Retail 2.0 - a New Paradigm for Location Analysts


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Presentation by Andy Thompson of Wendover Consulting Group and Steven Feldman of KnowWhere to the Society for Location Analysis.

Published in: Real Estate, Business, Technology

Retail 2.0 - a New Paradigm for Location Analysts

  1. 1. Retail 2.0 - A new paradigm for location specialists Steven Feldman KnowWhere
  2. 2. Location still matters – or does it? <ul><li>“ The dream of electronic commerce has become a reality in today’s wired world, where physical geography no longer presents a barrier to retailers or consumers – and shopping has never been easier.  ” </li></ul><ul><li>Nielsen </li></ul>
  3. 3. Agenda <ul><li>Web 2.0 </li></ul><ul><li>Generations </li></ul><ul><li>Impact of online shopping </li></ul><ul><li>Bricks ‘n Clicks </li></ul><ul><li>New demographics </li></ul><ul><li>Impact on retail location strategies </li></ul><ul><li>How will we find our customers of the future? </li></ul><ul><li>Future data creation and analytical techniques </li></ul>
  4. 4. Web 2.0 <ul><li>Rich user experience </li></ul><ul><li>User participation </li></ul><ul><li>Dynamic content  </li></ul><ul><li>Openness, freedom </li></ul><ul><li>Collective intelligence </li></ul>“ creating network effects through an &quot; architecture of participation ,&quot; and going beyond the page metaphor of Web 1.0 to deliver rich user experience ” Tim O’Reilly
  5. 5. Generations
  6. 6. Why Web 2.0 matters to Retailers <ul><li>16m UK households have internet access </li></ul><ul><li>Online sales £55bn in last 12 months! </li></ul><ul><li>Sales growth 25-30% </li></ul><ul><li>30-50 year olds lead online spending </li></ul><ul><li>Generation Y are the high value customers of the future </li></ul><ul><li>Main impact today is in comparison goods but tomorrow ……? </li></ul>
  7. 7. Categories – who is buying online and where? <ul><li>Books & music </li></ul><ul><ul><li>Losing share to online </li></ul></ul><ul><ul><li>Higher in remote rural areas </li></ul></ul><ul><li>Clothing & footwear </li></ul><ul><ul><li>Catalogues go online and upmarket </li></ul></ul><ul><ul><li>Mix of rural areas and prosperous suburbs, urban professionals and areas of high ethnicity </li></ul></ul><ul><li>PCs/Games consoles & software </li></ul><ul><ul><li>Losing share rapidly </li></ul></ul><ul><ul><li>15-30s boys </li></ul></ul><ul><ul><li>Asian Communities </li></ul></ul><ul><li>Household Goods & Appliances </li></ul><ul><ul><li>Frequently need delivery </li></ul></ul><ul><ul><li>Online winning where large retailer not close </li></ul></ul><ul><ul><li>Source CACI </li></ul></ul>
  8. 8. Where is hurting? Source CACI A mixture of affluent suburbs, some prosperous urban areas and an affluent rural hinterland
  9. 9. OnLine vs InStore <ul><li>OnLine </li></ul><ul><li>Price </li></ul><ul><li>Convenience </li></ul><ul><li>Wider Range </li></ul><ul><li>Comparison </li></ul><ul><li>Customer Reviews </li></ul><ul><li>Product information </li></ul><ul><li>InStore </li></ul><ul><li>Want to evaluate </li></ul><ul><li>Immediacy </li></ul><ul><li>No shipping costs or waiting at home for delivery </li></ul><ul><li>Trusted Brand </li></ul><ul><li>Knowledgeable Sales people </li></ul>
  10. 10. OnLine vs InStore
  11. 11. Bricks ‘n clicks can beat online only <ul><li>Combining an online presence with physical outlets may offer the best option </li></ul><ul><ul><li>Leverage core competencies </li></ul></ul><ul><ul><li>Supplier and distribution networks </li></ul></ul><ul><ul><li>Brand equity </li></ul></ul><ul><ul><li>Consumer trust </li></ul></ul><ul><ul><li>Economies of scale </li></ul></ul>
  12. 12. Bricks ‘n clicks can beat online only
  13. 13. Finding the e-consumer <ul><li>Target </li></ul><ul><ul><li>30-50s </li></ul></ul><ul><ul><li>May come from minority groups </li></ul></ul><ul><ul><li>E-literate </li></ul></ul>
  14. 15. Location still matters
  15. 16. RETAIL 2.0 A New Paradigm for Location Specialists <ul><li>Andy Thompson </li></ul>
  16. 17. The World of the Customer
