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2014 Retail Insight: The Impact of Omni-Channel Trends for 2014 and Beyond

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You are invited to view a complimentary webinar featuring retail industry experts from Retail Systems Research (RSR) and SPS Commerce. Based on their latest research, including the 2014 Retail …

You are invited to view a complimentary webinar featuring retail industry experts from Retail Systems Research (RSR) and SPS Commerce. Based on their latest research, including the 2014 Retail Insights industry benchmark report, you’ll learn what strategies your peers are deploying to improve omni-channel performance in 2014.

The webinar provides insights on:
• The state of the retail market—how many retailers have or will adopt the omni-channel? What steps are they taking?
• Which external and internal forces will impact retail the most in the upcoming years?
• Which technology and business areas are retailers, vendors and logistics firms making significant investments in 2014?

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  • Thank you. Welcome to the second annual Retail Insights webinar with Retail Systems Research and SPS Commerce.Each year our industry benchmark survey delivers a 360-view of the state of the retail supply chain. Our research is based on hundreds of anonymous surveys from retailers, suppliers and logistics professional. We hope you today’s event, learn something new and become inspired in to make the most of your omni-channel strategies in 2014.
  • Our agenda for today’s webinar includes the rise of the digital consumer and how their social and demanding behavior is impacting retail, The fundamental building blocks to a successful omni-channel strategy.Then, you’ll hear why today is retail’s reset moment in so many ways and hears a detailed account of what your peers said about the state of retail, their operations and merchandising strategies, and where their challenges are in 2014 based on the industry benchmark survey report.During the Q&A, you’ll have an opportunity to ask us your most pressing omni-channel or supply chain questions. Last year this portion of the event include dozens of compelling questions from you. At the end of the presentations, the operator will provide directions on how to submit your questions.
  • Our speakers for today’s webinar include Paula Rosenblum, one of the brightest and insightful minds in retail today and Managing Partner at RSR. Her recent reports on merchandising, the omni-channel, pricing practices and the value of store employees in the consumer age show she is on the cutting edge of retail. She is smart and knows retail inside out, and always worthy of listening to. I am Pete Zaballos, the Vice President of Marketing at SPS. I work alongside many of our retailers, suppliers and logistics executives on our enterprise cloud network. Most describe me as a change agent to adopt winning omni-channel strategies that extend trading communities, look at new sourcing and item management strategies built for the digital consumer, and reap the value of perfecting their trading partner relationships.Let’s move ahead to the the information you’ve dialed in to hear….
  • Our speakers for today’s webinar include Paula Rosenblum, one of the brightest and insightful minds in retail today and Managing Partner at RSR. Her recent reports on merchandising, the omni-channel, pricing practices and the value of store employees in the consumer age show she is on the cutting edge of retail. She is smart and knows retail inside out, and always worthy of listening to. I am Pete Zaballos, the Vice President of Marketing at SPS. I work alongside many of our retailers, suppliers and logistics executives on our enterprise cloud network. Most describe me as a change agent to adopt winning omni-channel strategies that extend trading communities, look at new sourcing and item management strategies built for the digital consumer, and reap the value of perfecting their trading partner relationships.Let’s move ahead to the the information you’ve dialed in to hear….
  • Our speakers for today’s webinar include Paula Rosenblum, one of the brightest and insightful minds in retail today and Managing Partner at RSR. Her recent reports on merchandising, the omni-channel, pricing practices and the value of store employees in the consumer age show she is on the cutting edge of retail. She is smart and knows retail inside out, and always worthy of listening to. I am Pete Zaballos, the Vice President of Marketing at SPS. I work alongside many of our retailers, suppliers and logistics executives on our enterprise cloud network. Most describe me as a change agent to adopt winning omni-channel strategies that extend trading communities, look at new sourcing and item management strategies built for the digital consumer, and reap the value of perfecting their trading partner relationships.Let’s move ahead to the the information you’ve dialed in to hear….
  • Our speakers for today’s webinar include Paula Rosenblum, one of the brightest and insightful minds in retail today and Managing Partner at RSR. Her recent reports on merchandising, the omni-channel, pricing practices and the value of store employees in the consumer age show she is on the cutting edge of retail. She is smart and knows retail inside out, and always worthy of listening to. I am Pete Zaballos, the Vice President of Marketing at SPS. I work alongside many of our retailers, suppliers and logistics executives on our enterprise cloud network. Most describe me as a change agent to adopt winning omni-channel strategies that extend trading communities, look at new sourcing and item management strategies built for the digital consumer, and reap the value of perfecting their trading partner relationships.Let’s move ahead to the the information you’ve dialed in to hear….
