Retail 2020 Challenges:
Collaborating for Growth through Supply
Chain Efficiencies
Jeff Holmes
Managing Director, Retail a...
Retail 2020:
Redefining Supply Chain
Collaboration to Drive Growth
www.pwc.com
October, 2013
PwC
So we are going to talk about the
four 3’s today
• Factors changing your business
• Drivers of success in 2020
• Quest...
PwC
3 key factors are dramatically changing your
consumer, your business, your supply chain
5
Big DataDigital
Revolution
I...
PwC
Changing demographics and proliferation of mobile
devices will disrupt existing operational strategies
6
In 2020, ongo...
PwC
Increasing appetite for online retail and research
could be your biggest competitor or best ally
7
Source: PwC
Online ...
PwC
The digital shopping future is unfolding now and
your consumers will change how you serve them
• Real-time
comparative...
PwC
Being able to translate “Big Data” into actionable business
decisions will be the key to win and keep consumers
9
Sour...
PwC
What does this mean for you and what should you
do?
10
These trends are not fads…
… rather a structural transformation...
PwC
3 drivers of success in 2020
11
• Creating connected experiences for omni-channel consumers
• Consumer-centric organiz...
PwC
3 interdependent collaborations that will help you
win
1. Consumer centric operations: Redefining your operational str...
PwC
Collaboration is required to deal with the
complexity of Omni-channel fulfillment
Channel Order characteristics Pickin...
PwC
This drives industry leaders to implement a new
organizational operating model
Aligned / Integrated / Seamless / Digit...
PwC
Better organizational alignment will be required
People
Processes
Structure
Technology
15
PwC
Enhanced human resources will be required to
operate supply chains in 2020
More skilled employees needed in
management...
PwC
Is there a sufficient supply of well-equipped
professionals for the skilled jobs needed in 2020
Critical skills and
kn...
PwC
Leading companies are implementing consumer
focused supply chains
• Beyond the delivery notice
• Dynamic order fulfill...
PwC
And building resilience into their supply chains
Protect your supply chain!
• Diversity of sourcing
• Information shar...
PwC
With a new collaborating model with business partners that
goes beyond the transactional level
20
• Strategic collabor...
PwC
Data collaboration will be required for both suppliers and
retailers to align supply with demand
In store
• Pricing
• ...
PwC
In summary: Implications for a consumer focused
organization
• Losing supply chain
economies: managing efficiencies
on...
PwC
Some suggestions for action
Supply chain & operations
• Pilot an end-to-end fulfillment operational design using one (...
PwC 24
You can win from within: 5 key principles to
effectively stay ahead of market shifts
1. Does my company have a clea...
Thank you!
© 2013 PricewaterhouseCoopers LLP. All rights reserved. PwC refers to the United States
member firm, and may so...
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PwC Retail 2020 Challenges

  1. 1. Retail 2020 Challenges: Collaborating for Growth through Supply Chain Efficiencies Jeff Holmes Managing Director, Retail and Consumer PwC
  2. 2. Retail 2020: Redefining Supply Chain Collaboration to Drive Growth www.pwc.com October, 2013
  3. 3. PwC So we are going to talk about the four 3’s today • Factors changing your business • Drivers of success in 2020 • Questions you need to ask yourself • Strategies that may help you win 4
  4. 4. PwC 3 key factors are dramatically changing your consumer, your business, your supply chain 5 Big DataDigital Revolution Informed Price Sensitive Consumer
  5. 5. PwC Changing demographics and proliferation of mobile devices will disrupt existing operational strategies 6 In 2020, ongoing demographic fragmentation will create two distinct cultural, societal, and retail reference groups. Number of Smartphone users in the U.S. 2010- 2016 (millions) is expected to grow 60% © Statista 2013 Source: eMarketer *Forecast Source: Kantar Retail analysis, 2012
  6. 6. PwC Increasing appetite for online retail and research could be your biggest competitor or best ally 7 Source: PwC Online Retail Sales = $250 Billion By 2014 e-commerce = 30% of total retail sales growth 2011-2016 e-commerce sales will represent 12% of all retail sales in the U.S. by 2020 of total sales will be influenced by online visits by 201677% Multichannel consumers spend 4x more than single-channel shoppers
  7. 7. PwC The digital shopping future is unfolding now and your consumers will change how you serve them • Real-time comparative shopping • Greater levels of sophistication and personalization • Better data on consumer needs, preferences, real-time behavior • Consumers are in the driver’s seat 8
  8. 8. PwC Being able to translate “Big Data” into actionable business decisions will be the key to win and keep consumers 9 Source: Intel Companies must be able to harness consumer “likes”, “tweets” and “check ins” to drive additional interactions with consumers... Source: ChainLink Research … and real time visibility in to product inventory will be key to satisfy the need for “instant gratification”
  9. 9. PwC What does this mean for you and what should you do? 10 These trends are not fads… … rather a structural transformation of the consumer interaction Consumers expect similar interactions where ever there is a sale to be made… … the industry must collaborate to make this happen Revenue growth and enhanced margins will go to the… … best conversationalist with the consumer Is the shopping experience a continuous conversation across multiple channels before, during, and after a stay? Are infrastructures in place linking disparate data sources to personalize the right story, at the right time? Are operating models, organizational structures and data architectures integrated to monetize the conversation?
