Retail 2.0 - A new paradigm for location specialists Steven Feldman KnowWhere

Location still matters – or does it? “ 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. ” Nielsen

“ 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. ”

Nielsen

Agenda Web 2.0 Generations Impact of online shopping Bricks ‘n Clicks New demographics Impact on retail location strategies How will we find our customers of the future? Future data creation and analytical techniques

Web 2.0

Generations

Impact of online shopping

Bricks ‘n Clicks

New demographics

Impact on retail location strategies

How will we find our customers of the future?

Future data creation and analytical techniques

Web 2.0 Rich user experience User participation Dynamic content Openness, freedom Collective intelligence “ creating network effects through an " architecture of participation ," and going beyond the page metaphor of Web 1.0 to deliver rich user experience ” Tim O’Reilly

Rich user experience

User participation

Dynamic content

Openness, freedom

Collective intelligence

Generations

Why Web 2.0 matters to Retailers 16m UK households have internet access Online sales £55bn in last 12 months! Sales growth 25-30% 30-50 year olds lead online spending Generation Y are the high value customers of the future Main impact today is in comparison goods but tomorrow ……?

16m UK households have internet access

Online sales £55bn in last 12 months!

Sales growth 25-30%

30-50 year olds lead online spending

Generation Y are the high value customers of the future

Main impact today is in comparison goods but tomorrow ……?

Categories – who is buying online and where? Books & music Losing share to online Higher in remote rural areas Clothing & footwear Catalogues go online and upmarket Mix of rural areas and prosperous suburbs, urban professionals and areas of high ethnicity PCs/Games consoles & software Losing share rapidly 15-30s boys Asian Communities Household Goods & Appliances Frequently need delivery Online winning where large retailer not close Source CACI

Books & music

Losing share to online

Higher in remote rural areas

Clothing & footwear

Catalogues go online and upmarket

Mix of rural areas and prosperous suburbs, urban professionals and areas of high ethnicity

PCs/Games consoles & software

Losing share rapidly

15-30s boys

Asian Communities

Household Goods & Appliances

Frequently need delivery

Online winning where large retailer not close

Source CACI

Where is hurting? Source CACI A mixture of affluent suburbs, some prosperous urban areas and an affluent rural hinterland

OnLine vs InStore OnLine Price Convenience Wider Range Comparison Customer Reviews Product information InStore Want to evaluate Immediacy No shipping costs or waiting at home for delivery Trusted Brand Knowledgeable Sales people

OnLine

Price

Convenience

Wider Range

Comparison

Customer Reviews

Product information

InStore

Want to evaluate

Immediacy

No shipping costs or waiting at home for delivery

Trusted Brand

Knowledgeable Sales people

OnLine vs InStore

Bricks ‘n clicks can beat online only Combining an online presence with physical outlets may offer the best option Leverage core competencies Supplier and distribution networks Brand equity Consumer trust Economies of scale

Combining an online presence with physical outlets may offer the best option

Leverage core competencies

Supplier and distribution networks

Brand equity

Consumer trust

Economies of scale

Bricks ‘n clicks can beat online only

Finding the e-consumer Target 30-50s May come from minority groups E-literate

Target

30-50s

May come from minority groups

E-literate

Location still matters

RETAIL 2.0 A New Paradigm for Location Specialists Andy Thompson

Andy Thompson

The World of the Customer

Impact on Retail Location Strategies Here are three possible future states.... Retail catchment areas will be much smaller in size Customers will reject brand loyalty in preference to price/convenience trade-off Purchase behaviour will become more complex and transaction patterns less predictable We need to find or create new data and analytical techniques to understand the customers and markets of the future

Here are three possible future states....

Retail catchment areas will be much smaller in size

Customers will reject brand loyalty in preference to price/convenience trade-off

Purchase behaviour will become more complex and transaction patterns less predictable

We need to find or create new data and analytical techniques to understand the customers and markets of the future

WHERE 2.0 Electronic generation of mapping and location technology Location enabled mobile devices will become the norm in the future By 2012 at least 18% of phones will be smartphones .