  • Our speakers for today’s webinar include Paula Rosenblum, one of the brightest and insightful minds in retail today and Managing Partner at RSR. Her recent reports on merchandising, the omni-channel, pricing practices and the value of store employees in the consumer age show she is on the cutting edge of retail. She is smart and knows retail inside out, and always worthy of listening to. I am Pete Zaballos, the Vice President of Marketing at SPS. I work alongside many of our retailers, suppliers and logistics executives on our enterprise cloud network. Most describe me as a change agent to adopt winning omni-channel strategies that extend trading communities, look at new sourcing and item management strategies built for the digital consumer, and reap the value of perfecting their trading partner relationships.Let’s move ahead to the the information you’ve dialed in to hear….
  • From our perspective in retail – with the largest network in the market – we see Omni-Channel as being comprised of four key components:-Adaptability in how items are managed, to embrace the fluid nature of what is required to convince a consumer to buy, and to fulfill that purchase-Increasing the velocity of item sell-thru, ensuring you always have the right product where demand is highest for it-Access to large quantities of new items, to ensure you’re able to anticipate and respond to rapidly changing consumer tastes-In concert this enables frictionless scale. The ability for retailers and consumers to rapidly, easily expand and adapt their businesses
  • To understand the impact, it’s good to look back at past “Reset” moments. In the U.S., the dawn of the Industrial Age came in the early 1800’s, with inventions like the sewing machine, the steam engine, and the cotton gin. But what triggered a massive societal shift to the Industrial age was the LIGHT BULB at the very end of the 19th Century. Because of the light bulb, factories could now operate 24X7, and that triggered a huge population shift away from farms and to the cities.The information age really began with the dawn of commercial computing in the late 1950’s. But it wasn’t until the mid 1980’s – with the mass adoption of bar codes in stores, that most people began to participate. With bar code scanning, companies such as Wal-Mart were able to scale their businesses to unimagined sizes, by optimizing their supply chains. This is how mass merchandising became so prevalent.Now, we are entering the participation age. It can be argued that this new age really began with network-attached personal computers. But what triggered a mass movement to the Participation Age is – the smart mobile phone, and particularly the iPhone. The iPhone wasn’t the first mobile phone by any means, but it was the one the World fell in love with. Now consumers carry a world of information with them wherever they go.
  • So what to do? When we talk about “Omni-channel” retailing, this is what we mean. There should be one set of processes (and systems) that support all the paths to purchase, regardless of how a consumer starts and ends a transaction with a retailer. But we’ll see later that this is a HUGE CHALLENGE, and one that cannot be addressed without a redesign of the operating model and new investments in the systems that support it. This is the Uber-challenge.
  • When new channels started to emerge, for example catalog, or first generation e-commerce sites, retailers simply replicated the operating model for the new channels. They planned, bought, sold, and tracked in one or thee other of the channel, and the path to purchase was still assumed to be from “the front” of the store through to the ring-out. There was a lot of operational duplication, but it really didn’t matter too much.
  • But in the mid-2000’s, consumer expectations started to change, and they wanted retailers to support more complex paths to purchase, for example, buying online but returning an item in a store. So retailers had to develop specific inter-connects between the channels to support these new behaviors. This was (and still is) called “Cross Channel retailing” – and for many retailers, this is the state of the art. But note that there’s still a lot of duplication of process and systems. And now, because more and more shoppers want this, the duplication is getting too expensive.
  • Thank you for attending today’s webinar with RSR and SPS Commerce. We hope you were inspired by your industry’s optimism and filled with ideas on how to bolster your omni-channel in 2014. Have a wonderful day.