  17. 18. Impact on Retail Location Strategies <ul><li>Here are three possible future states.... </li></ul><ul><ul><li>Retail catchment areas will be much smaller in size </li></ul></ul><ul><ul><li>Customers will reject brand loyalty in preference to price/convenience trade-off </li></ul></ul><ul><ul><li>Purchase behaviour will become more complex and transaction patterns less predictable </li></ul></ul><ul><li>We need to find or create new data and analytical techniques to understand the customers and markets of the future </li></ul>
  18. 19. WHERE 2.0 <ul><li>Electronic generation of mapping and location technology </li></ul><ul><li>Location enabled mobile devices will become the norm in the future </li></ul><ul><li>By 2012 at least 18% of phones will be smartphones . </li></ul>
  19. 20. Crowd Sourced Data <ul><li>Been around for centuries! </li></ul><ul><ul><li>C19 th Oxford English Dictionary </li></ul></ul><ul><li>WEB 2.0 provides the structure for collaboration </li></ul><ul><ul><li>e.g. </li></ul></ul><ul><li>Debate around coverage, currency and quality </li></ul><ul><li>What about crowd sourced retail data ? </li></ul>
  20. 21. Pervasive Location <ul><li>Path Intelligence </li></ul><ul><ul><li>Tracking individuals using mobile phone signals </li></ul></ul><ul><li>Footpath TM Technology </li></ul><ul><li>Retail applications </li></ul><ul><ul><li>Rental valuations and tenancy mix </li></ul></ul><ul><ul><li>Shopper flow management </li></ul></ul><ul><ul><li>In centre marketing </li></ul></ul><ul><ul><li>Behaviour analysis </li></ul></ul>Copyright 2007 Path Intelligence Ltd
  21. 23. Pervasive Location <ul><li>Geo-location Services </li></ul><ul><ul><li>Yahoo Fire Eagle </li></ul></ul><ul><ul><li>Mozilla Geode </li></ul></ul><ul><ul><li>Google Geolocation API </li></ul></ul><ul><li>Don’t need a GPS service </li></ul><ul><li>Detection of “where” people are interacting with the web </li></ul><ul><li>Location intelligent Web 2.0 services </li></ul><ul><ul><li>Sales and marketing offers.... not new anymore.... </li></ul></ul><ul><ul><li>Security (location verification) </li></ul></ul><ul><ul><li>True “location-tailored” content </li></ul></ul><ul><ul><li>Intelligent Near Field Communication services </li></ul></ul>
  22. 24. Historical Data Analysis? <ul><li>“ When you rely on historical data, its much harder to tease out causation” </li></ul><ul><li>Ian Ayres, Super Crunchers - “ How Anything Can Be Predicted” </li></ul>“ Marketing is concerned with recent past and near future.... and human beings are remarkably consistent in their behaviour over short periods” Sean Kelly, Customer Intelligence - “From Data to Dialogue”
  23. 25. Random Sampling <ul><li>Sir Ronald Fisher </li></ul><ul><ul><li> </li></ul></ul><ul><li>Randomisation test </li></ul><ul><ul><li>Study of errors in data with a non-normal distribution </li></ul></ul><ul><li>Gold standard in medical research for testing success of treatments </li></ul><ul><li>Why aren’t we using randomisation? </li></ul><ul><ul><li>We have the resources </li></ul></ul><ul><ul><li>We can create new data </li></ul></ul>
  24. 26. Randomisation in Action <ul><li>Divide your customers randomly into groups, treat them differently and measure the responses </li></ul><ul><li>Sample size is key </li></ul><ul><ul><li>If the sample is large enough we can assume they are statistically identical </li></ul></ul><ul><ul><li>Our intervention can then be measured purely - the “treatment effect” </li></ul></ul><ul><li>Capital One – proactively intervenes in the market through randomised experiments </li></ul><ul><li>Today we have data which has random characteristics but are we treating it as random data? </li></ul>
  25. 27. New Techniques in Predictive Modelling
  26. 28. Generalised Linear Model
  27. 29. Generalised Additive Model
  28. 30. GAMs in Performance Modelling
  29. 31. We need to act now! <ul><li>“ Statistics are like a lamp-post to a drunken man.... more for leaning on than illumination” </li></ul>Lets make data analytics the currency of our organisations and the first activity of decision making not the last!
  30. 32. Location still matters
  31. 33. Thank You Steven Feldman [email_address] http:// GIScussions Slides at http:// Andy Thompson [email_address] Slides at