Electronic generation of mapping and location technology

Location enabled mobile devices will become the norm in the future

By 2012 at least 18% of phones will be smartphones .

Crowd Sourced Data Been around for centuries! C19 th Oxford English Dictionary WEB 2.0 provides the structure for collaboration e.g. openstreetmap.org Debate around coverage, currency and quality What about crowd sourced retail data ?

Been around for centuries!

C19 th Oxford English Dictionary

WEB 2.0 provides the structure for collaboration

e.g. openstreetmap.org

Debate around coverage, currency and quality

What about crowd sourced retail data ?

Pervasive Location Path Intelligence Tracking individuals using mobile phone signals Footpath TM Technology Retail applications Rental valuations and tenancy mix Shopper flow management In centre marketing Behaviour analysis Copyright 2007 Path Intelligence Ltd

Path Intelligence

Tracking individuals using mobile phone signals

Footpath TM Technology

Retail applications

Rental valuations and tenancy mix

Shopper flow management

In centre marketing

Behaviour analysis

Pervasive Location Geo-location Services Yahoo Fire Eagle Mozilla Geode Google Geolocation API Don’t need a GPS service Detection of “where” people are interacting with the web Location intelligent Web 2.0 services Sales and marketing offers.... not new anymore.... Security (location verification) True “location-tailored” content Intelligent Near Field Communication services

Geo-location Services

Yahoo Fire Eagle

Mozilla Geode

Google Geolocation API

Don’t need a GPS service

Detection of “where” people are interacting with the web

Location intelligent Web 2.0 services

Sales and marketing offers.... not new anymore....

Security (location verification)

True “location-tailored” content

Intelligent Near Field Communication services

Historical Data Analysis? “ When you rely on historical data, its much harder to tease out causation” Ian Ayres, Super Crunchers - “ How Anything Can Be Predicted” “ 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”

“ When you rely on historical data, its much harder to tease out causation”

Ian Ayres, Super Crunchers - “ How Anything Can Be Predicted”

Random Sampling Sir Ronald Fisher wikipedia.org/wiki/Ronald_Fisher Randomisation test Study of errors in data with a non-normal distribution Gold standard in medical research for testing success of treatments Why aren’t we using randomisation? We have the resources We can create new data

Sir Ronald Fisher

wikipedia.org/wiki/Ronald_Fisher

Randomisation test

Study of errors in data with a non-normal distribution

Gold standard in medical research for testing success of treatments

Why aren’t we using randomisation?

We have the resources

We can create new data

Randomisation in Action Divide your customers randomly into groups, treat them differently and measure the responses Sample size is key If the sample is large enough we can assume they are statistically identical Our intervention can then be measured purely - the “treatment effect” Capital One – proactively intervenes in the market through randomised experiments Today we have data which has random characteristics but are we treating it as random data?

Divide your customers randomly into groups, treat them differently and measure the responses

Sample size is key

If the sample is large enough we can assume they are statistically identical

Our intervention can then be measured purely - the “treatment effect”

Capital One – proactively intervenes in the market through randomised experiments

Today we have data which has random characteristics but are we treating it as random data?

New Techniques in Predictive Modelling

Generalised Linear Model

Generalised Additive Model

GAMs in Performance Modelling

We need to act now! “ Statistics are like a lamp-post to a drunken man.... more for leaning on than illumination” Lets make data analytics the currency of our organisations and the first activity of decision making not the last!

“ Statistics are like a lamp-post to a drunken man.... more for leaning on than illumination”

Location still matters

Thank You Steven Feldman [email_address] http:// GIScussions .blogspot.com Slides at http:// www.slideshare.net/stevenfeldman Andy Thompson [email_address] www.thewendovergroup.co.uk Slides at