Transcript

  • 1. 2014 RETAIL INSIGHT: THE IMPACT OF THE OMNI-CHANNEL OCTOBER 17, 2013
  • 2. LEARN THE LATEST ON OMNI-CHANNEL RETAIL • The rise of the digital consumer • The fundamentals of omni-channel • Retail’s reset moment • Findings from the Retail Insight industry benchmark survey • Q&A
  • 3. PRESENTED BY OMNI-CHANNEL EXPERTS Paula Rosenblum, Managing Partner, Retail Systems Research Paula is widely recognized as one of the top analysts in the retail industry. She formerly served as Vice President of Research & Content at Retail Systems Alert Group (RSAG), and as Vice President of Aberdeen Group's Retail Research practice. Prior to that, Paula spent over 20 years as a retail technology executive and CIO. Pete Zaballos, Vice President, Marketing, SPS Commerce Pete is responsible for the marketing strategy that is defining, executing and scaling SPS Commerce’s enterprise cloud services. He is a sought-after visionary focused on perfecting the power of retail trading partner relationships through the intersection of communities and technology.
  • 4. $83,000,000,000 68% 29% 13,000,000,000
  • 5. OMNI-CHANNEL FUNDAMENTALS • Item Management Adaptability • Sell-Thru Velocity • Item Sourcing • Frictionless Scale
  • 6. Retail's Reset Moment: How Omni-Channel Selling Affects The Supply Chain October 2013 Paula Rosenblum Managing Partner Retail Systems Research, LLC
  • 7. Agenda About RSR Retail’s RESET Moment • Innovations On The Selling Side Affect the Supply Chain SPS Commerce and RSR Joint Survey • How is the Supply Chain responding?
  • 8. About RSR Founded in 2007. Quickly became the leading source of insights for trends in retail technology, and retail ecosystem in general. Mission: To elevate the conversation about retail technology to a strategic level within the retail enterprise by: • • • Providing objective, pragmatic advice to both retailers and solution providers Leveraging our extensive retail industry experience Providing a deep bed of research into retailers' technology investment plans and the business opportunities and challenges that drive those investments. We help retailers keep their IT strategies aligned with corporate objectives. We help solution providers align their products and messages with retailers’ needs.
  • 9. RETAIL’S RESET MOMENT
  • 10. RSR’s Take: The Retail Industry Is At A “Reset Moment” Today (As Before) Technology Is The Trigger For Major Shifts In Business And Society Information Age Industrial Age Agrarian Age Participation Age
  • 11. Consumer Behaviors Are Fundamentally Changing … From This …(very orderly) Investigate Select Pay For Fulfill Pay For Fulfill Pay For Fulfill Pay For Fulfill Store Investigate Select Web Investigate Select Catalog Investigate Select Direct Sales
  • 12. …To This (Many Paths To Purchase – Chaotic Patterns) Investigate Select Pay for Fulfill Store Store Store Store Call Center Call Center Call Center Direct Delivery Web Web Web Direct Sales Direct Sales Direct Sales …and Mobile Anything This is the Omni-Channel Phenomenon
  • 13. What Does That Mean to Us?
  • 14. The Retail Model Was Built On An Uni-Channel Assumption €$£ Buy Better, Turn It Faster € $£ Run Better € $£ Sell More Stuff
  • 15. But the World Has Changed Forever…
  • 16. A Worldview Designed Around This: Or This:
  • 17. Met a Worldview Enabled by This: And This: A dramatic shift in the power dynamic between the retailer and the consumer.
  • 18. Omni-Channel Enables One Brand Across All Selling Channels – But That Requires Aligning Supply To Demand Differently
  • 19. The Addition Of Multiple Selling Channels Didn’t Change The Model… But Did Add Inefficiencies
  • 20. Cross-Channel Enables “One Brand Across All Selling Channels”, But Doesn’t Address Inefficiencies
  • 21. The Question That Is Only Beginning To Be Asked Is… “How Do We Meet These Fulfillment Requirements Profitably?”
  • 22. The Payoff? Beyond Any Doubt Multi-Channel Customers Are: 2013 2012 Significantly More Profitable Than Single Channel Customers Slightly More Profitable Than Single Channel Customers Equally Profitable Less Profitable Than Single Channel Customers Don't Know/Can't Tell 38% 47% 29% 28% 3% 7% 3% 10% 18% 17% RSR Research, June 2013 But how much profit are we leaving on the table?
