores and eCommercePercentage of Sales via eCommerce3.002.50 Cars and Parts2.00 Furniture + Electronics + Home Improvement1.50 Grocery Drug1.00 Apparel Sports+Media0.50 Miscellaneous0.00 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: US Bureau of Census, 2012 Statistical Abstract Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  6. 6. Non-Stores and eCommercePercentage of Sales via eCommerce40.00 $117B35.00 Cars and Parts30.00 Furniture + Electronics +25.00 Home Improvement20.00 Grocery Drug15.00 Apparel Sports+Media10.00 Miscellaneous $4B Nonstore 5.00 $28B 0.00 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: US Bureau of Census, 2012 Statistical Abstract Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  7. 7. eCommerce Changes thePhysical Network for Retailers…Buy online and pickup in store will be: Buy online and ship from store will be: 1 16 14 39 17 52 32 30 Essential Common Sometimes Rare or Not at all Essential Common Sometimes Rare or Not at all N=115, data collected 12/2011 Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  8. 8. …and the Role of StoresDo you think the physical store in an eCommerce future will be: 4 8 15 More Important Less Important Same, but Different Role 73 N=115, data collected 12/2011 Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  9. 9. …While Offering New Possibilitiesfor Branding & Promotion Brand Loyalty Demand Flexibility 29% 21% 39% 14% 32% 65% Favors Retailer Favors Manufacturer No Change More Receptive to Offers* Less Receptive to Offers* Unchanged Product Choice, Price Point, Availability, Convenience are all jointly delivered by the retailer and the manufacturer Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  10. 10. Marks & Spencer Leads the Way “As well as acting as a distribution centre for stores, the huge warehouse will house the groups e-commerce operation and will also be a base for its international distribution business. It will be one of the biggest buildings in the East Midlands.” Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  11. 11. Fragmented Structures Will Struggle Supply eCommerce Chain Merchandising Ops Store OpsStore Assortment 5% 64% 5% 15%Store Fulfillment 54% 5% 8% 28%Store-to-Store Transfers 37% 5% 5% 37%Store Fulfill Online 16% 0% 16% 34%In Store Kiosk Sales 5% 3% 8% 21%Site-to-Site Transfers 46% 8% 5% 8%eCommerce Assortment 5% 42% 30% 2%eCommerce Fulfillment 42% 0% 25% 2% Source: RSR Research, 2011 Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  12. 12. Consider International Shipping… Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  13. 13. One Supply Chain Organization willSupport eCommerce and StoresDo you expect retail organizations in an eCommerce future to have: Overall Non-Food Large and Small Formats Separate SC Organizations 16% 19% 84% Grocery 81% 50% 50% N=102, data collected 03/2012 Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  14. 14. Convergence or Integration a MustAs eCommerce grows do you expect the roles of supply chain, merchandising andstore operations to: Overall Converge 38% Diverge 49% Remain the Same Integrate, but Remain Separate 3% 10% N=102, data collected 03/2012 Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  15. 15. Multiple Talents Needed to LeadIf these three roles were to come under one head which is best suited to lead allthree? Overall Grocery Merchandising 16% 12% Supply Chain 42% Store 42% Operations 36% 23% Non-Food Large Format 19% 44% 37% 30% N=102, data collected 03/2012 Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  16. 16. Transition to the Future by DesignDo you believe the transition to omni-channel retail is best done: Overall “Integration is mandatory for 7% success across channels and needs to filter down from the C level” Holisitically with merchandising, 25% store ops and supply chain developed as one strategy Gradually with each developing individually and at their own pace Other 68% N=102, data collected 03/2012 Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  17. 17. Most are Prepared for the ChangeAs eCommerce grows from 5% of US sales to 15% do you have: Overall 26% 31% An 18 month strategy to respond A 3 year strategy to respond Both Neither 28% 15% N=102, data collected 03/2012 Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  18. 18. New Metrics are a Chance to Change Do you believe measurements of retail performance will: Overall 25% Remain based on same-store 44% sales growth Change to same-shopper sales growth Develop new metrics not yet in use 32% N=102, data collected 03/2012 Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  19. 19. Summary and ConclusionsREVOLUTION RETAIL –Organizational Considerations 1) Expect to design a new value chain - Stores, supply network, merchandising and brand 2) Build one organization across channels to support this value chain FACTORS 3) Integrate processes from source to sale – think of consumer and shopper as one 4) Find leaders that understand both sales and operations – learn to balance 5) Strategic planning is a must – new metrics may catalyze new behavior Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  20. 20. Join the Conversation on Twitter Connect with Us! @JDASoftware @waynejusie @RTouchPoints @komarah JDA.com │info@jda.com │blog.jda.com Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL
  21. 21. Organizing for Success with Digital Retail

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