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Smarter Planet: Retail
 

Smarter Planet: Retail

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To survive in today’s changing retail environment, smart organizations are working to optimize their (1) Shopping experience, (2) Operations, (3) Merchandizing and supply chain.

To survive in today’s changing retail environment, smart organizations are working to optimize their (1) Shopping experience, (2) Operations, (3) Merchandizing and supply chain.

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    Smarter Planet: Retail Smarter Planet: Retail Presentation Transcript

    • George Mattathil4/20/2011Let’s Build a Smarter Planet:Retail © 2009 IBM Corporation
    • Building a smarter planetThe reality of living in a globally integrated world is upon us. Economic downturn and future uncertainty. Frozen credit markets and limited access to capital. Increasingly complex supply chains and empowered customers. Emerging economies offering new markets for growth. Market conditions forcing consumers everywhere to alter spending habits.The world is connected:economically, socially and technically. © 2009 IBM Corporation
    • Building a smarter planetThe need for progress is clear.91% $1.2 trillion $93 billionCustomers spending Value of excess Total sales missedless in some merchandise each year becausediscretionary areas. stockpiled in supply retailers don’t haveApproximately 59% of chains configured for the right productscustomers have less long lead times— in stock to meetdiscretionary budget forcing retailers customer demand.than last year. to make significant bets on inventory. © 2009 IBM Corporation
    • Building a smarter planetThe opportunity for progress is clear.50% increase 15% 92.5%in conversion reduction in less orderrates time and cost lead timeIntegrated experience: Smart tracking: Real-time information:Moosejaw Metro YanshaMoosejaw created a truly By implementing RFID Yansha implementedseamless shopping item-level tracking, Metro a real-time informationexperience across the was able to reduce the time platform to provideWeb, stores and mobile and cost of receiving goods transparency into supplydevices, increasing from the warehouse by chain business processesconversion rates up 15%. and reduce order lead timeto 50%. from 2.5 days to 4.5 hours. © 2009 IBM Corporation
    • Building a smarter planetMeanwhile, in the new economy, shoppers are looking to connectwith retailers that they trust. OPERATIONAL COMPETENCIES21% to 38% High Quality Store ExperienceCustomer Advocacy nearly doubled Convenience ADVOCATE VALUEfrom 2007 to 2008. Product Availability Assortment3.1Consumers will move to a new retailer after Price/Promotion Customer Service Multichannel Low3.1 negative experiences. Advocates indicate that quality, store experience and convenience are most important. Source: IBV NRF 2009; n= 30,000 © 2009 IBM Corporation
    • Building a smarter planetFor retailers, this means effectively responding to drivers infour key areas.GLOBAL ECONOMY COMPETITION AND REGULATION Financial crisis  Industry consolidation Credit crunch  New business models Unpredictable oil and commodity prices  Increasing protectionism Growth market slowdown Product and food safety Environmental concernsCONSUMER BEHAVIOR TECHNOLOGY Decreased spending ability  Historical underinvestment in IT Savvy and informed  Pervasive connectivity and mobile devices Job insecurity and falling real estate prices  Security and compliance © 2009 IBM Corporation
    • Building a smarter planet In the face of a radically transformed economy, retailers are under pressure to retain and build customer loyalty while at the same time cutting costs and streamlining operations. Their success will require innovative business models that rely on real-time insights to meet customers’ changing demands and expectations. © 2009 IBM Corporation
    • Building a smarter planetTo survive in today’s changing retail environment, smartorganizations are working to optimize their… SHOPPING EXPERIENCE MERCHANDISINGEnable customers to shop however, AND SUPPLY CHAIN whenever and wherever they want. Gather customer information Match inventory and brand continuously and at every touch point. experience on the Web, in stores Manage and deliver assortments and via mobile devices. RETAIL based on customer input and insights. OPERATIONS Update systems to better handle today’s customer demands. Improve management across labor, assets and business processes. © 2009 IBM Corporation
    • Building a smarter planet + + = An opportunity for retailers to think and act in new ways. Deliver a smarter Develop smarter Build smarter shopping experience. merchandising and operations. . supply chains. © 2009 IBM Corporation
    • Building a smarter planetRetail:Delivering a smarter shopping experience.SMART IS SMART ISEnabling customers to shop seamlessly Developing promotions that areacross touch points and brands. personalized—and timely.SMART IS SMART ISPutting payment and loyalty cards at An exchange of advice among friendsthe tips of customers’ fingers—literally. and strangers. © 2009 IBM Corporation