  • 23. The State of the Union: RSR & SPS Commerce Asked YOU
  • 24. How We Structured the Survey: RSR’s BOOT MethodologySM
  • 25. How We Structured the Survey: RSR’s BOOT MethodologySM Business Challenges Opportunities Organizational Inhibitors Technology Enablers A simple, yet powerful model Puts technology in the context of business issues
  • 26. Who You Are Total of 306 Respondents. • 71% Vendors/Suppliers Executive Management 40% Marketing 6% • 21% Retailers or Distributors Merchandising 2% Procurement/Product Development 3% • 8% Logistics providers (LSPs) E-Commerce 4% Information Technology 9% Business Development 7% Supply Chain 7% Logistics 7% Warehouse 4% Finance 9%
  • 27. OVERVIEW The State of the Union at a Glance
  • 28. Overview • The omni-channel imperative and how we got here • A 360 degree viewpoint • A Supply Chain still bullish on the future • Retailers lagging suppliers in buy-side readiness • Budgets reflect a willingness to spend, but some lack of clarity on what to spend it on
  • 29. In The Next 18-24 Months, Retail Will Move To Address How To Profitably Serve Anytime/Anywhere Shopping 2010-13 The Impact of the massive adoption of consumer technologies (mobile, social) on the retail selling environment 2013 The harmonization of the digital and physical selling environments Next Generation of Sales & Marketing 2014 2015-16 Next Generation Supply Chain
  • 30. Bullish on the Future These percentages almost identical to last year’s survey.
  • 31. A Sorry State of Affairs RSR Research, September 2013 Retailers lag… likely needing a champion (as marketing was for sell-side).
  • 32. … and It’s Not About the Money RSR Research, September 2013 “Bearing in mind that an equal number of respondents reported budget increases last year, we can assume that those whose budgets rose continue to keep those increases intact. The ecosystem recognizes that it is behind, has some headroom for growth, and is continuing to invest.”
  • 33. BUSINESS CHALLENGES Bad Memories Die Hard
  • 34. Business Challenge Headlines • Optimism colored by painful memories • Meeting customer expectations remains a key challenge • The Amazon Effect • Demanding customers across the entire supply chain • Transparency informs decision-making • Wanting broader assortments • Loyal to valued partners • What if the future looks like the past? • Fear of economic and supply chain shocks color our world • Regulations and politics shape our decision-making • Consumer preferences constantly shifting
  • 35. The Economy and Customer Color our Worlds RSR Research, September 2013 Customer expectations increase pressures on the entire ecosystem “The Amazon Effect”
  • 36. Man…These People Are Demanding How has your customer changed vs. 2 years ago? "They are more likely to...." Retailers Vendors LSPs 85% Requires immediate availability/shipping 77% 84% Knowledgeable on competitive offerings 77% 79% 84% 82% Knowledgeable on pricing 74% 72% Seeks information from social networks before buying 33% 63% Knowledgeable on products 65% Looking for variety/broader assortments 82% 76% 65% Loyal to retailer Loyal to brands 78% 63% 67% 11% 23% 37% 35% 17% 37% RSR Research, September 2013
  • 37. Man…These People Are Demanding How has your customer changed vs. 2 years ago? "They are more likely to...." Retailers Vendors LSPs 85% Requires immediate availability/shipping 77% 84% Knowledgeable on competitive offerings 77% 79% 84% 82% Knowledgeable on pricing 74% 72% Seeks information from social networks before buying 33% 63% Knowledgeable on products 65% Looking for variety/broader assortments 82% 76% 65% Loyal to retailer Loyal to brands 78% 63% 67% 11% 23% 37% 35% 17% 37% Glimmers of good news RSR Research, September 2013
  • 38. The Future Brings More of the Same RSR Research, September 2013 The economy, the customer and political climate will drive us.
  • 39. OPPORTUNITIES Meeting Customer Demand Wherever It Comes, but Driving Traffic to Stores
  • 40. Some Differing Points of View Retailers are pragmatic • Fulfill customer orders from inventory, regardless where order is generated • Drive increased traffic to stores Vendors deliver mixed messages • Top priority is to drive customers to retailer stores • Following closely behind: selling direct Their approaches differ… as we’ll see.
  • 41. Retailer Pragmatism Retailers' Top 3 Omni-Channel Opportunities Fulfill customer orders with… 58% Drive increased traffic to retail stores 50% Build a social community around our… 42% Deliver a broader product assortment, the… 34% Deliver a consistent cross-channel… 34% Provide flexibility to the customer to… Provide more detailed product information 26% 26% RSR Research, September 2013 Retailers presume that consumers can find detailed product information on their own, yet interest in “endless aisle” grows.