  10. 10. PwC 3 drivers of success in 2020 11 • Creating connected experiences for omni-channel consumers • Consumer-centric organizations capable of meeting the needs of omni-channel shoppers • Creating and executing omni-channel operational capabilities to deliver on the Brand Promise
  11. 11. PwC 3 interdependent collaborations that will help you win 1. Consumer centric operations: Redefining your operational strategy to collaborate around consumers not functions 2. Changing together: Re-imagining collaboration with your partners to serve consumers where and how they want to be served 3. Winning from within: Changing your organizational DNA with the right structure, talent to better understand your consumers changing needs 12 Are you ready?
  12. 12. PwC Collaboration is required to deal with the complexity of Omni-channel fulfillment Channel Order characteristics Picking Shipping Direct to Consumer Few Lines/Few Units; Quick Fulfillment Expectation Each or Case from stock Parcel or TL (store delivery for store pickup) Wholesale Many Lines/Many Units; Customer Controlled Scheduled Delivery Windows Pallet or Case from stock LTL or TL Retail Store Distributions or Replenishments (Many Stores/Many Units); Retailer Controlled Delivery Windows Cross Dock/Flow Through Pallet or Case from stock TL Returns High variability from individual units from store and DTC to multiple cases/pallets for retail/ wholesale merchandise pull backs or end of product lifecycle Dispositioning at the store level for retail and wholesale Unit picking/packing by customer for DTC Wholesale – LTL Retail – LTL DTC – Parcel, store drop off, 3rd party 13
  13. 13. PwC This drives industry leaders to implement a new organizational operating model Aligned / Integrated / Seamless / Digital Commerce 14 Merchandising Information Technology Retail Operations Supply Chain Digital Commerce
  14. 14. PwC Better organizational alignment will be required People Processes Structure Technology 15
  15. 15. PwC Enhanced human resources will be required to operate supply chains in 2020 More skilled employees needed in management information systems to operate more complex global systems. Job creation can be expected in: • Warehousing operational positions • Logistics information systems • Instructors/trainers • Sales, Marketing, and Account Managers • Corporate Service positions with a supply chain management emphasis 16
  16. 16. PwC Is there a sufficient supply of well-equipped professionals for the skilled jobs needed in 2020 Critical skills and knowledge required • Projecting/Forecasting • Cost analysis • International business practices • Laws, compliance and regulations • Transportation, logistics • Languages Success factors • Better retention policies • Clear career pathways • Transfer of knowledge and experience to future leaders 17
  17. 17. PwC Leading companies are implementing consumer focused supply chains • Beyond the delivery notice • Dynamic order fulfillment • Retail postponement, product customization • Rapid change of product innovation and assortment • Automatic replenishment of staples 18 Faster Less Risk Less Cost More Agile
  18. 18. PwC And building resilience into their supply chains Protect your supply chain! • Diversity of sourcing • Information sharing • Legislative and regulatory standards • Culture of risk management • Risk assessment frameworks • Alert/warning systems 19
  19. 19. PwC With a new collaborating model with business partners that goes beyond the transactional level 20 • Strategic collaboration is key between brands and retailers as consumers today are moving away from the world of brands and channels, and opting for lifestyle affiliations • PwC suggests several key strategies that can lead to effective collaboration: —Start small, then go larger —Define the collaborative agenda upfront —Agree on how success will be defined and measured —Use data judiciously
  20. 20. PwC Data collaboration will be required for both suppliers and retailers to align supply with demand In store • Pricing • Product placement • Promotion • Packaging • Layout/Adjacencies • In-Stock ratios • Regional/local store data = micro trends Logistics management • Trace problems to the source • Respond quickly to changes in demand • Real time: inventory levels, sales and product forecasts, shipment destinations and arrival status 21
  21. 21. PwC In summary: Implications for a consumer focused organization • Losing supply chain economies: managing efficiencies on a transactional level • The new organizational imperative, moving from the functional to a value chain organization • Virtual integration, how the store will survive • The new operational footprint is GLOBAL: Operating Globally, Thinking Locally • Showrooming: decrease shelf and store size, rapid replenishment and same day delivery 22 • Stock balancing with omni- channel fulfillment: effective use of inventory • Fight for the customers wallet: retailer vs. supplier • Leverage IT systems: consumer patterns and supply chain visibility
  22. 22. PwC Some suggestions for action Supply chain & operations • Pilot an end-to-end fulfillment operational design using one (or more) categories • Design a true omni-channel supply chain without need for separate ecommerce DCs. Use inventory optimization as the opportunity. • Design a supply chain to support global expansion • Determine the value of your brand and its drivers by market segments • Re-energize S&OP to be more dynamic Customer impact • Determine the value of your brand and its drivers by market segments • Digital Transformation • Increase collaboration to include sales and marketing and merchandizing 23
  23. 23. PwC 24 You can win from within: 5 key principles to effectively stay ahead of market shifts 1. Does my company have a clear strategy in place to capture these new and emerging business opportunities, and does our organizational structure support that strategy? 2. Delivering a consistent brand experience, both internally and externally, across all possible technologies and channels 3. Having the right talent in place to enable both above 4. Understanding and the changing the organization’s culture, and the way that it will support – or undermine—organizational change efforts 5. Putting the right metrics in place to gauge success
  24. 24. Thank you! © 2013 PricewaterhouseCoopers LLP. All rights reserved. PwC refers to the United States member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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