    • Building a smarter planetRetail:Delivering a smarter shopping experience.1-800-FLOWERS: Is tearing down the walls Carrefour: Implemented a groundbreaking in-storebetween its 14 brands through a flexible Web promotion system across its supermarket andplatform that lets the company respond to hypermarket stores that enables the planningcustomer needs faster and more efficiently. and execution of targeted campaigns to achieve enhanced customer loyalty.Gewandhaus Gruber: Launched the first Moosejaw:Is giving customers a seamless shoppingfingerprint-identification-based loyalty and experience across the Web, storespayment method in Germany, allowing club and mobile devices while infusing customermembers to conveniently pay for items and feedback and reviews back into a systemreceive loyalty incentives. designed to continuously improve products and customer experiences. © 2009 IBM Corporation
    • Building a smarter planetRetail:Developing smarter merchandising and supply chains.SMART IS SMART ISReducing order lead times from days Manufacturing the right numberto hours. of a trendy item to fulfill real-time customer demand.SMART IS SMART ISKnowing exactly where your Dynamically allocating inventorymerchandise is as it moves from the based on real-time customer demandmanufacturer to the customer. and inventory constraints. © 2009 IBM Corporation
    • Building a smarter planetRetail:Developing smarter merchandising and supply chains.Yansha: is leveraging a first-of-a-kind, real-time Max Bahr: Built a dynamic system that helpsperformance information system that provides to determine optimal inventory levels based ontransparency into supply chain processes to reduce inventory constraints, demand patterns andorder lead times, improve order accuracy and boost customer service levels.order acknowledgement rates. Metro: Uses RFID technology throughout its supply chain to help get the merchandise customers want onto the shelves right when they want it. © 2009 IBM Corporation
    • Building a smarter planetRetail:Building smarter operations.SMART IS SMART ISUnderstanding sales trends in real time Quickly consolidating new acquisitionsand adjusting inventory and promotions into an existing brand as well asaccordingly. existing processes and systems.SMART IS SMART ISReducing overall operating costs Never allowing customer data to bewhile deploying new customer breached or compromised.services more quickly. © 2009 IBM Corporation
    • Building a smarter planetRetail:Building smarter operations. Co-op Group UK: Deployed energy efficient point- Elie Tahari: Built a business intelligence and of-sale that automatically powers down after end of performance management platform that helps day processing, resulting in savings of 1.68 million match products to real customer demand. kilowatt hours of electricity per year and 120K GPB in annual savings. Rocky Mountain Chocolate Factory: Enhanced insight into financial and inventory performance by integrating point-of-sale and core systems, resulting in improved staffing schedules, sales and profitability. © 2009 IBM Corporation
    • Building a smarter planet Forward-thinking retailers will fundamentally reshape their business models to cut costs and boost efficiencies while focusing on the high-value areas of merchandising and customer experience. Product Availability Price/ Assortment Promotions Human Resources MERCHANDISING Call Centers Quality BACK OFFICE KEY IT COMPETENCIES FUNCTIONS Customer Service IndirectProcurement CUSTOMER Finance and EXPERIENCE Accounting Convenience Multichannel Store Experience Source: IBM, "Shopper advocacy: Building consumer trust in the new economy" © 2009 IBM Corporation
    • Building a smarter planet These retailers will use multiple channels to gather real-time customer insights, which they will share with partners, suppliers and manufacturers to drive product development. SUPPLY CHAIN Product Availability Price/ Assortment Promotions Human Resources MERCHANDISING Call Centers Quality BACK OFFICE KEY IT COMPETENCIES FUNCTIONS SHOPPING CHANNELS Customer Service IndirectProcurement CUSTOMER Finance and EXPERIENCE Accounting Convenience Multichannel Store Experience Information Flow Source: IBM, "Shopper advocacy: Building consumer trust in the new economy" © 2009 IBM Corporation
    • Building a smarter planet This will enable them to deliver the optimal products and customer experience—at the right prices and in weeks instead of months. SUPPLY CHAIN Product Availability Price/ Assortment Promotions Human Resources MERCHANDISING Call Centers Quality BACK OFFICE KEY IT COMPETENCIES FUNCTIONS SHOPPING CHANNELS Customer Service IndirectProcurement CUSTOMER Finance and EXPERIENCE Accounting Convenience Multichannel Store Experience Information Flow Product Flow Source: IBM, "Shopper advocacy: Building consumer trust in the new economy" © 2009 IBM Corporation
    • Building a smarter planetTo deliver on this vision of the retail future, smart organizations arefocusing on three imperatives… SHOPPING EXPERIENCE MERCHANDISINGEnable customers to shop however, AND SUPPLY CHAIN whenever and wherever they want. Gather customer information Match inventory and brand continuously and at every touch point. experience on the Web, in stores Manage and deliver assortments and via mobile devices. RETAIL based on customer input and insights. OPERATIONS Update systems to better handle today’s customer demands. Improve management across labor, assets and business processes. …supported by a dynamic infrastructure. © 2009 IBM Corporation