  • 42. Vendor Mixed Messages Top Vendor-Identified Opportunities A new world of frenemies: Drive increased traffic to retail stores Provide more detailed product information 42% 38% Increase direct sales from our company’s e-commerce site 35% Support new order management models for retail customers, especially drop-ship Private Label vs. Vendor Direct 35% The Rise of Vendor-Direct Vendors Report: Product available through retailer… Sales made through retailer… 78% 22% Products available through vendor… Sales made through vendor… 53% 17% RSR Research, September 2013
  • 43. What Do Retailers Want? Top 3 Vendor Capabilities That Retailers Value Retailers' POV Vendors' POV 75% 81% 71% 76% Price Item availability Brand recognition 36% 32% 32% 29% Compliance with trading requirements Item assortment Visibility to sales and order status Years of business Drop ship experience Digital assets Size of company 5% 7% 4% 46% 50% 21% 22% 18% 14% 18% 25% 14% RSR Research, September 2013 Vendor perception on assortment depth value far outweighs retailers’.
  • 44. ORGANIZATIONAL INHIBITORS Management and Employees Hold the Key
  • 45. Internal Forces Affect Change • Strong leaders a must • The next generation of employee emerges across the Supply Chain • Technically savvy • Good interpersonal skills • Vendors anticipating retailers’ future needs • Retailers are very slow in synchronizing • Mixed messages on “product information” • In a world where we’re used to sharing documents, is it time to think about sharing all kinds of structured and unstructured data?
  • 46. The Visionary Leader and The Empowered Employee Top 3 Internal Forces Impacting the Business in the Next 5 Years 2013 2012 91% 86% Management’s vision/strategic planning New technology adoption Employee technical skills 34% 31% 24% 27% 25% Employee interpersonal skills Mergers or acquisitions Mobile workforce Employees’ use of social media 55% 52% 62% 13% 11% 11% 9% RSR Research, September 2013 All the technology in the world will not help if people cannot use it.
  • 47. Retailers Lag, Vendors Waiting Cross-Channel Expectations Vendors vs. Retailers Retailers report "Fully Cross-Channel" Pricing Product information Product availability Promotions Breadth of product assortment Access to helpful employees Images/video Visibility in social media conversations User ratings/reviews Vendors report "Important to our retail customers" 69% 55% 84% 66% 62% 72% 41% 39% 38% 22% 35% 27% 31% 26% 12% 17% 17% 31% RSR Research, September 2013 Retailers lack of omni-channel capabilities also reported in other RSR’s 2013 reports. Vendors generally doing a better job anticipating customers’ omni-channel needs. Example: Cross-channel price synchronization. Retailers struggle. Vendors recognize it’s important to their retail customers; retailers just have to make it work.
  • 48. TECHNOLOGY ENABLERS WHERE IS ALL THAT BUDGET MONEY GOING?
  • 49. Tech Enabler High Notes • LSPs focus on warehouse improvements • All others making investments “across the board” • Can EDI drive visibility? And why aren’t retailers planning to invest in the most important tool in their omni-channel toolkits? • Can retailers use the data they get? • How many item attributes are enough?
  • 50. A Harmonized Omni-Channel Environment: Wishes vs. The Budget Omni-Technology: Current Status vs. Perceived Value 90% 80% 70% 60% 50% 40% 30% 20% Implemented "Very Valuable" ? #5 #4 #3 #2 #1 Source: RSR Research, June 2013
  • 51. Then How’d We Get Here?
  • 52. Then How’d We Get Here?
  • 53. The World of Product Attributes • Generally, vendors provide more than retailers use • Vendors expecting to provide more in the next year • Most currently provide mundane, but necessary attributes Are we setting our sights too low?
  • 54. FINAL THOUGHTS The Rise of Drop Ship?
  • 55. Vendor Direct With or Without the Retailer • All agree drop ship volumes will rise • Vendors shipping on their own behalf • Also shipping on retailers’ behalf • LSPs supporting both • A reliance on the empowered employee • Dated means of communication may slow the process • Further shifts coming. The wise company will invest in improving product information capabilities and supply chain efficiencies
  • 56. Thank You! Paula Rosenblum, RSR Research prosenblum@rsrresearch.com Further Information on Products & Services: info@rsrresearch.com www.rsrresearch.com
  • 57. THANK YOU FOR ATTENDING TODAY’S WEBINAR