    • Building a smarter planetRetailers require an infrastructure that can propel the businessforward while improving service, reducing cost and managing risk. Mobility Facilities Supply Chain Technology Communications Infrastructure Infrastructure Infrastructure Infrastructure Infrastructure + + + + We need a dynamic infrastructure. © 2009 IBM Corporation
    • Building a smarter planet Dynamic Infrastructure…  Enables visibility, control, and automation across the retail value chain.  Enables retailers to make better decisions on how to service customers … and enables the consumer to make better decisions on purchases.  Helps address the growing information challenge in retail.  Is highly optimized to drive operational efficiency.  Leverages flexible sourcing like clouds.  Manages and mitigates risks by ensuring availability, security and regulatory compliance. …delivers superior business and IT serviceswith agility and speed. © 2009 IBM Corporation
    • Building a smarter planetDynamic Infrastructure: The foundation to accelerate thetransformation toward making smarter systems for retail.  Monitor business and IT asset performance to meet service objectives withservice managementsolutions.  Manage all types of assets – IT, stores, warehouses, fleet - on a common platform withasset managementsolutions. Deliver a smarter shopping  Create aninformation infrastructureto manage, backup, store experience. and protect significant volumes of customer and transactional data. Develop smarter  Provide a secure andresilient environment that monitors for merchandising and physical attacks and prevents cyber attacks to minimize system supply chains. interruptions. Build smarter  Implementsecuritysolutions to meet payment card industry data operations. security standard (PCI DSS) regulations.  Improve and manage theenergy efficiencyof the stores and data centers, their assets and HVAC, and align energy usage with business goals.  Use virtualizationand cloud computing to improve workload management for faster business service delivery. © 2009 IBM Corporation
    • Building a smarter planetThe imperative for retailers is threefold. 1 2 3 Focus on Value: Exploit Opportunities: Act with Speed:Deliver a smarter  Customer security  Increase loyalty  Clearly communicateshopping and confidence  Invest in growth plays  Get the information to actexperience.  Improve efficiency  Protect and acquire talent  Business performance management and analyticsDevelop smarter  Optimize Supply Chain  Explore New Operating  Get the information to actmerchandising and  Rationalize Assortments Models  Manage businesssupply chains.  Renegotiate terms  Consider Global Expansion performanceBuild smarter  Reduce SG&A costs  Focus on winners  Clearly communicateoperations.  Improve efficiency  Invest in growth plays  Leverage experience  Renegotiate terms  Explore new operating  Set the agenda models  Manage risk  Look at acquisitions and alliances © 2009 IBM Corporation
    • Building a smarter planetIBM’s offering portfolio is aligned with the needs of retailers. RETAILERS ARE FOCUSED ON… IBM IS DELIVERING… Delivering a smarter  Next-generation  Marketing and shopping experience e-commerce campaign management  Single view of customer  Checkout and  Cross-channel order self-service management  Customer analytics Developing smarter  Integrated planning  Integrated supply chain merchandising and  Product information  Business process supply chains management management  Core merchandising  Merchant and SC dashboards Building smarter operations  IT outsourcing  BPO: call center, F&A,  Application management indirect procurement services  Energy performance  Store management management services  Retail security © 2009 IBM Corporation
    • Building a smarter planet We’ve only just begun to uncover what is possible on a smarter planet. The world will continue to become smaller, flatter and smarter. We are moving into the age of the globally integrated and intelligent economy, society and planet. By building intelligence into our entire retail system, retailers, manufacturers and suppliers can eliminate inefficiency and waste at every step of the chain— crucial in the current economic downturn. More importantly, retailers can better serve the new breed of empowered consumer, whose needs for high value, individual service and low prices will only grow. Lets work together to drive real progress in our world. © 2009 IBM Corporation
    • Building a smarter planetTrademarks and notes IBM Corporation 2011  IBM, the IBM logo and ibm.com are registered trademarks, and other company, product or service names may be trademarks or service marks of International Business Machines Corporation in the United States, other countries, or both. A current list of IBM trademarks is available on the Web at ―Copyright and trademark information‖ at www.ibm.com/legal/copytrade.shtml  Adobe, the Adobe logo, PostScript, the PostScript logo, Cell Broadband Engine, Intel, the Intel logo, Intel Inside, the Intel Inside logo, Intel Centrino, the Intel Centrino logo, Celeron, Intel Xeon, Intel SpeedStep, Itanium, IT Infrastructure Library, ITIL, Java and all Java-based trademarks, Linux, Microsoft, Windows, Windows NT, the Windows logo, and UNIX are trademarks or service marks of others as described under ―Special attributions‖ at: http://www.ibm.com/legal/copytrade.shtml#section-special  Other company, product and service names may be trademarks or service marks of others.  References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates. © 2009 IBM Corporation